Kenya’s Plans for Citizenship by Investment – Any Takers?

 

Several reports of a planned Kenyan citizenship by investment program (CIP) have surfaced in recent weeks, raising eyebrows throughout the investment migration industry. A country whose own wealthy make up the second-largest Sub-Saharan applicant constituency among Caribbean CIPs hopes to become a net importer of investor migrants.

The notion is far-fetched, but not altogether ludicrous.

Consider how Kenya stacks up on the conventional criteria most prospective applicants consider in a CIP:

  • Visa-free access
    Ranking 72nd on the Henley & Partners Passport Index, Kenya’s passport permits visa-free travel to 71 destinations, none of which are in the EU, Schengen, the UK, the US, Canada, or Australia. We can safely say, therefore, that the prospect of increased mobility would not be among the attractions of a Kenyan CIP.
  • Pricing
    Reports indicate Kenyan authorities are aiming at a minimum investment requirement of around US$200,000 for a single applicant, essentially double that of most Caribbean CIPs. That price point, divorced as it is from market realities, will not be a draw either.
  • Secondary benefits
    While the mobility factor generally takes the front seat among a CIP’s selling points, the real differentiator between programs are the diverse additional benefits pertaining to a particular citizenship. These include pull-factors like low or non-existent taxes, memberships in international communities that allow for extended settlement rights (EU, CariCom, CTA, etc), market access, peace and stability, educational options, lifestyle advantages, and so on. Kenya offers precious little in the way of such secondary benefits.

With such a dearth of redeeming features, where does Kenya’s government think its CIP applicants will come from? Will the program have any suitors at all?

On the face of it, Kenya’s CIP proposal is completely unrealistic, inasmuch as it expects people to overpay for a substandard product when much better and cheaper alternatives abound.

But that exact phrase applies equally to Jordan’s CIP. And it received 105 applications in its first seven months. Are those investors out of their minds, or are other factors at play?

There are three chief reasons why expensive, advantage-less CIPs still get applicants.

  1. Familiarity and sentimentality
  2. Pre-existing investments that can justify a CIP-application
  3. Exclusion from the CIPs of more reputable countries

Familiarity: To those investors not merely looing for more travel freedom, the local culture, customs, religions, and so on in the new country matter. Perhaps the applicant has spent a great deal of time in the country and, consequently, has some emotional affinity to it; perhaps the country’s people share the applicant’s faith; perhaps the country neighbors on the applicant’s home country; perhaps the investor has lived in the country for decades but has been unable to naturalize through other means. Maybe it’s irrational, but sentimental factors do influence investor decisions.

Pre-existing investments: Sometimes, investors find that property they bought or businesses they started many years ago can now help him qualify himself and his family for citizenship. In these cases, there’s nothing irrational about partaking in an otherwise pointless program.

Exclusion: Some investors know, perhaps because they have tried, that they will not pass the due diligence of reputable CIPs in Europe and the Caribbean. Maybe there’s a good reason for that, or maybe it’s because they have the great misfortune of hailing from a country on the banned nationalities lists. Such applicants may calculate that their odds improve in a country like Kenya.

In fact, two countries in Kenya’s immediate vicinity – Sudan and Somalia – are barred from applying to many other CIPs. And the visa-free destination counts of their passports are less than half of that of the Kenyan one, which means that, for these nationals, a Kenyan CIP represents a step up.

A Kenyan CIP would not attract Chinese businessmen, well-heeled Russians, or the Middle Eastern elites. But that’s probably not the government’s aim anyway. Kenya would appeal to a different segment of the market; those who have a special affinity for the country, those who are already present and involved in it, and those who don’t have better options.

image via: Ninara

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