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Why Kenyans are rushing for expensive investment visas

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Many economies are attracting the wealthy with investment visas and passports. PHOTO | SHUTTERSTOCK

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Summary

  • High net-worth Kenyans are taking advantage of the door to acquire foreign passports under what is known as citizenship by investment (CBI).
  • The investment options are varied where one can make a direct non-refundable contribution to the government or invest in real estate or other such sectors in the country offering the programme.

The promulgation of a new Constitution in Kenya in August 2010 opened the door for Kenyans to acquire dual citizenship.

High net-worth Kenyans are taking advantage of the door to acquire foreign passports under what is known as citizenship by investment (CBI).

In recent years, Kenyan elites, whose numbers have grown significantly in the past decade, have amped up their appetite for such arrangements, seeing them as an attractive plan B for their investments and to hedge against any unforeseen problems back home.

These individuals are also driven to look abroad by a struggling economy, high crime statistics and political instability in parts of the region.

“The number of inquiries we have had from Kenya have tripled compared to 2011 when the option of dual citizenship came into play,” says Micha-Rose Emmett, chief executive officer of CS Global Partners, a marketing and legal advisory agency specialising in foreign direct investment (FDI).

She defines citizenship by investment as a legal process where an individual can obtain citizenship in a second country by making an investment, whose minimum amount is usually defined.

The investment options are varied where one can make a direct non-refundable contribution to the government or invest in real estate or other such sectors in the country offering the programme.

This is in exchange for citizenship for life, with the right to live and work in the country, entitlement to dual citizenship, ability to pass on citizenship to future generations as well as Visa-free travel to other countries and territories.

Ms Emmett says for long, the scheme has not been attracting many takers, but as the economic power of Africans is increasing, many are now opting for and affording to take up the programme.

Changing world

As such, many see it as a way to do business more effectively with powerhouse economies such as the US and Europe, but others also take it up in order to have an additional option for holidays or a second place to call home.

According to Ms Emmett, the gates opened for Kenyans immediately the 2010 Constitution was promulgated, allowing dual citizenship. Before one had to renounce his Kenyan citizenship to acquire a new one.

“What perhaps used to be seen as an unconventional avenue to obtain a second passport is now something that is highly sought after. The world has changed, and the only certain thing is that things are uncertain. No-one can afford not to have a back-up plan, whether it ends up being for business, leisure or family reasons,” she explains.

The South African-born lawyer opines that the bureaucracy of obtaining visas for most African passport holders means that travelling has generally been a challenge, but by obtaining dual citizenship they are now able to gain easier access to the rest of the world.

The opportunity for investing your way into the roll of citizens of another country previously remained unknown to many Kenyans, perhaps due to the former Constitution’s limitation of dual citizenship.

Now that Kenya has opened up this option, there has been a number of firms—mainly legal firms— making a beeline for the country to try and attract takers for the plan, with these firms acting as their agents.

In the past few years, a US private equity firm known as Atlantic American Partners has been making a foray into the country, marketing the US visa known as EB-5 (employment based-fifth preference visa).

Long waiting period

Under this US investor visa programme, interested (and eligible) individuals are required to fork out $500,000 (Sh55.5 million) to qualify for the visa, with this money put into a job creating investment in the US.

Atlantic American facilitates the application process and acts as a trustee and investor of the funds.

Under the arrangement, applicants are also charged Sh2 million in legal fees and Sh5million ($45,000) in investment management fees on top of the Sh55.5 million investment amount.

Successful applicants are given back the Sh55.5 million once they achieve permanent resident status — normally after five years — with citizenship following about a year later.

In his last visit to the country in July last year, Atlantic American managing director Daniel Ryan told the Business Daily that they had signed up more than 20 high-net worth Kenyans to the programme in just seven months, while 20 others were in the process of filling in paperwork and getting vetted for suitability to the programme.

“It takes about six months for people to get ready to invest, given that most of them do not have the $500,000 instantly at hand,” Mr Ryan told the Business Daily.

It is, however not just the leading global economies that are attracting the wealthy with the investment visas and passports, especially with the difficulties and relatively higher costs.

Ms Emmett argues that while Kenyans have for a long time been interested in applying for second citizenship in Europe, particularly the UK, the options have been narrowing with stricter regulations and expensive terms put in place forcing many to look for alternatives.

This, she adds, has seen most of wealthy Kenyans turn to Caribbean countries for dual citizenship with the islands proving more attractive because their investment threshold is not that expensive, making it accessible even to the middle class.

“Over the last five years, we have noted that Kenyans have searched predominantly for UK citizenship but since the journey to achieve this is long, Kenyans then look at alternatives, including the Caribbean,” says Ms Emmett.

The popular Caribbean destinations include St Lucia, St Kitts and Nevis, Antigua and Barbuda, Grenada and Dominica.

They are sought after as they offer a luxurious lifestyle combined with accessibility to the US, which appeals to many Kenyan entrepreneurs, business owners and those wanting a better life for their family.

CS Global Partners promotes programmes for St Lucia, St Kitts and Nevis, Antigua and Barbuda, Grenada, Malta and Dominica. The firm says that in the last year, 90 percent of the enquiries from Kenyans have been for the Caribbean options with the enquiries increasing by 60 percent between 2019 and 2020.

For instance, the Antigua and Barbuda CBI programme, established in 2013, grants one citizenship through either investing in a national development fund, real estate, business approved by the country’s Cabinet or in the University of the West Indies Fund with minimum investment between $100,000 and $400,000. (Sh11.1 million to Sh44.4 million).

For St Kitts and Nevis, an applicant can apply for citizenship by either donating to the country’s Sustainable Growth Fund or by investing in pre-approved real estate for between $150,000 (Sh16.7 million) and $400,000.

Launched in 2016, St Lucia’s programme, the newest citizenship by investment programme in the Caribbean, offers four investment options including real estate, the national economic fund, pre-approved enterprise project or in government bonds for between 100,000 and $1 million (Sh111 million) depending on the option.

Dominica requires an applicant to either invest in the Economic Diversification Fund (EDF), a Government fund that supports socio-economic initiatives, or purchase Government-approved property under the real estate option, which must be held for a minimum of three years with minimum investment between $100,000 and $200,000 (Sh22.2 million).

On the other hand, Malta, Montenegro, Turkey, Austria and Cyprus (which has since been discontinued) offer easier entry into Europe. Jordan in Asia and the tiny islands of Vanuatu in Oceania are also part of countries with the programme.