Investor confidence in Kenya declining, Government told

By Benson Kathuri and Reuters

Politicians and the Government should address the declining investor confidence caused mainly by continued political disagreements, Standard Group Deputy Chairman and Strategy Advisor Paul Melly has said.

Mr Melly said the business community was becoming concerned over the political bickering among partners in the Grand Coalition Government and asked politicians to fix the problem immediately.

"Investors want an environment that is predictable. Politicians should support and not scare away investment," Melly said when he took Commercial Bank of Africa senior managers on a tour of the Standard Centre on Mombasa Road.

His concerns come barely a day after a survey by an auditing firm PricewaterhouseCoopers (PWC) disclosed that business leaders in the East African region are more concerned about the impact of political instability on business prospects than the global economic downturn.

The PWC survey showed that the CEOs are also the most optimistic in the world about growth possibilities this year, with more than half predicting increased revenue this year.

Melly said both local and foreign investors would only commit themselves to long-term investment if they were confident that the business environment would remain predictable and sustainable in the long–run. The country has over the last week witnessed heightened accusations and counter accusations from the two parties that make the coalition government.

CBA managing director Isaac Awuondo said banks were willing to lend to all commercial sectors but also said confidence was required to encourage borrowers to seek long-term credit facilities.

"We have witnessed local companies, including the Standard Group make long term commitment," said Awuondo referring to the multi-billion shilling centre that is in its final stages of completion.

CBA, that has been the financial partner in the project, said it was willing to enter into partnership with companies in all sectors with such long-term plans.

In the poll of 187 CEOs and business heads from Kenya, Uganda, Tanzania and Rwanda, 30 per cent cited politics as a long-term worry, versus eight per cent mentioning the world slump. "The political situation at the moment is even more precarious than at the end of last year," said Charles Muchene, who heads the Kenya office of PricewaterhouseCoopers, which carried out the survey at the end of 2008.

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