- Political risk presents a strategic challenge and a call to enhanced due diligence.
- Kenya has been lauded as a democratic anchor in the region, but is simultaneously characterised by cyclical electoral tensions, political fragmentation, and increasing civic unrest, especially in the last twenty years.
- To secure long-term sustainability, the business community must invest in political order, advocate for institutional reforms, and stand firm for democratic values and growth.
Several businesses in Kenya have closed or scaled down operations over the past five years, with some attributing these closures to the political environment, alongside economic factors. In Kenya’s unpredictable political climate, doing business demands careful consideration. Although small and medium enterprises (SMEs) and multinational corporations each face unique challenges, political risk has become a common factor affecting business sustainability in Kenya over the last two decades. Despite this, many businesses still regard politics as a secondary concern, which is a strategic mistake.
In this article, I argue that political risk must be prioritised at the core of business strategy in Kenya, not only as a risk management exercise but as a strategic necessity. I challenge Kenya’s business community to confront the politicised nature of our economy, develop proactive responses, and become part of the solution in rebuilding a stable, democratic order that is vital for sustainable growth. In doing so, businesses will not only protect their commercial interests but also contribute significantly to national development and societal cohesion.
A Global Outlook of Political Risk
Political risk refers to the probability that political decisions, events, or conditions will significantly affect the profitability or sustainability of a business. These risks can stem from government instability, policy unpredictability, regulatory changes, social unrest, or weak rule of law. Political risk presents a strategic challenge and a call to enhanced due diligence. Globally, multinational corporations have learned the hard way how political dynamics can upend operations. From trade wars and uncertainties to coups and currency crises, the geopolitical landscape increasingly shapes business outcomes. In regions like Eastern Europe, Latin America, and parts of Asia, sudden political shifts have had ripple effects across global supply chains and investment portfolios.
In Africa, political risk is even more pronounced. The continent has seen a resurgence of coups, contested elections, and prolonged political tensions and transitions. According to the Mo Ibrahim Index on Good Governance in Africa, while some countries are making progress on governance, the average score for political participation, rights, and the rule of law has declined in many regions.
This means Investors and businesses must assess not only market potential but also the political fragility of each country. Kenya’s case is particularly of interest within the East African Region. Kenya has been lauded as a democratic anchor in the region, but is simultaneously characterised by cyclical electoral tensions, political fragmentation, and increasing civic unrest, especially in the last twenty years. These dynamics have elevated the urgency of embedding political risk strategy into the DNA of business planning.
Kenya’s Fragile Political Paradox
Kenya’s economy, often touted as one of the most diversified in East Africa, continues to be held hostage by political uncertainty, policy inconsistencies, and ethnicized patronage and informal networks. Despite a projected GDP growth of 5.4% in 2025, the cost of doing business continues to rise due to politically driven disruptions, ranging from tax policy swings to abrupt regulatory changes and civic unrest.
Political power in Kenya has historically determined access to markets, licenses, and contracts. Entire industries are exposed to the shifting whims of political alliances. As county governments increasingly exercise devolved authority, the risks are no longer confined to the national level. Localised political interference and corruption in counties are now among the top challenges facing businesses.
A 2025 report by the Kenya Private Sector Alliance (KEPSA) revealed that most SMEs cited political instability and policy unpredictability as their top constraint to growth, ranking higher than access to finance or market access. This is a stark indicator of the deep entanglement between politics and enterprise. Further, the World Bank’s Ease of Doing Business Index (prior to its suspension) consistently flagged Kenya’s weak contract enforcement, land titling issues, and regulatory inconsistency, problems that are exacerbated during election cycles or times of national discontent.
The 2024 anti-tax protests, ignited by the controversial Finance Act, laid bare the growing frustrations of a citizenry that sees economic policy as being increasingly alienated from public interest. Businesses in Nairobi, Kisumu, and Mombasa suffered tens of billions in daily losses as protesters clashed with security forces and commerce ground to a halt. The cost was not just in broken glass and looted stores, but in lost investor confidence, shaken consumer trust, and further delayed post-COVID recovery.
The High Cost of Political Apathy in Kenya
Despite these disruptions, Kenyan businesses often adopt a “wait-and-see” posture during political crises. There is an unspoken corporate culture of silence, one that fears government backlash or reputational risk from engaging in politically sensitive discourse. But this fear-driven disengagement is itself a threat to sustainability. For instance, following the 2017 elections, the repeat presidential poll and subsequent political standoff led to an economic slowdown that cost the country billions in just three months. The hospitality, transport, and retail sectors took the brunt of the hit, with thousands of jobs lost and numerous businesses shuttered.
