NAIROBI, Kenya, Jul 30 – Kenya must rein in public spending, deliver predictable economic policies and strengthen corporate governance to unlock private sector investment and sustain long-term growth, experts said during the Capital FM Investment, Trade and Opportunity Town Hall at Strathmore University.
The panelists argued that while the economy is showing signs of recovery, persistent structural challenges—including rising public debt, policy uncertainty and weak investment governance—continue to limit business expansion and investor confidence.
Mentoria Economics Chief Economist Ken Gichinga said the government’s growing debt burden has increasingly diverted resources away from productive sectors, making it harder for businesses to access affordable financing.
He noted that nearly half of government revenue is now spent on debt servicing and pension obligations, up from about 13 percent two decades ago, significantly reducing fiscal space for development and private sector support.
“Almost 50 percent of revenue collected is now going towards servicing debt,” Gichinga said.
“That crowds out the private sector because money that should finance businesses ends up financing government borrowing.”
He added that high-yield Treasury securities have made lending to government more attractive than extending credit to businesses, slowing private sector investment despite a recent recovery in credit growth.
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Gichinga called for fiscal discipline through slower expenditure growth and tax reforms that broaden the revenue base without discouraging investment.
“We need to rethink our tax system and move towards more progressive taxation.”
“Reducing the deficit will lower borrowing and allow more money to flow to the private sector.”
Strathmore University finance lecturer Mercy Kano said policy predictability remains one of the most important factors influencing investor confidence, warning that frequent regulatory changes undermine long-term business planning.
She urged policymakers to prioritise sectors with the greatest potential to create jobs, particularly agriculture and agro-processing, arguing that value addition remains critical to expanding manufacturing and boosting exports.
“Predictability is key. We should encourage consistency in our regulations instead of short-term laws that discourage investors.”
“Agriculture and value addition remain among the strongest opportunities for creating jobs and growing the economy.”
Kano said agriculture would remain one of Kenya’s most resilient investment sectors despite rapid technological change and called for policies that encourage greater youth participation in agribusiness.
Meanwhile, I&M Bank Head of Investor Services Silas Mutuku urged investors to place greater emphasis on governance, environmental standards and risk management when evaluating investment opportunities.
He said recent global shocks—including the COVID-19 pandemic, geopolitical tensions and currency volatility—have underscored the importance of investing in businesses with strong leadership and resilient operating models.
“Investors need to examine how companies are governed and who is managing them before investing.”
“Good environmental, social and governance practices, together with strong risk management, are becoming critical.”
Mutuku also encouraged investors to adopt a long-term perspective, arguing that sustainable wealth creation is built on disciplined, patient capital rather than short-term returns.
The experts agreed that restoring investor confidence will require prudent fiscal management, regulatory certainty and stronger governance standards to ensure private capital plays a greater role in financing Kenya’s long-term economic transformation.
