This archive report was first published on 16 August 2021.
Kenya is set to introduce significant changes to its investment promotion law to address loopholes exploited by foreigners, including those involved in money laundering.
Interior Cabinet Secretary Fred Matiang'i has announced plans to raise the minimum investment threshold for foreigners, which currently stands at $100,000 (Sh10.92 million), to qualify for incentives such as investment deductions and tax rebates.
The proposed changes aim to protect local small traders and prevent crimes such as money laundering, which has been a concern in the country.
According to Matiang'i, the current minimum investment threshold is too low given the size of the Kenyan economy.
He stated, 'For a country our size and the economy of our size, we now need to be a bit more careful when we look at these kinds of things (rules for foreign investors) in future because we have learned the bitter way from some of these things.'
The Kenya Investment Authority (KenInvest) has proposed a flexible minimum foreign investment threshold, depending on the capital requirement of different sectors, based on feedback from stakeholders during engagements that led to the development of the country's first investment policy, launched in November 2019.
KenInvest's director-general, Moses Ikiara, said stakeholders wanted the minimum capital for foreigners to be tripled to $300,000 (Sh32.76 million) for capital-intensive sectors such as construction, energy, manufacturing, oil, and gas.
Others felt that the threshold should be lowered for sectors such as ICT whose ventures may not require as much capital.
Lawmaker Mishra Swarup (the Kesses MP) has also called for the investment threshold for foreigners to be raised as much as ten-fold to protect small traders.
Kenya deported seven Chinese nationals in June 2019 for trading illegally in Gikomba, the country's largest informal market for second-hand clothes and footwear.
