Should investors put their money in Kenya? We speak to KenInvest boss

Moses Ikiara, managing director of the Kenya Investment Authority (KenInvest)

Moses Ikiara, managing director of the Kenya Investment Authority (KenInvest)

The Kenya Investment Authority (KenInvest) is an agency mandated with promoting investments in Kenya. Dinfin Mulupi caught up with Dr Moses Ikiara, managing director of KenInvest, to discuss investor protection, corruption and perceptions of Kenya as an investment destination.

Let’s talk investor protection and the justice system. We have seen the government fail to honour court rulings in the past. Can investors rely on Kenya’s judiciary if they find themselves in dispute with other parties?  

I would say our justice system is one of the best in the region. It may take time before they resolve an issue, but the wheels of justice eventually grind. Although it is still not where I would like it to be, our judicial system has evolved [and] it is strengthening. There is more budgetary allocation to the judiciary and they have hired more judges, and in fact all judges were publicly vetted. I am very confident that you can get justice here. Investments made here are safe. We have a strong democracy. We have the necessary legal arrangements, including a new companies act, a new insolvency act [and] a public private partnership (PPP) framework.

I think all investors know there is no place you can’t get disputes, and the process takes long in other countries too. We also have the necessary infrastructure to ensure investors are not exposed if the local system does not work. We have seen people that have not been happy and they have gone to an international court and they have got consideration. We have signed up to international institutions like the Multilateral Investment Guarantee Agency (MIGA) and the International Centre for Settlement of Investment Disputes (ICSID) that deal with investor disputes, and the African Trade Insurance Agency which offers political risk insurance and investment insurance.

Corruption makes headlines here quite a lot and Kenya ranks 145th out of 174 in one corruption perception index. Can investors get work done here without getting their hands dirty?

Of course, but I will not sit here and tell you there is no corruption. But I will also not agree that Kenya is the most corrupt country or anything like that. In fact some of the comparisons and corruption indices do injustice to Kenya. We have a problem, but not at the level which it is painted.

The difference in my own assessment is because of our media freedom, Kenyans are empowered to talk and they can say anything. So part of why we are ranking high on corruption indices is because of the perception created by free media. I think the perception of corruption is a bit exaggerated because of the freedom. Because people here are allowed to make those kind of allegations, it creates a very exaggerated image. As a country we have to deal with the perception because even perceptions are important. If people think we are corrupt, we must accept that perception and deal with it and show evidence and information that we are not. I think the country is continuing in that direction. We have seen cabinet secretaries suspended over allegations and investigations are happening. Judges and senior police officials were vetted publically allowing any citizen to lodge a complaint against officials who had asked for bribes, and some officials were sent home. So corruption is a problem, but the government has attempted to create strong institutions to fight this like the Ethics and Anti-Corruption Commission. Although it has also gone through motions, we are moving on to find the equilibrium, to find the optimal combination that will work best.

KenInvest’s mandate is to bring investors to Kenya. Indian mobile operator Bharti Airtel expanded here five years ago but is now threatening to leave blaming an uncompetitive environment. Do you see that as a failure – to attract investors then have them leave?

Many investors will find competition here more than they will find in other countries. They will find multinationals here [and] they will find domestic companies that are very strong. So this not a place you come if you are looking for protection against competition – competition is there. You have to ask: do we need a regulatory framework that curtails innovation from companies that are innovating or do you want a regulatory framework that says you can be the best you can, even if that might trample on others?

We have competition law and a competition authority. We have to make sure no company is abusing the market or has dominance but then also make sure that we don’t prevent companies from innovating and getting bigger and bigger. We bring in companies, give them a good environment, try as much as possible to give them all the support, but they are better in business [than ourselves]. So it is up to them to come up with innovative business models and fight it out in the market.

There is a lot going on domestically – political bickering, industrial action by workers, security threats. Is it affecting investor perceptions?

Investors don’t just look at newspaper headlines, they do their homework too and make their own assessment. Even when I tell them things, they don’t take it as gospel truth, they do their own studies. This is good for us, because there are valid reasons to invest in Kenya, and it is why FDI numbers are going up. Look at the things that have happened this year – Kenya hosting the Global Entrepreneurship Summit (GES) and US President Barack Obama visiting.  It’s already having impact. It has accelerated a lot of traffic from America, a lot of people coming and they are looking at the various opportunities. The Pope is also coming later in the year and KenInvest is hosting the second Kenya International Investment Conference in November. So even with all those headlines about strikes by teachers and medics and the politics, investors are doing their homework and they are seeing that the fundamentals are good for business.