How Ruto Taxes Are Chasing 100 Millionaires Out Of Kenya
Some 84,000 of the world’s high net-worth individuals (HNWIs) migrated last year
Marvin Chege 
A global report on Tuesday, June 13 revealed that some 100 dollar millionaire investors fled Kenya in 2022 to escape political tension as well as a high taxation rate and economic instability.
The Henley Private Wealth Migration Report 2023 produced by Henley & Partners in partnership with New World Wealth, and which tracks wealth and investment migration trends worldwide, detailed that wealthy individuals relocated from Kenya in search of countries with less taxation, better political stability and stronger economic growth.
Some 84,000 of the world’s high net-worth individuals (HNWIs) migrated last year, an indication of the consequences of the President William Ruto administration seeking to implement new taxes and raise current ones to collect more revenue.
According to the report, HNWIs, people with investable wealth of $1 million (Ksh139 million) or more, are considered to have migrated if they have relocated and remained in a new country for longer than six months.
A photo of a luxury home. /FILE
The report added that other than 100 super-rich individuals who left Kenya in 2022 for various reasons, another 100 are projected to leave the country in 2023, indicating that investors are in limbo over Kenya's current state of affairs; both economic and political.
Kenya stepped up taxation in recent years in a bid to raise revenue to fund the country’s growing spending needs. The Finance Act of 2022, for instance, raised the Capital Gains Tax (CGT) from five per cent to 15 per cent in a bid designed to align the Kenyan CGT rate with regional rates.
The rate became effective in January this year despite stakeholders’ proposal to retain the same at five per cent, given the fact that a significant portion of capital gains on the disposal of properties is often attributable to inflation.
“Political stability is the key metric for those selecting where they want to live, together with low taxation regimes and personal freedom. Until the Russo–Ukrainian war [ends], both countries will continue to export HNWIs, and this will remain the single largest driver of relocation,” said Misha Glenny, Rector of the Institute for Human Sciences in Vienna, who is also a British journalist.
Sunita Singh-Dalal, a partner at Private Wealth and Family Offices at Hourani, also cited rising debt, a dysfunctional healthcare system and a high-crime rate as reasons millionaires are vacating the country.
The report came only three months after the 2023 Africa Wealth Report published by the same firm showed that some 800 individuals fell off the list of Kenya’s dollar millionaires in 2022. This was primarily owed to a weak shilling whose value dropped by about nine per cent during the year, shrinking the wealth of the tycoons in dollar terms.
Specifically, Kenya’s rich with a net worth of at least $1 million stood at 7,700 in 2022, a sharp drop from 8,500 in 2021, with the Henley Private Wealth Migration Report 2023 terming the exit of dollar millionaires from the country as a means of damaging its economy while their entry increases investment and job creation.
The report was in comparison to one by Real estate firm Knight Frank released on Wednesday, March 1 titled the 2023 Knight Frank Wealth Report which revealed that 60 per cent of investors were opting to invest in Kenya, with 50 per cent choosing the UK, 40 per cent the United States (US), 25 per cent in Canada and 20 per cent in South Africa and Australia respectively.
In particular, the sectors where they invested include offices (32 per cent), industrial and logistics (32 per cent), retail (68 per cent), residential private rented sector (68 per cent), hotels and leisure (41 per cent), development land (50 per cent) and student housing (23 per cent).
Speaking to Viral Tea, Tarquin Gross, the head of the residential agency in Knight Frank Kenya, attributed the huge interest in Kenya to a rebounding residential market following a five-year silence where there has been huge growth prior to the COVID-19 pandemic and the 2022 general elections.
"What we noticed in 2022 is that as we sort of came through the other side of COVID and furthermore we had a very quiet election, people's decision to buy...people were much more interested in buying second homes or looking at buying bigger primary residences or having the confidence that the market was there and that the wealth was secure or it wasn't as risky," stated Tarquin.
Tarquin also recognised the efforts of President Ruto's government in encouraging business and investments into the country, which is also driving property prices, especially in the prime markets with international investors.
"When we talk about the Coast, the majority of that investment was international money, when we talk about Nanyuki, it might be international bars but there are residents of Kenya, ex-pats living in Kenya but looking to buy a home, maybe they rent in Nairobi and work for some of the bigger multinational organisations who fall in love with the country.
"I think also the government is making ways easier for internationals to buy into Kenya, not so much in the sense that it's stopping Kenyans...but definitely making it more transparent on how people can buy property in Kenya but also makes people feel safer. If you're an international and you don't know a huge amount about Kenya, it's quite transparent; you would need a lawyer but it's quite transparent on how to buy into Kenya and that also encourages," he added.
The Kenya-Kwanza administration is seeking to raise an additional Ksh211 billion as revenue through the tax policy changes stipulated within the Finance Bill 2023, which is four times more than the Finance Bill 2022 and indicates Ruto's determination to solve the country's debt crisis.
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