FDIs into Kenya will pass $3.5b

 

Chinese premier Li Keqiang with presidents Uhuru Kenyatta (second, right), Yoweri Museveni (left) and Paul Kagame after signing the rail funding deal. Photo/Billy Muta

 

By STEVE MBOGO Special Correspondent

In Summary

• Foreign direct investment inflows are expected to surpass the record $3.5 billion realised in 2013.
• Kenya is expected to continue growing its status as a regional hub for international deal hunters despite the current security challenges, seen as short term in comparison with the long term growth gains expected from natural resource discoveries and the improved ease of doing business.
• Since it is not a requirement under the law for all investors to register with KenInvest, the FDI figures are only a part of overall inflows into Kenya.

Kenya's foreign direct investment inflows are expected to surpass the record $3.5 billion realised in 2013.

Executives from the Kenya Investment Authority (KenInvest) and FDI Intelligence unit of the Financial Times said investor appetite was rising despite growing security challenges, with the ongoing infrastructure mega projects being the top attraction.

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Experts cite oil and gas, the hospitality, telecommunications and consumer sectors as the other attractions.

FDI inflows recorded by the KenInvest totalled Ksh30 billion ($341 million) in the first quarter of 2014, new data shows. Inflows into Kenya rose to a record $3.5 billion in 2013 compared with $2.1 billion in 2012 and $1.3 billion in 2011, according to data from FDI Intelligence.

“Attracting that amount of FDI in an election year is significant,” said Dr Moses Ikiara, the managing director at KenInvest. “We expect this year to be better.”

Kenya is expected to continue growing its status as a regional hub for international deal hunters despite the current security challenges, seen as short term in comparison with the long term growth gains expected from natural resource discoveries and the improved ease of doing business.

The status of Kenya as a destination for FDI in Africa has grown from insignificant levels in the past decade, to second position last year after Ghana, according to data released jointly by Ernst & Young and KenInvest.

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The agency has an annual target of attracting at $1.8billion.  In the past financial year, it attracted $1.2 billion and has attracted $1.05 billion in the first three quarters of the financial year that ends on June 31.

Since it is not a requirement under the law for all investors to register with KenInvest, the FDI figures are only a part of overall inflows into Kenya.

In the past five years for instance, the communications sector drew the most FDI accounting for 17 per cent of all tracked projects between 2009 and 2013, closely followed by the financial services sector, which accounted for 14 per cent, according to FDI Intelligence.

Other key sectors attracting FDI are retail and consumer products, technology and media, are mainly by investors from the UK, US and India.

Over the five-year period, the UK has been the greatest source of investment into Kenya, representing 15 per cent of tracked FDI. The UK doubled its share of FDI into Kenya from 11 per cent in 2009 to 23 per cent in 2013.

The financial services sector accounted for 25 per cent of this FDI, with six separate companies undertaking investments