The ballooning foreign debts in Kenya and the uncertain policymaking in Tanzania are among potential risks that are set to affect businesses and investments in East Africa.
According to a report released by Control Risks, Kenya’s emergence from the long electioneering period and the return of normalcy has started winning the confidence of investors but the increasing debt is a concern among many.
“2018 is set to be a promising year for Kenya and the East African region. We have started to see the recovery of investor confidence due to the return of political stability in Kenya,” stated Control Risks.
Control Risks notes that Kenya still has a pending first portion of a Eurobond worth USD 774.8 million in 2018 which might trigger the government to focus attention on controlling public borrowing and spending before debt becoming unmanageable.
Among other risks that are likely to affect investment in the East African region includes:
- Lingering debt crisis that raised reputational risks especially for economically potential countries such as Kenya and Ethiopia. Investors are likely to have concerns over the sustainability of borrowing over the long term.
- Increased vulnerabilities for investors due to regional political cooperation.
- The existing tension between Kenya’s national government and the county governments may generate new political risks to investors.
- Regulatory risks in Tanzania. There has been an increased unpredictable policymaking in Tanzania that will continue to present major regulatory risks among investors.