Kenya: Graft Slowing Big-Ticket Investment - Moody's

From left: Ethics and Anti-Corruption Commission (EACC) chairman Eliud Wabukala, US ambassador Kyle McCarter and EACC chief executive officer Twalib Mbarak address the media at Integrity Centre on July 19, 2019.

Perception of corruption and low transparency in procurement remains a top concern for big-ticket investors looking for opportunities in Kenya, researchers at Moody's have said.

The US credit-rating firm says in the latest note on Kenya corruption has slowed down progress in improving investment climate in the five years through 2018.

Nairobi has climbed 75 places in the World Bank Group's ease of doing business rankings since 2015 to position 61 among 190 countries polled in the annual survey in 2018.

Moody's cited improved ranking in resolving insolvency, protecting minority investors and registering property as key attractions to investors chasing returns in infrastructure projects in Kenya.

Kenya requires an estimated Sh400 billion yearly for infrastructure projects such as roads, electricity plants and lines, bridges, water and irrigation.

The country, however, faces a deficit of Sh200 billion annually to meet its infrastructural financing, according to the World Bank estimates, a gap expected to be filled by private investors.

"Persistent issues around corruption will be a concern for large, capital-intensive infrastructure investment requiring years of planning, land negotiations, permits and regulatory approvals," Moody's wrote in the note.

"On the Worldwide Governance Indicators, Kenya underperforms similarly rated peers (South Africa, Nigeria, Ghana, Uganda and Tanzania), particularly in the control of corruption, where its performance has been weak."

Kenya was last year ranked 144th out of 180 countries surveyed in the Transparency International's Corruption Perceptions Index.

Corruption has become the "biggest industry" in Kenya, gulping down about a third of annual budget, the Kenya Private Sector Alliance (Kepsa) said in January, referring to an estimation by former Ethic and Anti-Corruption Commission chairman Philip Kinisu in March 2016.

Business community at the time proposed setting up of a reporting mechanism for companies and individuals convicted of corruption with a view of blacklisting firms engaged in corrupt practices and locking them out of contracts.

Kenya has been looking to entice deep-pocketed investors to participate in infrastructure development through the Public Private Partnerships whose legislation was passed in 2013.

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