CHAPTER NINETEEN: Property Investing in Kenya

Famous for its natural beauty, incredible scenery and abundance of rare and amazing wildlife, Kenya has long been a favourite destination for holidaymakers from all over Europe. The country is well-placed for access to the rest of East Africa, and has become the regional hub for trade, finance and air transport. Many organisations, including the UN and Red Cross as well as corporate bodies, also have their African headquarters in Kenya, making the country the obvious choice for investors targeting regional markets.

Despite this, Kenya is a very new investment market, largely due to its economic and political background. After gaining independence from the UK in 1963, the government was plagued with corruption and crime, gaining a worldwide reputation for this in the 1990s. In 1997 the International Monetary Fund (IMF) suspended Kenya’s Enhanced Structural Adjustment Programme due to the government’s failure to maintain reforms, and the tourist industry sustained severe damage after the US Embassy bombing by Al Qaeda in 1998. A drought from 1999 to 2000 compounded Kenya’s problems, leading to resource rationing and a reduction in agricultural output. The IMF resumed loans in 2000 to help the country through the drought, but suspended them again in 2001 when the government failed to institute anti-corruption measures. The rains returned in 2001, but the endemic corruption, weak commodity prices and low investment limited growth to 1.2%. GDP was slow again in 2002 due to erratic rains, low investor confidence, limited donor support and political infighting in the period before…