Kenya's bond market experienced its worst performance since November 2018 on March 8, 2019, as concerns over a Sh65 billion dam project scandal involving Finance Minister Henry Rotich intensified. The crisis, which saw police question Rotich for a second time, contributed to a broader global risk-off sentiment that pressured emerging market assets.
The chief prosecutor’s office confirmed it was investigating contracts totaling Sh65 billion, with Sh21 billion allegedly paid in advance for two Rift Valley dam projects. Authorities are seeking international cooperation to trace the funds, while Rotich denied wrongdoing, stating all payments adhered to legal and commercial protocols.
Despite the downturn, Kenya’s bonds remained among the world’s top performers, returning 12.2% year-to-date according to the JP Morgan EMBI Global Diversified index. Analysts attributed the recent volatility to both the scandal and profit-taking by investors who had previously favored Kenya’s frontier market assets.
"Kenya was a major overweight for investors this year, so as risk appetite waned, the market faced pressure," said Koon Chow, an emerging market strategist at UBP. The nation’s economic stability and growth prospects continue to attract international capital, even amid the ongoing controversy.
