Foreign Direct Investment (FDI) inflows into Kenya are on a rebound after a lull experienced in the last three years courtesy of the global economic slowdown triggered by the Covid-19 pandemic outbreak.
According to the Kenya Investment Authority (KenInvest), the FDI prospects point to a steady recovery to pre-pandemic levels, a trend expected to hold as the new government earmarks strategic sectors to support Vision 2030.
According to KenInvest’s Acting managing director Olivia Rachier, foreign investors have been developing a keen interest in green energy, infrastructure, agricultural value chain, oil & gas as well as the information technology space.
''This is bolstered by the government’s intent to pursue a strategic approach to sustainable energy production in a bid to respond to challenges brought about by climate change,'' Rachier said.
She added that this is key to positioning Kenya among the integral players and respondents to the global rallying call of saving the globe from the effects of global warming.
According to her, the pandemic not only battered Kenya’s FDI stock but sent the entire global marketplace back to the drawing board with respect to strategizing on investor targeting as foreign investors adopted a wait-and-see attitude aimed at capital preservation.
As the pandemic continues to subside, the impact it has had on economies is far from being mitigated. This is complicated further by the Russia-Ukraine hostilities.
Some countries are however coming up with innovative ways of building back better as others apply the building forward smarter mantra.
In the African context, Kenya continues to align her policies to the modern investment climate demands in a bid to position herself as a leader in investment attraction and retention.
According to the authority, the county’s seamless political transition during the just concluded general elections is a testament to its resolve to claim leadership position as a haven where investors are assured of the security of their investments.
Given that an estimated 42 per cent of the country’s GDP is derived from climate-sensitive sectors such as agriculture, manufacturing and tourism, an effort towards promoting responsible production and sustainable energy generation is a welcome relief to Kenya.
In the long run, the country will be able to manage with ease the effects of drought and floods for the benefit of the continued growth of the aforementioned sectors and associated ones. The trickle-down effect will have a positive impact on the overall economic performance.
Ms. Rachier confirmed that the improved business environment brought about by government interventions in response to changes in investor needs has started bearing fruit.
This is evident considering the frequency and number of registered interests from investment groups as well as source country inquiries and investor-aligned delegations that the Authority continues to receive.
Investment-related statistics compiled by the Authority at the thick of Covid 19 pandemic paint a promising picture of the country’s potential of dislodging comparator economies as a preferred investment destination in Africa post-pandemic.
During the year 2021, KenInvest registered and facilitated 167 foreign investment projects worth Sh47.44 billion, an encouraging feat during such an unpredictable period.
Sectors that drew more interest were energy, construction, finance and manufacturing.
The promising achievement notwithstanding, the overall FDI attracted may be much higher for the period under review given that the data presented emanated only from companies that registered with the Authority.
The difference between the actual and presented value of the investment by KenInvest is brought about by the option available to investors of either registering or not registering their companies with the authority.
This is in line with the provision of the Investment Promotion Act of 2004 from which the investment promotion agency draws its mandate.
Currently, KenInvest is in the process of organizational revitalisation by coining a new strategic plan to reinvigorate its approach towards investment promotion, facilitation and policy advocacy, the three pillars that anchor the Authority’s mandate.
The state corporation envisages that through this approach, it will contribute extensively to the Government’s aspirations of economic development, under the Bottom-Up Economic Model and overall sustainable economic growth.
Rachier affirmed that the three functions of investment promotion, facilitation and policy advocacy will be integrated into the key sectors that form the core pillars of the Government’s economic development.
These sectors include agriculture, housing and settlement, healthcare, manufacturing, and the creative economy.
Involving micro, small and medium enterprises (MSME) in the value chains of the said sectors will be pivotal to the realization of the government's dream of inclusive growth.
“Pre and post-investment facilitation is critical towards making Kenya a global leader in investment attraction and facilitation, as it ensures timeliness in investment implementation continuum from the time an inquiry is received to the time the investment is operationalized,'' Rachier said.
She added that it will proactively support investors through all avenues available to address their concerns whenever the need arises.
She noted that Netherlands and Mauritius were among the fast-rising source countries for Kenya’s foreign direct investments.
These are joining the traditional FDI source powerhouses that include the United Kingdom, the United States of America, China and Japan.