Kenya’s Declining Foreign Direct Investment (FDI) and investment inflows amidst uncertainty and social unrest are worrying.

That the country shed more than $345 million worth of FDI in just three months must raise alarm bells about the state of the economy.

Further, data from the Central Bank of Kenya (CBK) reveals a staggering 34 per cent dip in net financial account inflows during the first quarter of this year from $1 billion, compared to the same period in 2022, to the current figure of $660 million. The concerns have been exacerbated with Kenya’s outlook being revised to negative by Fitch Ratings, to further signal external financing constraints, rising costs and fiscal uncertainty.

A country’s financial account is a crucial indicator of its economic health, and as such, a significant decline spells trouble and calls for immediate action to salvage the situation, by sorting out factors contributing to this worrisome situation.

This calls for the state and private sector to focus on the root causes of the decline in foreign direct investment and come up with a comprehensive approach to political stability, business policies, anti-corruption efforts, infrastructure development, human capital investment and proactive diplomacy. We must tweak politics to enhance stability and come up with clear and consistent policies.

For the government to create a predictable and secure political landscape this will assure investors that their businesses will be protected and it must start with the political elite, some of whom like Trade Cabinet Secretary Moses Kuria, have been misbehaving lately hurting economic prospects. While at it, the country needs genuine efforts to combat corruption as part of a package to help restore investor confidence and encourage foreign capital inflows. The government must also implement measures to restore fiscal discipline, build international reserves, and address both local and external debt obligations which are part of the main concerns facing the country.

These can be achieved with Kenya working towards proactive diplomacy and strategic partnerships with key trading partners and investors to help strengthen economic ties and attract foreign investments. In addition to government actions, opposition leaders and stakeholders must prioritise the needs of ordinary citizens over their political gains.