Friendly policies needed to attract offshore wealth
Friday March 03 2023
The repatriation of billions by wealthy Kenyans into the country for investment in property and bonds presents the country with an opportunity to repair its economy without having to be overly dependent on fickle foreign capital.
The norm over the years has been for the wealthy to cart away their money to foreign capitals to buy property and shares, in the name of diversifying their portfolios.
Another reason has been to avoid local taxes, especially for those whose destination of choice has been the numerous tax havens around the globe.
In the meantime, the country has had to depend on foreign direct investments which, as we have seen in times of political heat or economic uncertainty, can dry up or exit to western markets.
This is why inflows of wealth owned by Kenyans are important and should be encouraged through favourable policies and ample protection of private enterprises.
This would boost the inflows even when there is no global turmoil of the kind that has triggered the current round of wealth repatriation.
For instance, the local stock market has suffered from foreign investor exits, and could do with a boost from increased local investor trading and inflows.
These inward investments can also work well for the property sector, which has been slowing down lately compared to the rapid growth seen in the previous decade.
There is also an advantage in it for those bringing back money into the country.
By investing and paying taxes locally, they also help grow the Kenyan economy, which eventually benefits them in the long run through the appreciation of their investments and earnings.