Interestingly, the businesses most affected during crises often remain silent when governance issues threaten national unity. From halted projects caused by corruption scandals to democratic backsliding that impacts policy adherence, the private sector has become a silent victim and an unwitting supporter. It is vital to change this perspective: Political neutrality no longer guarantees safety. In a highly politicised economy, failure to act equates to complicity. The business community must transition from passive observers to active participants in shaping Kenya’s political landscape. To effectively navigate and influence Kenya’s intricate political environment, businesses must incorporate political risk intelligence and mitigation strategies into their organisational core. Here are three practical and actionable strategies:
- Integrate Political Intelligence into Core Business Decisions: Every business, regardless of size, must embed political awareness into its core operations. This means designating individuals or teams to consistently track political, legislative, and policy trends, whether through internal staff or outsourced services. These insights should directly inform investment decisions, market entries, partnership choices, and expansion plans. This could mean using scenario planning and stakeholder mapping to assess the possible impacts of political developments on the supply chains, licensing, or operations. Engage in monthly or quarterly political briefings at the leadership level to stay ahead of changes and disruptions. Political context should be treated with the same rigour as financial forecasting.
- Engage, Collaborate, and Influence Responsibly: Businesses need to move from silence to a more structured engagement. This is currently happening through various professional and business bodies in advocating for challenges within their specific focus, but could be enhanced to include broader good governance discussions. Businesses should build strategic relationships with policymakers, civil society, and other stakeholders to influence policies that not only affect them, especially in areas like taxation, labour laws, procurement practices, and digital regulation. Join or strengthen participation in associations like KEPSA, KNCCI, and sector-specific platforms. These associations offer a collective voice that can drive national-level advocacy and policy shaping. Encourage joint forums between the county and national governments and the private sector to reduce regulatory friction and promote transparent governance.
- Model Ethical Leadership and Champion Institutional Strengthening: Businesses must set the tone for ethical governance in both words and practice. Support institutions such as the Judiciary, EACC, and Auditor General through principled partnerships, not patronage. Where possible, co-fund or support civic initiatives that promote the rule of law, transparency, and electoral integrity. Equally important, CEOs and business leaders must use their platforms to speak up when the rule of law, democratic institutions, or public finances are under threat. Ethical leadership is no longer optional. Silence perpetuates dysfunction. Public positions taken in defence of good governance are long-term investments in business continuity and economic stability.
No Sustainability Without Political Order
The governance pillar of ESG (Environmental, Social, and Governance) goes beyond internal corporate compliance and accountability. It places a growing responsibility on businesses to engage in and influence the broader political and governance landscape. Political risk is not only a threat to business sustainability. It is a threat to national stability and social cohesion. But it is also an opportunity for constructive influence.
Kenya’s business elite holds convening power. In moments of national crisis, businesses have brokered peace, funded reform, and stabilised supply chains. During the 2007-2008 post-election violence, it was the banking, telecom, and logistics sectors that kept the country afloat while politicians dithered. In 2018, the famed “handshake” between Uhuru Kenyatta and Raila Odinga, which calmed political temperatures and restored investor confidence, was partly driven by private sector leaders urging de-escalation for economic stability. Political risk cannot only be monitored, it must be shaped.
The business community cannot afford to wait until the situation is worse. Kenya needs a private sector that is bold, vocal, and visionary. Business Associations need to enhance their advocacy role and champion democratic and economic accountability. SMEs need to collaborate to amplify their voices and collective action to give weight to their concerns. Other corporates and multinationals must invest not just in markets but in institutions and support local democracy. Investors must demand ESG frameworks that account for political governance, not just environmental and labor issues. CEOs and entrepreneurs, the market you are building today could be dismantled tomorrow by unchecked political fragmentation. Your leadership matters beyond your balance sheet.
Kenya stands at a historic inflection point. Economic inequality is deepening. Youth frustration is rising. Public debt is ballooning and political institutions are being tested like never before. Businesses can no longer afford to operate in silos. Political risk is not a distant threat but a daily operational reality. To secure long-term sustainability, the business community must invest in political order, advocate for institutional reforms, and stand firm for democratic values and growth. Political stability is not a given. It is earned. It is defended and it is co-created. The private sector has a duty and a vested interest to be part of this national agenda. Kenya’s future prosperity depends not only on politics but on courageous businesses.
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Dr. Gilbert Ang’ana is a Leadership and Governance Advisor, Founder & CEO of Accent Leadership Group, and a Policy Leader Fellow at the European University Institute (EUI).
