A recent report released by the US government indicated that bribery and corruption in the East African nation are close to causing significant harm to the business relationships between Kenya and the United States.
The National Trade Estimate (NTE) Report on Foreign Trade Barriers, highlights the growing apprehension regarding bribery and corruption in Kenya as a significant issue when engaging in business activities within the East African nation.
The report read in part; “corruption remains a substantial barrier to doing business in Kenya. U.S. firms continue to report challenges competing against foreign firms that are willing to ignore legal standards or engage in bribery and other forms of corruption,”
“Corruption is widely reported to affect government procurements at the national and county levels. Kenya has not effectively implemented its anti-corruption laws. U.S. firms routinely report direct requests for bribes from all levels of the Kenyan Government,” it adds.
The report emphasized the impact of major US companies missing out on Kenyan contracts because they choose not to engage in bribery or corrupt dealings with Kenyan officials.
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The report further highlighted the limited success achieved by Kenyan authorities in addressing the issue of bribery and corruption, attributing it to the accumulation of pending cases and persistent misconduct.
“Despite efforts to increase efficiency and public confidence in the judiciary, the backlog of cases and continued corruption undermine the judicial system’s credibility and effectiveness. While judicial reforms are moving forward, bribes, extortion, and political considerations continue to influence court cases,” the report states.
The report also addressed the difficulties encountered by non-nationals attempting to acquire real estate in the nation. It highlighted the restrictions imposed by Kenyan legislation on the property rights of foreigners, preventing them from owning properties within the country.
The ban is a result of the 2010 Kenyan constitution, which stipulates that non-citizens are prohibited from owning freehold land in Kenya. Instead, they are only permitted to hold leasehold titles for a maximum duration of 99 years.
The report raised concerns regarding the uncertainties encountered during the process of acquiring a definitive title for undeveloped land.
According to the report, US investors who are looking to purchase an undeveloped piece of land face the potential risk of obtaining counterfeit title deeds or lands that have multiple deeds and authorized sales.
Bilateral Economic Relations
Kenya’s diversified economy has produced an average annual GDP growth of five percent over the last decade, and an increasing number of U.S. companies have established their regional or Africa-wide headquarters in Nairobi. Kenya remains East Africa’s largest and most important business, financial, and transportation hub, with 80 percent of East Africa’s trade flowing through Mombasa Port. The United States is a top three destination for Kenya’s exports and the seventh largest source of its imports. Kenya enjoys preferential trade benefits under the African Growth and Opportunity Act through 2025. U.S. imports from Kenya include apparel, coffee, and tea. More than 120,000 U.S. citizens visited the country in each of the last two years, making the United States the leading source of tourists to Kenya. Launched in 2018, Kenya Airways’ three-times-per-week New York-Nairobi direct flights provide seamless connections. U.S. private sector interest in Kenya remains robust, with numerous U.S. companies engaged in Kenya, especially in the technology, consumer goods, banking and finance, and healthcare sectors. The United States’ existing trade and investment framework agreements with both the East African Community and the Common Market for Eastern and Southern Africa include Kenya as a member state.
On July 14, 2022, the United States and Kenya announced the launch of the U.S.-Kenya Strategic Trade and Investment Partnership. Both governments agreed to pursue enhanced engagement towards a bilateral trade agreement that would increase investment; promote sustainable and inclusive economic growth; benefit workers, consumers, and businesses; and support African regional economic integration. Key areas for engagement include agriculture; anti-corruption; digital trade; environment and climate change action; good regulatory practices; micro, small, and medium enterprises; promoting workers’ rights and protections; supporting participation of women, youth, and others in trade; standards collaboration; and trade facilitation and customs procedures.
What You Should Know
US companies operating in Kenya are involved in a diverse range of industries, including Construction, Financial Services, Telecommunications, Energy, Manufacturing, and Technology.
The United States and Kenya have one of the largest trade relationships globally, with bilateral investment and trade amounting to approximately $1.6 trillion each year.
Corruption in African states has been recognized as a significant hindrance to the political, economic, and social advancement of the continent.
Written by Adeluola Biola
