Kenya Has the Second Worst Business Environment Globally, IMF

By Lynnet Okumu / Published July 15, 2022 | 1:13 pm




KEY POINTS

Most businesses are still struggling to recover from the effects of covid nineteen pandemic, which gave the country an element of surprise when it first hit.


Kenya

KEY TAKEAWAYS


According to the IMF's World Uncertainty Index (WUI), which is a means to measure economic and political uncertainty among 143 countries, Kenya’s economic and political uncertainty has risen sharply by 84 percent to 0.628 points from 0.34 to the second quarter of 2021.


According to data by the International Monetary Fund, IMF Kenya currently falls second as the country with the worst business environment globally.

Between April and June 2022, Columbia, held the worst position followed closed by Kenya whose political and economic uncertainty keeps on rising as the August general elections quickly approach.

According to the IMF’s World Uncertainty Index (WUI), which is a means to measure economic and political uncertainty among 143 countries, Kenya’s economic and political uncertainty has risen sharply by 84 percent to 0.628 points from 0.34 to the second quarter of 2021.

“The index is constructed by text-mining the country reports from the Economist Intelligence Unit (EIU), a business intelligence company that provides country reports every quarter. These reports cover each country’s economy, policies, and politics,” States the IMF.

Factors Driving the Economic Uncertainties in Kenya

  1. Electioneering Year

Most investors have already started withdrawing their investments in fear that the august elections might cause chaos and war leading to losses.

The country has faced uncertainties in the previous election years. For instance, the aftermath of the 2007 elections, which led to the loss of property, in the 2017 general elections, and the fourth quarter of 2002 when Kenyans went to the polls to vote for a change of regime after 24 years of rule by the late President Daniel Arap Moi.

Currently, the leading political aspirants Raila Odinga and William Ruto are in a tight race with opinion polls showing that they are just a few points apart.

This has prompted several investors to take a break from their big plans until the elections are over and outcomes clear.

  1. Covid 19 Pandemic

Most businesses are still struggling to recover from the effects of covid nineteen pandemic, which gave the country an element of surprise when it first hit.

The uncertainty index due to covid 19 rose to 0.452 in the second quarter when the country recorded its first case.

  1. Russia-Ukraine War

IMF data shows that even though the economy grew by 6.8 percent in the first three months of 2022, most investors have cited that apart from the approaching elections, the Russia-Ukraine conflict is also a reason for their jitteriness.

The report further states that the country’s GDP is likely to grow at a slower pace in 2022 than last year, attributed to the pending elections, the war in Ukraine, and a continuous drought.






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