According to data released by KenInvest, the Kenya Investment Authority, total investments (both local and foreign) in the country in 2012 amounted to $712 million, down 61% from the 2011 figure of $1.84 billion. The number of new projects approved by KenInvest fell from 130 in 2011 to 103 in 2012. These significant falls in investment are thought to be attributable to the political, economic and security risks the country is currently facing.
Kenya’s invasion of Somalia has been answered by sporadic terrorist attacks. There has been a significant wave of inter-ethnic violence, possibly politically motivated, in the coastal area. With the March elections likely to be hotly contested, there are fears that the wholesale riots could develop, as they did after the last elections in 2007. Recent moves by the government to require majority Kenyan ownership of mining projects would have scared away foreign investors.
One of the biggest deterrents to investment is uncertainty, and there is considerable uncertainty concerning the future of Kenyan politics. One of the leading presidential candidates and his vice-presidential running mate have been indicted by the International Criminal Court, with their trials to be held after the elections. Only very brave investors would be willing to risk their money in such an environment.