Economy

British firms blame corruption for low investments in Kenya

mar

UK’s High Commissioner to Kenya Jane Marriott. PHOTO | COURTESY | BRITISH HIGH COMMISSION, NAIROBI

British firms have blamed corruption as an impediment in the country’s business environment, but they maintain Kenya remains an investment hotspot in Africa for profitable investments.

The firms under their business lobby say they will back the private sector's fight against graft as part of the business reforms they hope to achieve.

This is after Kenya signed a Memorandum of Understanding (MoU) with the British Chamber of Commerce Kenya (BCCK) to promote Kenya’s business climate reforms agenda.

Speaking during the signing of the MoU, Principal Secretary, State Department for East African Community in the Ministry of East African Community and Regional Development Dr Kevit Desai, said that business integrity is the foundation of international trade.

“While corruption is a global issue, it is a concern that has been raised in our discussions with businesses and international investors,” he said.

“This MoU will create a platform to reaffirm Kenya’s commitment to strengthening the business climate. It will also build private sector participation in the digitisation and automation of government services in procurement, revenue collection and cross-border trade.”

The MoU will address some of the findings from the recent survey by the British lobby, which measured the impact of corruption in the private sector and recommends areas for reform.

The survey found that 66 percent of the respondent companies in Kenya experience negative impacts on their businesses as a result of corruption.

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Of these, 37 percent of respondent companies report financial impacts through loss of annual earnings or future investment.

Recommendations from the private sector include accelerating the digitisation of government service delivery, as well as including more integrity content and programming in industry standards and professional development.

Survey respondents also called for extensions on the debarment of companies and directors found culpable for integrity lapses.

The UK’s High Commissioner to Kenya, Jane Marriott, said that improving business integrity underpins both the UK-Kenya Strategic partnership and the building of a prosperous, safer, and healthier Kenya.

“The lessons from anti-corruption efforts in the UK, and globally, show the importance of building coalitions across government and civil society, as well as working with reformers to make incremental gains,” she said.

BCCK chairperson, Sonal Sejpal, said the work done by the Chamber to generate evidence-based recommendations for changes to integrity policies and practices, has shown that Kenya has a strong legal framework to combat corruption.

“The focus of this MoU is to support the private sector, the Government, and its development partners on enhancing enforcement and implementation,” she said.

An estimated 150 British enterprises are currently in Kenya, and bilateral trade between Kenya and the United Kingdom is worth Sh167 billion.

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The MoU comes at a time British corporate giants such as British luxury carmaker Land Rover, Standard Chartered Bank, British American Tobacco (BAT), and Unilever — which once straddled the Kenyan consumer goods market like a colossus — are struggling to fend off a stiff challenge from the more aggressive and flexible rivals.

Kenya’s preference for countries in the Far East for business and development financing under retired President Mwai Kibaki’s reign and later President Uhuru Kenyatta has dislodged European power-houses including the UK from long-held positions as the leading sources of foreign direct investment (FDI).

This change in FDI pecking order has deepened in the past couple of years as the majority of developed countries — under the shock waves of debt crises — cut back on foreign investment while emerging economies search for opportunities in frontier markets.