Kenya's Unrest: A Growing Risk for Investors

Kenya's recent history of police brutality, civil unrest, and systemic governance failures has reached a critical juncture. From the violent crackdowns on protests against regressive tax policies to the unresolved killings of activists like Albert Ojwang, the country faces mounting pressure from international bodies, civil society, and investors. For those with capital tied to Kenya's economy—whether through equities, bonds, or infrastructure projects—the risks of escalating instability are becoming impossible to ignore. This article examines how persistent civil unrest, governance challenges, and international scrutiny are reshaping Kenya's investment landscape, with implications for foreign direct investment (FDI), sovereign creditworthiness, and key sectors like tourism and construction.

The Escalation of Civil Unrest and Governance Risks

The 2023–2025 protests against the Finance Bills—driven by IMF-backed policies that disproportionately burdened low-income Kenyans—exposed the fragility of the government's social contract. Over 50 deaths in 2023 alone were attributed to police violence, while Amnesty International documented cases of live ammunition and tear gas used against crowds. The invasion of parliament in June 2024, followed by mass abductions and torture, underscored the security forces' willingness to escalate violence.

The data paints a bleak picture. The Kenya National Commission on Human Rights (KNCHR) reported over 3,000 individuals targeted for arrest during the 2024 protests, with many “forcefully disappeared.” Meanwhile, the Independent Policing Oversight Authority (IPOA) noted systemic failures in holding officers accountable, with only 28 out of 136 documented extrajudicial killings in 2023 reaching courts. President Ruto's public threats to judges and civil society—such as accusing NGOs of “funding protests”—further erode institutional trust.

Impact on Foreign Direct Investment (FDI)

FDI has long been a pillar of Kenya's economic growth, particularly in tourism, infrastructure, and tech. However, sustained unrest and governance risks are now deterring capital.

• Tourism Sector Vulnerability: Kenya's tourism sector, which accounts for 7% of GDP, relies on stability and safety. Protests in Nairobi and Mombasa—paired with reports of police violence—could deter tourists. The UK embassy's recent call for investigations into police killings sends a chilling signal to Western investors, who might reassess exposure to politically sensitive regions.
• Infrastructure Projects at Risk: Major infrastructure initiatives, such as the Standard Gauge Railway and port expansions, depend on social license. Communities near projects may increasingly resist if perceived as benefiting elites while security forces repress dissent.

Sovereign Creditworthiness Under Pressure

Kenya's credit ratings—already at “B+” by Fitch and “B” by Moody's—are under threat. Persistent protests and governance failures could lead to further downgrades, raising borrowing costs for a government that relies on external debt to fund deficits.

• Debt Sustainability: Kenya's public debt reached 65% of GDP in 2024, with over 40% held by foreign creditors. A ratings downgrade would tighten access to capital markets, forcing reliance on costly IMF programs.
• Comparative Risk:

Investment Strategies: Navigating the Risks

For investors, the path forward requires a mix of risk mitigation and long-term engagement.

Short-Term Mitigation:
1. Sectoral Avoidance: Reduce exposure to tourism and real estate in politically volatile areas.
2. Hedging Sovereign Risk: Use currency hedges and derivatives to protect against potential currency devaluation or bond yield spikes.
3. ESG Filters: Screen for companies with minimal ties to controversial security contractors or state-backed projects.

Long-Term Engagement:
1. Advocacy for Governance Reforms: Pressure multilateral lenders like the IMF to tie aid to measurable governance improvements, such as IPOA independence or judicial protections.
2. Support for Private Sector Solutions: Invest in tech-driven solutions for transparency, such as blockchain-based procurement systems to combat corruption in healthcare or infrastructure.

Conclusion: The Cost of Impunity

Kenya's civil unrest and governance failures are not mere political headaches—they are systemic risks with real financial consequences. For investors, the choice is clear: either engage proactively with reforms or brace for volatility in FDI returns and sovereign debt costs. The stakes are high, but so are the opportunities for those who can navigate the turbulence. As the data shows, the path to stability lies not just in suppressing protests, but in dismantling the structures of impunity that fuel them.

In the short term, caution is warranted. In the long term, investors must demand—and fund—the governance reforms needed to turn Kenya's economy from a risk to a resilient opportunity.