Avoid situations that drive away foreign direct investment

Part of the Standard Gauge Railway (SGR) line freight train haul that has attracted foreign investors. [Photo/Standard]

A visit to Koitalel arap Samoei Museum in Nandi County is incomplete without a lecture on the famous Nandi bear. On display are the remains of a furry creature, the skeleton of which bears similarity to that of a large rodent or a dog of sorts. Also known as Chemisit in the local Nandi dialect, the bear was said to have hunting prowess of near mythical proportions. Today, the Nandi bear is referred to as a “cryptid”, which the Urban Dictionary defines as “animals which are commonly believed not to exist but actually may.”

But Chemase Village in Nandi County does exist. That its name may be a derivative of Chemisit the Nandi bear is arguable. What is indisputable is that Chemase is a veritable garden of Eden, flowing with milk, honey and gold. The gold here is not the figurative type but that real precious mineral much sought after the world over. Chemase featured recently in a segment of news. A company called Karebe Gold Mining Limited has over the years, been commercially extracting the precious metal. There has been some community disquiet over the company.

There have been allegations of human rights violations, a disregard of a Memorandum of Understanding between Karebe and the locals and claims of inadequate compensation for leased land. But what is unsaid is that Karebe employs lots of locals and that the land owners were previously, satisfied landlords. The furore, it appears, is a typical case of American poet Emily Dickinson’s poem, “Tell all the truth but tell it slant.”

Negativity

But the ramifications of that slant go further than Chemase. There is an emerging worrying trend that is gaining traction on the national scene. It seems politics is at work running out of town much needed Foreign Direct Investment (FDI). FDI in the simplest terms, is the investment by foreigners in the enterprise of a host country in which they have direct control.

Some of FDI benefits include technology spill-overs, human capital formation and contribution to international trade integration. These contribute to economic growth and consequently, the alleviation of poverty. Kenya’s attractiveness to FDI hit a six year low recently while that of Uganda, Tanzania and Rwanda increased.

While last year’s drawn-out electioneering contributed largely to this decline, our local brand of resource nationalism also exacerbated the situation. Whilst there has been no outright expropriation of any foreign company’s assets, there have been significant threats from politicians and their allies. It appears no region in this country is immune. Dominion Foods, an American company has all but pulled out of Siaya, after altercations with leaders.

A senior manager at Mumias Sugar in Western Kenya fled the country last year amid allegations of extortion attempts by politicians. Multi-nationals with interests in large scale tea production in the North and South Rift are facing uncertainties over the threats to terminate land leases. The same is said of large scale pineapple growing regions of Central Kenya. Coast region has its controversies over titanium mining. Even where there are legitimate grievances among the employees of foreign

companies in Kenya, these are lost when presented by political figures because of the perception that they (politicians) cannot be trusted.

The solution

But there is a way out for Kenya if we are to attain middle income status. The easy part is bringing FDI into the country. Protecting it so that it realizes returns for Kenya as the host country is where the hard work is. That’s the rub. The foremost thing to do is the facilitation of a business environment that is inured from politics. To that end, the government must be deliberate about a sensitization policy on the need for and benefits of FDI. A success story of such effort is with regards to the Standard Gauge Railway. At the onset, SGR had faced resistance.

The Chinese behind its funding and construction were viewed with suspicion and visceral fear. But by impressing on the populace the need for SGR by paid up adverts and branding through words with emotive connections like “Madaraka Express,” SGR is now embraced by all and sundry. Its support is now seen as nothing less than one’s patriotic duty even among its erstwhile detractors.

Leaders who foment trouble against investors must be viewed as saboteurs of the economy and dealt with accordingly. Disputes may be resolved by recourse to the Industrial court and need not lend themselves to extraneous interventions from political busybodies.

There is a sense of urgency for the requisite framework that will enable us gain back our regional ascendancy in attracting FDI. So far, our export economy has been driven by the agricultural sector. As we contemplate the shift to oil and other mineral exports, we must ensure that the scourge of black gold does not afflict us as it has other African countries. We must ensure that FDI does not become as mythical as the Nandi bear. 

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foreign investments