CBK report on the economic stability of Kenya reveals that more foreign investors are leaving the country.
In its September Kenya Financial Stability Report, CBK detailed the trend of investors leaving the country was witnessed from 2022 all the way to the first half of 2023.
The Nairobi Securities Exchange (NSE) investor activity according to CBK is an evidence that foreigners were selling their shares more frequently than they were buying them.
For instance, in March 2023, about Ksh15 billion worth of shares were sold as opposed to Ksh5 billion worth that were bought.
However, in June 2023, the volume of shares sold fell to below Ksh5 billion, approximately the same amount of investments made by foreigners.
In 2022, foreign investors sold (outflow) shares valued at Ksh63.2 billion against Ksh38.8 billion purchases (inflow) in 2022, leading to a net outflow of Ksh 24.4 billion.
The CBK report attributed the trend to the current tough economic times contributed by the pandemic and government policies.
“Overall, the market remained on net outflow in 2022 and the first half of 2023, highlighting the impact of rising global interest rates as advanced economies tighten monetary policy, domestic business environment and firm-specific challenges,” read the report in part.
“The sell-off at the NSE could also be attributed to the tightening financial conditions in international markets as central banks in advanced economies tightened their monetary policy stance to stem the rising inflation risks.”
On the other hand, it was also highlighted that competition from imported goods was a major barrier for local businesses, particularly those in the manufacturing sector, making the industry undesirable for investors.
Depreciation of the shilling was also being seen as a result of the withdrawal. The current exchange rate for the dollar is Ksh149.
The dollar has also maintained its dominance over the shilling in recent months given the dollar has hit the Ksh145 mark in recent months.
Notably, in the Henley Private Wealth Migration Report 2023, it was predicted that 100 millionaires would leave the country by the end of this year with high taxation being a big factor.
This followed the passing of the Finance Act 2023 which introduced new tax measures such as the 15 per cent housing fund.
In the same breath, close to 100 millionaires left the country in 2022 in search of countries with fair taxation policies.