NAIROBI, Kenya, Jul 30 – Kenya must provide a predictable and stable tax regime if it is to attract more domestic and foreign investment, industry experts have said, warning that frequent policy changes are increasing investor risk and undermining long-term business confidence.
Speaking during the Capital FM Investment, Trade and Opportunity Town Hall at Strathmore University, the panelists argued that while taxation is essential for funding public services, policy certainty—not just tax incentives—has become one of the most important factors influencing investment decisions.
They said investors are willing to pay taxes provided the rules remain clear, transparent and consistent throughout the life of their investments.
Sameer Raja, Assistant General Manager and Investment Advisor at I&M Capital Limited, said Kenya’s capital markets demonstrate how clear and predictable tax policies can stimulate investment.
“From an investment perspective, the tax laws are fairly clear, particularly around government securities and infrastructure bonds,” Raja said.
“Infrastructure bonds attracted significant demand because they were tax-free, and the growing focus on green bonds with tax incentives is the right direction for encouraging sustainable investment.”
He said targeted incentives and policy consistency have helped deepen Kenya’s capital markets and could mobilise more private capital into strategic sectors such as infrastructure and climate finance.
However, the panel noted that the predictability enjoyed by capital market investors has not always been replicated across the wider business environment.
Onesmus Kiema, Associate Director for Tax and Regulatory Services at KPMG East Africa, said certainty over future tax obligations is fundamental to investment planning.
“Investors always ask whether the tax system is predictable because they need certainty before committing their capital.”
“If incentives are withdrawn midway through an investment cycle, businesses can struggle to meet financial obligations after having made decisions based on earlier tax policies.”
Kiema acknowledged the government’s need to raise revenue to finance healthcare, education, infrastructure and security, but said tax reforms should be implemented in a way that preserves investor confidence.
He added that greater transparency in the use of tax revenues would also strengthen compliance and improve trust between government and taxpayers.
Meanwhile, Charles Miano, Senior Portfolio Manager at Nabo Capital, warned that policy uncertainty carries a direct economic cost by increasing the returns investors demand before committing capital.
“When investors see frequent changes in tax policy, they price that uncertainty into their investment decisions by demanding higher returns.”
“If those higher return thresholds cannot be achieved, projects simply do not happen, meaning fewer jobs, lower foreign direct investment and slower economic growth.”
Miano said adopting medium-term tax policy frameworks spanning three to five years would give businesses greater certainty and improve Kenya’s competitiveness as an investment destination.
The discussion comes as Kenya seeks to expand its tax base while maintaining private sector-led growth amid rising expenditure pressures and public debt obligations.
The experts agreed that Kenya’s long-term investment appeal will depend less on the generosity of tax incentives than on the confidence investors have that tax rules will remain stable and predictable.