KNBS data shows 50 per cent reduction in foreign investments and remittances
12 months ago, 4 Jan 00:12
: Money flowing into the country more than halved during the election period, latest official data shows. The quarterly report on balance of payment by the Kenya National Bureau of Statistics shows the 50 per cent reduction in financial inflows occurred between July and September 2017, at the time Kenyans went to the polls. “Net financial inflows more than halved from a surplus of Sh67.6 billion in the third quarter of 2016 to a surplus of Sh27.7 billion in the third quarter of 2017,” said the national statistician in the report released last week. The financial inflows included earnings from exports, debts, private investments and diaspora remittances. The drop in earnings also affected the country’s foreign currency reserves. “Gross official reserves decreased by 1.8 per cent from Sh830.6 billion as at end of September 2016 to Sh815.5 billion as at end of September 2017 translating to about 5.4 months of import cover,” read the report. The drop in money inflow saw a deceleration in the growth of most sectors of the economy during the period. The economy performed the worst in five years, growing at 4.4 per cent in the third quarter of 2017 compared to 5.6 per cent registered in a similar period the previous year. The last time the growth slowed down to such levels was in the third quarter of 2012 when the country recorded a 4.4 per cent growth. Most affected by the dip in financial inflows was the real estate sector with the County Government of Nairobi approving less building plans during the third quarter compared to the same period in 2016. As much as less foreign currency came in during this period, much of it also left the country. Foreign investors fled the Nairobi Securities Exchange (NSE) amid heightened political uncertainty in the country, selling shares worth Sh34.2 billion in three months. Data from the Capital Markets Authority (CMA) shows that most of the foreign investors cashed out of the NSE between July and September. Over the period, shares worth Sh23.1 billion were purchased, leading to a net foreign equity outflow of Sh11.1 billion. In addition, foreigners, who ordinarily command the activities on the Nairobi bourse, cut their participation to an average of 54 per cent. Their participation fell to a low of 49.14 per cent in July as Kenyans prepared to go to the polls on August 8. Since January, foreign investor participation had been averaging above 65 per cent. “The Sh11.1 billion foreign equity outflow registered in the third quarter was largely as a result of heightened political uncertainty in the country but is expected to rebound as long as the current situation does not become protracted,” said Luke Ombara, the CMA director for regulatory policy and strategy.
Category: business news