Why we need to go beyond the makeover of our investment laws

After two decades, the Investment Promotion Act is due for an overhaul and the Investment Promotion and Facilitation Bill 2023 is the result.

The Bill has been the subject of debate as we assess whether it goes far enough to attract impactful investments while shielding us from bandits masquerading as legit investors.

On the credit side of the ledger, the Bill provides for investors injecting capital above $ 500,000 for foreigners or Sh5 million for locals to apply for an investment certificate, which should take no more than 20 working days to obtain.

Once certified, investors are primed to expediently receive the licences indicated on their certificate. If a licence is not issued within 12 months of the certificate date, the remedy proposed by the Bill is to deem that licence to have been issued. Importantly, licences concerned with the environment, health or security have been carved out of the deeming provision.

Foreign investors who are not eligible for an investment certificate must still register with Keninvest’s successor corporation. Such mandatory registration has the dual advantage of providing visibility and data on foreign investment activity while protecting consumers from rogue investors who would otherwise operate in the shadows.

A positive note in the Bill is that investors can access a centralised investment facility to receive coordinated services from an expanded list of government agencies, including those handling labour compliance, land administration, development control and construction.

Recognising that a warm welcome is only the first step in a long investment journey, the Bill provides for investors to receive aftercare services to facilitate growth of their investments. The nature of the aftercare services is not prescribed, which hopefully means that they will be interpreted as broadly and flexibly as possible.

Another promising element of the Bill is the establishment of an Investment, Trade and Industry Tribunal to resolve disputes, including those connected with the grant of a certificate or licence. The tribunal should enable swift and fair resolution of disputes for investors, aided by its power to call in assessors with special knowledge to act in an advisory capacity where necessary.

In the final analysis, the Bill’s ability to spur greater investment is dependent on having an environment where capital can generate a reasonable and predictable return. If Kenya is perceived to have an aggressive and uncertain tax and regulatory environment compared to other countries, then upgrading our investment laws may not yield the desired harvest.

The writer is a Director in the Projects, Energy & Restructuring Practice at DLA Piper Africa, Kenya (IKM Advocates).