Kenya: Ruto announces a raft of tax incentives to attract investors

Kenya's President William Ruto recently announced a series of tax incentives aimed at attracting foreign investors to the country, amidst ongoing protests, rising inflation, and high debt levels. The move comes at a crucial time as the global economy faces a contraction and Kenya seeks to stabilize its economic landscape. CNBC Africa spoke with Aly-Khan Satchu, CEO of Rich Management LTD, to discuss the impact of these incentives and the current situation in Nairobi. The mood in Nairobi has seen a shift following the recent protests that have plagued the city over the past two weeks. With the president and the opposition leader, Raila Odinga, opting for a more conciliatory approach, there seems to be a sense of relief among the citizens and investors. The protests, which reportedly cost the country about $20 million per day, have been called off, paving the way for stability and a possible reconciliation in the days to come. Aly-Khan Satchu highlighted the importance of presenting a stable environment to both local and foreign investors amidst the challenges Kenya is facing. He noted that similar protests have been witnessed in other African countries like South Africa, Tunisia, and Nigeria, underscoring the need for a peaceful and conducive investment climate. President Ruto's tax incentives aim to address the issue of revenue collection, which has been a significant challenge for the government. Satchu described the previous approach of imposing taxes on various sectors as suboptimal and praised the president's decision to offer a more investor-friendly environment. The incentives include expedited VAT refunds within six months and the adjustment of the digital services tax to align with the OECD framework. Satchu emphasized the importance of these measures in promoting revenue collection and boosting Kenya's position as a favorable investment destination. The adjustments to the digital services tax were particularly lauded for making Kenya more attractive to international businesses and supporting the growth of the digital economy. President Ruto's move to abolish the 30% local shareholding rule further demonstrates a commitment to creating a conducive environment for businesses to thrive. By allowing companies to retain full ownership of their businesses, the government is sending a positive signal to both local and foreign investors. While concerns have been raised by local businesses regarding competition from multinational corporations, Satchu believes that a more vibrant digital economy will benefit all players. He acknowledged the challenge of competing for talent due to salary disparities but emphasized the potential for growth and prosperity that comes with increased investment and market participation. Overall, the tax incentives introduced by President Ruto signal a shift towards a more investor-friendly environment in Kenya. These measures, coupled with efforts to address stability and economic challenges, are likely to boost investor confidence and pave the way for sustained growth and development in the country.