Unpredictable government policies have overtaken tax incentives as the biggest concern for investors considering Kenya, signalling a shift in what multinational companies now value when choosing investment destinations, as reported by Business Daily.
While incentives remain important, investors are increasingly prioritising policy stability and regulatory certainty before committing long-term capital.
The concerns come despite Kenya recording a strong performance in attracting foreign direct investment (FDI). According to the 2026 World Investment Report by the United Nations Conference on Trade and Development (UNCTAD), the country attracted a record $3.2 billion (Ksh.413.6 billion) in FDI last year, representing a 37.7% increase from the revised $2.32 billion (Ksh.299.9 billion) recorded in 2024.
Kenya Investment Authority (Invest Kenya) Chief Executive John Mwendwa said policy predictability has become the issue most frequently raised by prospective investors during engagements with the agency.
He said investors require a stable policy, tax and regulatory environment to accurately project returns and make informed long-term investment decisions.
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According to Mwendwa, abrupt policy changes introduced without sufficient consultation or advance notice often force businesses to revise investment assumptions after capital has already been committed, creating uncertainty and increasing investment risk.
Beyond policy consistency, investors have also highlighted delays in regulatory approvals, including company registration, land titling, licensing and work permit processing, as significant obstacles to doing business in Kenya. In response, Invest Kenya has established an investment deal room that brings together government agencies to fast-track approvals and resolve bottlenecks affecting strategic investment projects.
Business lobby groups have echoed these concerns, arguing that excessive bureaucracy, overlapping national and county regulations, and an expanding compliance burden have increased the cost of doing business.
The Kenya Association of Manufacturers (KAM) says lengthy licensing procedures and multiple regulatory requirements have caused some investors to postpone or abandon planned projects.
While Kenya continues to market itself through tax incentives, Special Economic Zones and investment promotion initiatives, officials acknowledge that today’s investors assess a much broader ecosystem. Factors such as skilled labour, reliable infrastructure, affordable energy, efficient public institutions, market access and confidence in long-term policy stability are increasingly influencing investment decisions.
Despite the challenges, Invest Kenya maintains that the country remains an attractive investment destination, citing its skilled workforce, abundant renewable energy and preferential access to major export markets across Africa, the United States, the United Kingdom, the United Arab Emirates and China as key competitive advantages
