Short-term investors shy away as polls near

Short term investors are expected to shy away from putting their money in major projects as the election period nears.

However, long term investors seem undaunted by the uncertainty of the polling mood, and are expected to keep putting up investments, especially those dealing in private equity. Long-term investment ranges between a period of three to 10 years, while short term usually hits a maximum of 16 months.

This is according to PineBridge Chief Investment Officer Nicholas Malaki. Mr Malaki says lack of certainty in the next few months will see the uptake of public instruments of investment such as Treasury bills that are favoured by short term investors go down. Also trading at the securities market is expected to go down.

He also credits the construction sector with the growth experienced this year. The economy expanded by 5.9 per cent in the first quarter of 2016. The construction sector expanded by 9.9 per cent in the same quarter.

“Construction is doing well despite the high interest rates. This is mainly because of public expenditure on the mega-construction projects going on. Private expenditure on construction is not sufficient since it is mainly funded by credit,” Malaki said.

Again as the economy continues on an upward trajectory, tourism is set to recover as a growth pillar but Malaki argues that it will soon be diluted by financial services in its contribution to general economic growth.

The financial services sector recorded a growth of 8 per cent in the first quarter of 2016, compared to a growth of 10.6 per cent registered in a similar period of 2015. Tourism posted a growth of 12.1 per cent in the first quarter of 2016, after a two year spell of poor performance largely occasioned by security concerns and economic downturn in some key tourist markets.

Malaki, however, is wary that Kenya’s position as an economic leader in East Africa is under attack from Tanzania which has sustained a stable growth of 7.2 per cent in the last two years.

Malaki contends that the land policy in Tanzania is less restrictive than in Kenya, where the Government can easily take up land for public infrastructural projects without opposition. In Kenya, the Government has to battle land compensation claims to get any meaningful projects completed, something that threatens growth. Also corruption and lack of political will are bringing Kenya down unlike in Tanzania.