IMF Ranks Kenya’s Business Environment as the Second Worst in the World

International Monetary Fund (IMF) has released a report ranking Kenya’s business environment as the second worst in the world behind Colombia.

The World Uncertainty Index (WUI) attributed Kenya’s business uncertainty to the rising political temperature in the country ahead of the August 9th general elections.

The report notes that the economic and political uncertainty in the country has risen sharply by 84 percent to 0.628 points from 0.34 in the second quarter of 2021.

The IMF team that compiled the report cited the electioneering period as one of the main sources of uncertainty, with most investors fearing an outbreak of unrest after the elections.

“A research that was done by WUI to measure economic and political uncertainty among 143 countries that represent 99 percent of the world’s Gross Domestic Product (GDP), showed that political uncertainty in Kenya is so high,” read the report.

The index uses a single source for all countries, allowing the IMF team to compare the level of uncertainty across countries.

“The index is constructed by text-mining the country reports from the Economist Intelligence Unit (EIU), a business intelligence company that provides country reports on a quarterly basis. These reports cover each country's economy, policies, and politics,” says the IMF.

The Covid-19 pandemic is also a source of uncertainty in Kenya, with the index rising to 0.452 in the second quarter when the country recorded its first Covid-19 case.

Last year, Central Bank of Kenya (CBK) Governor Patrick Njoroge stated that the Kenyan investment market is no longer threatened by rising political temperatures but by other unforeseen factors. He noted that the country has gone through many political risks and it has learned to deal with them.

“Coronavirus is the one that is the unknown. The others are in the realm of known unknowns,” Njoroge said as quoted by The Standard.