Multinational companies close shop as Ruto buries head in sand

Kenya has, over the past decade, resembled a graveyard for both local and foreign companies. Despite Kenya Kwanza’s pledge to create a more conducive environment for business, its 34 months in power have witnessed intensified closures and scaled-down operations among firms, leading to job losses and eroded confidence in Kenya as an investment destination for businesses scouting for opportunities.

This trend has been driven by a mix of factors, including escalating operational costs due to high taxes, regulatory overreach, policy unpredictability, and perceived political instability.

These issues have also led other firms to shelve plans to increase investment in the country, while some have abandoned Kenya altogether in favour of pumping billions into neighbouring economies.

Over the past three years, dozens of companies have exited Kenya or significantly reduced their operations. As a result, more than 5,500 Kenyans have lost their jobs in the three years to January 2025, according to the Federation of Kenya Employers.

“Capital is very fearful of any instability… whether it is violence, or an unpredictable environment,” said Dr Erick Rutto, President of the Kenya National Chamber of Commerce and Industry (KNCCI).

No industry has been spared. The exodus has affected key sectors, including automotive, manufacturing, and consumer goods. All cite a tough operating environment marked by high taxes, elevated fuel and electricity costs, poor infrastructure, policy inconsistency, and a seemingly unstable political landscape marred by protests, with Kenyans demanding better governance.

Among the prominent firms that have recently exited, leaving employees jobless, are CMC Motors Group (January 2025) and Lipa Later (March 2025), which closed due to market conditions and financial difficulties, respectively.

Manufacturing giant Procter & Gamble (P&G) exited in 2024, citing high operating costs, resulting in an estimated 850 job losses.

E-commerce firm Copia Kenya shut down in June 2024 and went into liquidation due to funding challenges. Currency printer De La Rue exited in 2023. The government attributed its departure to the rise in digital transactions and a decline in demand for printed currency in Kenya. However, the Central Bank later contracted German firm Giesecke+Devrient Currency Technologies GmbH (G+D) to print Kenyan currency in a classified procurement process.

Gro Intelligence and RejaReja also left Kenya, though RejaReja maintained its operations in Uganda.

Beyond exits, numerous companies have announced large-scale layoffs.

Twiga Foods, an agricultural e-commerce firm, suspended its Nairobi operations in June 2025 after several rounds of layoffs since August 2023.

G4S (November 2024) declared 400 redundancies due to reduced revenues and high operating costs, while Flutterwave’s Kenyan arm also cut jobs in March.

BAT Kenya and Tile and Carpet Centre (both in December 2024) also announced restructuring measures, resulting in job losses.

While some firms have faced unique internal issues, most cite a broadly unsupportive business environment.

“When you look at all the big companies that have left, there’s a consistency in what they are saying. They talk about high and unpredictable taxes and a toxic business environment,” said one industry observer.

“They see stability in the region. Tanzania appears to be performing better. Ethiopia is currently the top recipient of FDI. It has invested strategically, has reliable and affordable electricity for industry, and is in talks with Eritrea to access the sea via railway.”

He added that Kenya missed the opportunity to offer landlocked Ethiopia port access through the Lamu Port South Sudan Ethiopia Transport (LAPSSET) Corridor. Meanwhile, Tanzania and Uganda have improved competitiveness to the extent that goods imported from those countries are often cheaper than locally manufactured products.

“There must be something wrong with our policies. There is no coherence in Ruto’s presidency. In three years, we haven’t seen any consistent policy direction. The only person who seems to know the plan is the President himself. His ministers are invisible. No principal secretary explains what the government is doing,” he said.

Multinationals exiting or scaling down have shifted to local distribution models. Their products, now manufactured abroad, continue to dominate the Kenyan market.

These companies still sell their products here. They move out the capital and manufacturing but leave behind marketing offices and continue importing their products,” said another analyst.

“Beyond job losses, the exits dismantle entire value chains. These companies support logistics, consume local supplies, and help build ecosystems. When you lose such high-quality firms, the losses are extensive.”

He added that Kenya is losing strategic advantages, such as its geographic position and skilled labour, within the region.

