How Nairobi Shelters the Horn's Elite
With political insecurity and conflict simmering across nearly every country in the Horn of Africa, Nairobi's relative stability —barring the fitful Gen Z protests —is a welcome and necessary change for regional elites, compared to the ruins of Khartoum and the insecurity of Juba and Mogadishu. In prominent hotel bars and restaurants across the Kenyan capital, exiled opposition figures routinely gather to discuss their next moves or commiserate about the state of their country and region. The political elites of Ethiopia, Somalia, South Sudan, and others have long maintained families and properties in Nairobi's lush neighbourhoods, aware of the need for a potential haven amidst the mercurial politics of their own countries. But with insecurity and political repression rising across much of the Horn, so is the capital flow increasing into Nairobi as growing numbers relocate their wealth-- often illicitly.
In February 2024, the Global Financial Action Task Force (FATF) placed Kenya on its "grey list," warning of strategic deficiencies in countering money laundering and terrorist financing. It came as little surprise. Nairobi has long been a favoured destination of wealthy foreigners seeking to hide ill-got gains and enjoy the 'Green City Under the Sun.' In many ways, Nairobi remains a city catering to international notables and monied expatriates, with its quiet gated estates, private schools, and abundant restaurants. The amenities and privacy it affords are quite a contrast to those found in Juba, Mogadishu, Kampala, and, increasingly, Addis as well. In turn, successive exoduses over the decades have created distinctive patterns in many of Nairobi's more elite neighbourhoods, with Somalis, South Sudanese, and Ethiopians all setting up shop in their own quarters of the city, including restaurants. The politics of Nairobi's restaurants is another complex topic altogether. There are other destinations of choice as well, with many Somali and Sudanese kleptocrats often preferring Dubai, Doha, Riyadh, Cape Town and Istanbul; however, within Sub-Saharan Africa, Nairobi is preeminent.
The 2024 decision by the FATF placed Kenya under increased international monitoring, with the William Ruto administration agreeing to work with the organisation to address identified shortcomings. But such efforts have apparently not been sufficient for the EU's Financial Reporting Centre (FRC), which in mid-June 2025 also added Kenya to its list of countries to place under increasing financial scrutiny. These issues, however, date back years, rooted in the enduring corruption of Kenya's political economy. Although Nairobi enacted its first significant anti-money laundering law in 2009, prosecutions have repeatedly lagged behind, with convictions rarely secured. In 2010, the FATF even placed Kenya on its list of non-cooperative countries, only removing it after reforms in 2014. But in early 2024, the FATF reported that "Kenya could not demonstrate any successful investigation and prosecution of any money laundering offence."
Historically, it has not been only Nairobi that has provided a safe haven; the Kenyan coast, particularly Malindi and Watamu, has been a favoured destination for investors connected to the Italian mafia as well. These small tourist towns are now populated with large European contingents enjoying the beautiful beaches, and one of the highest densities of Italian restaurants on the African continent. In recent years, though, South Sudanese elite have come under particular scrutiny for washing their money in Nairobi amid years of endemic insecurity and conflict alongside the ailing President Salva Kiir's consistent government purges. It is not uncommon to see high-end luxury cars with South Sudanese license plates in the streets of Nairobi. The ostentatious wealth of such politicians, who are officially paid only a fraction of their actual assets, belies the prolonged conflict and pervasive poverty in their home country. Their patronage money often comes from the skimming and graft endemic within the oil-dependent South Sudanese political economy, but isn't always straightforwardly 'criminal'-- even if it leaves a sour taste in the mouth with so many millions requiring humanitarian assistance. One recent African Development Bank report revealed that 92% of South Sudan's population is now living below the poverty line.
On the other end of the frame is Al-Shabaab, which continues to launder money on an apparent industrial scale through the Kenyan capital, particularly hiding its funds amongst the 'grey' economy of the ongoing construction boom. Laundering funds through construction is not a new phenomenon, and the dozens of skyscrapers being flung up in Nairobi do not appear to reflect any genuine demand for more shoddily built, expensive housing. It is not just Al-Shabaab that hides its money here, though, with many Somali politicians also preferring Nairobi. There is a significant distinction, however, between the washing of illicit money from piracy, jihadist taxation, or corruption, and the legitimate relocation of families due to genuine security concerns.
It is not just construction or pharmacies that are being inundated with illicit funds, but there are a host of ways to hide money and other assets. This includes properties being simply held in the names of relatives or associates. In one famous example, a sanctioned South Sudanese general paid USD 1.5 million in cash for a house in Nairobi, held under his wife's name. This also happens with businesses, as wealthy elites partner with Kenyans to establish corporate veils that are difficult to penetrate. Nor is this a problem unique to Kenya. The complexity and scale of international money laundering today are immense, with the quantity of money laundered on an annual basis ranging between 2% and 5% of global GDP, or USD 800 billion to USD 2 trillion, according to the UN Office on Drugs and Crime. And with the rise of cryptocurrency, though still nascent in Kenya, more avenues of squirrelling away wealth from prying eyes are becoming possible, though there have been tentative moves towards legally regulating its usage in the country. It may not be in the interests of the Kenyan elite to tackle such corruption and capital flow that they also benefit from; it is in the broader interest of the Kenyan people. Amidst a sustained cost-of-living crisis, corruption in Kenya has risen and continues to infiltrate all aspects of life, lending to the growing frustrations and protests led by Gen Z in recent months.
Nairobi has long played a prominent role in hosting political opposition from Uganda, Tanzania, Ethiopia, and much more besides. Innumerable peace talks and political negotiations have been accomplished in public and in private, and this space, as a venue for mediation as well as refuge, should be protected. Welcoming those fleeing political persecution or insecurity is a proud tradition. However, a safe haven for illicit funds and terrorist financing is a different prospect altogether, and the recent attention from the FATF and EU has placed renewed pressure on the Kenyan authorities to address a decades-old, yet increasingly pressing, issue. But such an inherently transnational issue requires regional solutions as well. To begin with, better cross-border financial intelligence sharing is urgently needed within the Intergovernmental Authority on Development (IGAD) bloc, not simply as a means to prosecute financial crimes, but also to protect Kenya's economic integrity – and to counter the problem of capital flight from its neighbours.
The Horn Edition Team
