Political anxiety casts shadow on Kenya's investment outlook

Kenya's top business leaders are growing increasingly anxious about the oncoming 2027 general election. A Central Bank of Kenya (CBK) survey indicates that there are major concerns over political instability emerging as a dark cloud over an otherwise cautiously optimistic economic outlook.

The CBK's Chief Executive Officers' Survey for July 2026, conducted against a backdrop of heightened political activity ahead of the August 2027 polls, reveals that business leaders are bracing for disruption as President William Ruto seeks a second term against an increasingly unified opposition determined to deny him one.

No Kenyan president has served a single term under the current constitution, with both former Presidents Uhuru Kenyatta and Mwai Kibaki winning re-election. But the spectre of poll-related chaos, Kenya suffered deadly post-election violence in 2007/08 and a disputed 2017 election that saw the Supreme Court nullify the result, is casting a long shadow over boardroom decisions.

While the survey's top-line findings show firms remain optimistic about growth prospects over the next 12 months, supported by stable business activity, improved access to credit, and broad technology adoption, the data reveals deeper fissures of concern for investors.

CEOs identified the high cost of doing business as the leading domestic constraint to growth, with energy prices, geopolitical tensions and global macroeconomic volatility named as the top external threats. But beneath these immediate pressures lies a more existential worry, the unpredictable nature of Kenyan politics as the election cycle intensifies.

According to the report, executives anxiety regarding political stability has followed a persistent upward trajectory over recent survey cycles, rising from 6 per cent in September 2025 to 12 per cent in July 2026.

Sectoral breakdowns further illustrate that political uncertainty is most acute in the manufacturing sector, where 11 per cent of respondents cited it as a growth constraint, compared to eight per cent in services and zero per cent in agriculture, reflecting heightened vulnerability among capital-intensive industries to domestic governance shifts.

The survey, which polled over 1,000 CEOs across sectors including wholesale and retail trade, professional services, tourism, financial services, healthcare, agriculture and manufacturing, found that real estate, building and construction sectors, heavily reliant on government-funded projects, expect activity to moderate "as the elections period approaches".

While political uncertainty remains secondary to primary macroeconomic headwinds such as the elevated cost of doing business (19 per cent) and increased taxation (17 per cent), its doubling as a perceived constraint over the past year, highlights a growing caution among firm executives as long-term investment horizons near.

This caution is not without precedent. The 2007/08 post-election violence saw GDP growth drop by more than 5.5 percentage points, with the economy recording actual growth more than five points lower than projections. The 2017 election again produced a slowdown, with GDP growth easing to about 4.9 per cent. Monthly sales dropped by 50 per cent in August 2017 and fuel usage fell by 10 to 12 per cent.

To insulate operations from these domestic governance concerns and broader external volatility, Kenyan CEOs reported prioritising operational risk mitigation, cost optimisation, and market diversification.

The findings emphasize that alongside monetary policy easing and credit accessibility, establishing "predictable, transparent and equitable policies" and "promoting long term national development plans that provide greater continuity beyond political cycles" remain vital imperatives for sustaining corporate expansion.

Already, businesses are feeling the heat. A Kenya Private Sector Alliance (KEPSA) survey found that 65 per cent of CEOs are postponing major capital expenditures planned for late 2026 and 2027. The World Bank has warned that political uncertainty ahead of the August 2027 poll could undermine the country's fragile economic recovery.

The emergence of politically aligned informal militia groups "goons" that have historically been deployed to intimidate opponents and disrupt polling has further stoked fears. The Independent Policing Oversight Authority has warned that isolated incidents of violence witnessed during recent rallies could escalate into a broader national security challenge as the country moves closer to the 2027 election.

Business stakeholders have sounded the alarm over confrontational politics, warning that rising political tensions, ongoing civil unrest, and intense political competition have severely threatened business operations, property, and economic stability.

The CBK survey itself acknowledges the risks. Respondents further reported that geopolitical developments, including US trade tariffs and policy changes, are expected to increase trade and supply chain pressures, import and shipping costs, and production costs, while negatively affecting tourism, travel, donor funding, and foreign aid. Lower personal and business incomes are also expected to weigh on business activity through reduced consumer purchasing power.

Firms intend to mitigate these constraints by improving cost and risk management, adopting technology and automation, and diversifying operations through expansion into new markets and developing new products.

The CBK conducts the CEOs Survey every two months before Monetary Policy Committee meetings to capture firm-level information on perceptions, expectations, and concerns about the business environment.