When investors think about where to put their money, security is often as important as tax policy, infrastructure, or interest rates.
In Kenya, the link between safety and investment has been repeatedly confirmed by both academic research and government reports, all pointing to a simple truth: a secure environment attracts capital, while insecurity pushes it away.
According to a recent study by the University of Nairobi, rising crime creates uncertainty in investment returns as it impacts on consumer behaviour, production costs, and market conditions. As a result, the investment rate goes down as investors postpone their investment activities.
The research found that whenever firms are exposed to actual or perceived insecurity, they tend to slow down or even halt their investment plans. The report warns that although businesses often respond by paying for their own private security, this raises production costs, which are eventually passed on to consumers.
“Providing adequate security is crucial to maintaining market confidence and encouraging private sector growth,” the study concludes.
“Insecurity makes firms’ sales vulnerable, adversely impacting on current profitability. The interaction variable between the future profitability and the impact of insecurity through the consumer behaviour shows a negative and significant relationship with investment. This implies that while expected future profits see an increase in investment, in case there is a significant impact of insecurity on consumer behavior through for example, changes in tastes and preferences which reduce market demand, firms will tend to lower their investment,” the study adds.
This academic finding is echoed in an article published in the International Journal of Research and Innovation in Social Science (2024). The paper makes a direct connection between policing, crime reduction, and economic performance. It argues that a safe and stable environment allows businesses to thrive, fosters investor confidence, and promotes business activities. By reducing crime, the state reduces hidden costs in the economy and creates conditions where both local and foreign investors feel their assets are protected.
“Effective policing contributes significantly to reducing crime rates, ensuring safety, and building public trust, which are essential for attracting investments and facilitating economic activities. Additionally, the police play a vital role in conflict management and fostering peaceful coexistence within communities, which are essential for maintaining stability. This, in turn, creates an enabling environment for businesses to thrive and social services to function effectively, thereby enhancing the quality of life for citizens,” the journal notes.
“However, the study also identifies challenges that limit the police’s ability to maximize their impact on socio economic progress. These include resource inadequacies, corruption, insufficient training, and strained police-community relationships. Addressing these issues requires reforms such as strengthening accountability mechanisms, improving professional standards, and fostering partnerships between law enforcement agencies and the public.”
According to the Parliament of Kenya’s 2024 Annual Report on the State of National Security, peaceful “Gen-Z” protests earlier that year, though initially orderly, were infiltrated by criminal groups. The result was not just public disorder but also a noticeable dip in investor confidence and disruption of normal economic activities. According to the report, such events show how even protests not directly targeting businesses can have a significant negative impact on the investment climate.
“In the month of June, 2024, the country experienced unprecedented youth led (Gen Z) protests against the Finance Bill 2024. Nairobi City was worst hit by the unfortunate events that followed the passing of the Bill on 25th June, 2024. The peaceful protests turned chaotic after being infiltrated by criminal gangs who vandalized both private and public property, including Parliament buildings,” the report notes.
The Central Bank of Kenya’s 2022–2023 Financial Stability Report also connects security to investor behaviour, this time in financial markets. It notes that political risks and social instability trigger a flight to safety as investors move away from riskier assets, reducing liquidity in the capital markets.
While the banking system remained resilient, the report highlights how instability translates into tangible economic costs, including a slowdown in access to financing for businesses.
“Political risk remains despite conclusion of 2022 general elections. The industry faces frequent episodes of riots and/or civil unrest, causing a disruption in business. Companies could scale down business as a mitigation to the risk thus reducing insurance business. Investment returns for the industry are also expected to reduce on low business activity,” CBK states.
Taken together, these findings show that security is not just a matter of policing streets or securing borders—it is a foundation of economic growth. Safer cities encourage entrepreneurship. Startups can grow without factoring in expensive security measures. Multinationals are more likely to open regional offices in stable environments. And ordinary Kenyans benefit when consumer prices are not inflated by the hidden costs of crime and insecurity.
For Kenya, the message is clear: strengthening national security is not just about protecting citizens—it is about building confidence in the economy. Every act of violence or disorder has ripple effects in markets and boardrooms. Conversely, every improvement in security—from reducing petty crime to managing protests peacefully—signals stability, lowers risks, and makes Kenya a more attractive destination for investment.
As the University of Nairobi study put it, investor confidence is rooted not only in returns but in reassurance. Or, as one senior policymaker noted during the launch of the 2024 security report: “Security is the first dividend of stability. Without it, growth stalls; with it, investment flows.”
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