In 2025, Kenya finds itself navigating the ripple effects of political uncertainty following widespread anti-tax protests in 2024. Triggered by the Finance Bill, which proposed increased taxes on essential goods and services, the protests highlighted citizens’ frustrations with rising living costs and government policies. While the bill was eventually revised, the aftermath has left investors and businesses wary, with significant implications for Kenya’s economy.
Political uncertainty has also slowed real estate developments, a sector heavily reliant on investor confidence. This caused uncertainty and delays in project approvals and construction activities which affected investor confidence and market stability. There was a 20.0% decline in tenant renewals in the Nairobi CBD following the protests. With recovery from the political unrests and uncertainties in economic policies, the sector is expected to recover.
Foreign Direct Investment (FDI) was negatively impacted by the protests by creating an environment of political uncertainty highlighting policy instability, discouraging potential investors. Persistent uncertainty and unfavourable tax policies may hinder FDI, affecting economic growth and Kenya’s attractiveness as an investment destination. Kenya is focusing on sectors such as agriculture, mining and infrastructure to enhance FDI inflows. Strategies include value addition in agriculture, sustainable mining practices and public-private partnerships for infrastructure projects.
Kenya’s debt burden increased following the withdrawal of the 2024 finance bill. Kenya had to increase its borrowing target by 132.2% to KES. 1,669.2 bn for FY 2024/25 from KES. 718.9 bn in FY 2023/24. The increasing tax burden is expected to strain households and businesses, reducing disposable income and repressing economic growth in 2025. This could potentially lead to reduced consumer spending, lower investment and increased risk of public objections.
The protests, triggered by frustrations over rising fuel and food costs, underscored the challenges citizens face in coping with economic pressures. Political uncertainty poses significant risks to Kenya’s economy, affecting investments in key sectors such as stocks, real estate and FDI. While the government’s promise to address these issues is commendable, swift and transparent action is needed to rebuild public and investor confidence. In 2025, the sectors could experience recovery with the CBK projecting a 5.5% economic growth.
