Government and Policy

The Toxic Business Environment In Kenya: Why Ruto’s Government Is the Root Of The Economic Malaise

BY Steve Biko Wafula · October 9, 2024 06:10 pm

KEY POINTS

KEY TAKEAWAYS

This government has failed Kenyans by turning a once-promising economy into a hostile zone for business. The administration’s toxic policies, selective incentives, and rampant corruption have made doing business in Kenya not only difficult but perilous.

Kenya once held promise as a beacon of business opportunity in Africa, a gateway to East Africa’s growing market. Today, however, the reality couldn’t be further from that dream. Businesses, both local and foreign, are quickly learning that venturing into Kenya’s current political and economic landscape is nothing short of a perilous journey, littered with barriers placed deliberately by the very government that should be fostering growth. In particular, Ruto’s administration has exhibited actions and policies that have left business owners frustrated, overburdened, and abandoned. The toxic atmosphere being created is pushing away genuine business opportunities, and it is the Kenyan people who suffer most in the end.

Corruption runs rampant, deeply rooted in every governmental layer, making it nearly impossible for an honest entrepreneur to make strides. To start a business in Kenya today, one is expected to grease the wheels of bureaucracy at every turn—licenses, permits, tax compliance—all come with an additional price tag that has nothing to do with government fees. This systematic culture has only worsened under Ruto’s government, which has shown no meaningful effort to curtail it. Instead, they foster a mindset that rewards the corrupt, while punishing those who attempt to follow the law.

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It has become glaringly evident that to survive in Kenya’s business environment today, one must either play along with the corrupt system or face the harsh reality of slow progress, setbacks, and a constant barrage of financial penalties. This forced compliance has made many lose hope in building enterprises here, forcing honest businesses out of the market while leaving room for corrupt and powerful enterprises to thrive. Ruto’s government has left the regulatory mechanisms intentionally weak, allowing allies and those willing to pay their way to operate unchecked, while legitimate businesses are sidelined.

For any business looking to thrive in Kenya, consistent electricity and stable infrastructure are essential. Yet, under the current administration, these basics have turned into luxuries. Power outages are rampant, and accessing stable infrastructure feels like a distant dream. It’s ironic that in a country seeking foreign investment and development, the state has been unable to ensure steady power—a basic requirement for industries to operate effectively. The government’s misallocation of resources in favor of grandiose projects rather than upgrading core infrastructure has only deepened this crisis. When the very power to run a factory is sporadic, businesses face uncountable losses, and productivity plunges.

Ruto’s government has also shown a penchant for over-regulation in some sectors while neglecting others. Rather than offering support to budding businesses, the administration has imposed arbitrary rules and restrictions that feel more like deterrents than facilitators. Take, for example, the introduction of multiple, overlapping tax policies that have not only confused but also burdened business owners. These tax laws, often poorly thought out and inadequately communicated, serve as traps that squeeze every last coin out of entrepreneurs and businesses, creating an environment that punishes compliance while rewarding evasion. Ruto’s administration seems more focused on extracting as much revenue as possible from businesses, even if it means crippling them.

The judiciary, which should serve as a sanctuary for aggrieved businesses seeking justice, has itself been compromised. Delays, favoritism, and political interference are now the norm, leaving little hope for businesses that face unfair treatment. For those seeking fair arbitration, the process has become nothing but a mirage. Cases involving government interests or those of powerful allies are often fast-tracked or quietly dismissed, while legitimate disputes brought forward by struggling business owners are shelved. When justice can no longer be relied upon, the foundation of trust in doing business crumbles, and Kenya’s business environment becomes a hostile zone where might triumphs over right.

Investment incentives promised by the government often appear on paper but are nonexistent in practice. The very investors targeted by these promises are later slapped with countless fees, fines, and hidden charges that make the benefits vanish. Meanwhile, connected entities benefit freely from duty waivers and tax reductions without contributing anything substantial to the economy. Ruto’s administration has been blatant in this selective application of incentives, sidelining those who genuinely seek to improve Kenya’s economic standing. This behavior sends a clear message that only those willing to play by corrupt rules can survive here, further discouraging legitimate investors.