The ongoing political unrest in Kenya is having profound and far-reaching consequences for businesses and investments in the country.
Economic Disruptions
The recent protests and demonstrations, led by the Gen-Z and Millennials, have brought the country to a standstill, resulting in significant economic losses. The Kenya Private Sector Alliance (KEPSA) estimates that the Kenyan economy is losing approximately Ksh3 billion ($21 million) every day due to these anti-government protests.
Job Losses and Business Closures
The Federation of Kenyan Employers (FKE) reports that about 70,000 private-sector jobs have been lost in recent times, with many businesses forced to close or scale down their operations due to rising operating costs and a heavy tax burden. This trend is expected to continue, with 40% of employers considering further reductions in their operations.
Taxation and Government Policies
The introduction of new taxes, such as a 1.5% housing levy, a 2.75% SHIF the Social health insurance fund levy, and a doubling of taxes on fuel to 16%, has exacerbated the financial strain on businesses. These measures, part of the contentious Finance Act (2023), have led to widespread discontent and protests.
Regional Impact
The unrest is also affecting regional trade, with transporters seeking alternative routes due to fears of cargo loss, damage, and delays on the Northern Corridor. This shift is benefiting neighboring countries like Tanzania, which is experiencing an increase in business activity as a result.
Investor Confidence
The frequent changes in government policies and the unstable political environment are discouraging investments. Businesses are relocating to other countries, and potential investors are hesitant due to the uncertainty and high tax burdens. The conduct of tax collectors has even been described as "harassment" in some cases.
In conclusion, the current political heat in Kenya is severely impacting businesses, leading to significant economic losses, job cuts, and a decline in investor confidence. It is crucial for the government to address these issues proactively to restore stability and support the recovery of the Kenyan economy.
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