Some shutdowns have spelt the death of enterprises, particularly for local manufacturers without the resources to relocate. Those with capacity have moved to neighbouring countries.

Dr Rutto noted that many KNCCI members, particularly local firms unable to relocate, continue to voice concerns over the high cost of doing business.

“In the case of our members, I wouldn’t say they are exiting, but they are certainly struggling,” said Rutto.

“We know some multinationals have invested heavily in neighbouring countries, some as far as Egypt.”

He further noted that Kenya is also falling behind in attracting new multinational investment.

“If you compare Kenya with neighbours like Tanzania, Uganda, and Ethiopia, they’re attracting more investment relative to their GDP,” he said.

A key policy failure has been the underdevelopment of the manufacturing sector. Rutto said successive governments have failed to invest in infrastructure and systems that would have established Kenya as a manufacturing hub for Africa.

He noted that prohibitively high electricity and credit costs have made Kenyan products uncompetitive in both local and regional markets.

“As a country, we must be extremely competitive. Kenyan manufacturers can’t match firms accessing electricity at eight US cents per kilowatt hour or credit at single-digit interest rates.”

Kenya’s Vision 2030 aimed to raise manufacturing’s share of GDP to 15 per cent by 2022—this was missed. The current goal of 20 per cent by 2030 appears increasingly unattainable.

The sector has been in decline for over a decade, its contribution to GDP falling from 11.8 per cent in 2011 to 7.4 per cent in 2021. A slight recovery to 7.7 per cent in 2022 reversed again under Kenya Kwanza, dipping to 7.5 per cent in 2023 and 7.3 per cent in 2024, according to the Kenya National Bureau of Statistics.

President William Ruto, however, dismisses such concerns. He maintains that Kenya remains an attractive destination for investment and claims numerous firms are setting up operations in the country. In recent days, government-aligned bloggers and influencers have claimed that over 253,000 businesses have registered in Kenya since 2022.

During his trip to Europe last week, President Ruto said his government had signed major deals with five global firms to relocate their headquarters to Kenya.

“Just over this trip, we have signed five companies that are moving their headquarters to Kenya,” he said in one of his UK addresses.

These include Lloyd’s of London (Africa office at NIFC), the European Bank for Reconstruction and Development (Africa HQ in Nairobi), Bupa Health International, Africa Finance Corporation, and Africa Speciality Risk. He also cited Teleperformance, a BPO firm, which opened its headquarters at Two Rivers three months ago and is expected to create 5,000 jobs.

“And I can count more companies to tell you in simple language that Nairobi is becoming the financial hub of our continent,” Ruto said.

“But if you read The Standard newspaper, they will tell you companies are closing in Nairobi—but won’t name them,” he added.

Manufacturers, however, say the decline in business conditions is real and due to a poor investment climate characterised by high taxes, excessive regulation, costly energy, and weak infrastructure.

Industry players describe a landscape rigged against success, forcing many to throw in the towel.

Tobias Alando, CEO of the Kenya Association of Manufacturers (KAM), said companies face numerous challenges: from expensive energy and cheap imports to unpaid government bills and regulatory uncertainty.

He added that manufacturers must contend with an overtaxed and financially stretched consumer base, leading many Kenyans to opt for cheaper imports, counterfeit goods, or second-hand clothing.

“This erosion of purchasing power is not just a household concern; it is rippling through the economy, weakening sales volumes and slowing overall economic growth,” said Alando.

“Amid this crisis lies a business environment plagued by unpredictability. Frequent tax and policy changes create instability, discouraging long-term investment and making it difficult for manufacturers to plan.”

He warned that the influx of cheaper imports from neighbouring countries continues to disadvantage local manufacturers, who already struggle with high costs.

Electricity is one of the most cited challenges. A March 2025 report by the Parliamentary Budget Office (PBO) found that Kenya has the region’s most expensive electricity.

“Despite efforts, the cost of energy remains significantly high for most Kenyans and also compared to the region,” PBO noted.

Although the cost of electricity has declined from a high of Sh36 per unit in January 2024 to around Sh28 in June 2025, it remains high compared to regional competitors vying to attract industrial investment.