NAIROBI, Kenya Aug 16 – Economic upheaval in developed markets is expected to impact foreign direct investment to Kenya this year as they look to recover from shocks in their economies.
IFC Director for Eastern and Southern Africa Jean Phillipe Prosper says whereas Africa and Kenya in particular present an ideal market for foreign companies to grow their business, financial constraints could see them scaling down their foreign investments.
Mr Prosper says this could affect the level of engagement between developed markets and the country in the short term, but expects it to pick up once the financial systems stabilise.
“Africa in one way or the other will be affected. We export a lot of our products to the developed world so if there is a slowdown in that region there will be less activity,” Mr Prosper said but pointed out it would be difficult to measure the full extent.
A survey by Ernst and Young in May showed that foreign investments in Africa jumped 87 percent in the last decade from 338 projects in 2003 to 633 in 2010 and predicts investments in the region could hit $15 billion (Sh1.3 trillion) by 2015.
The top 10 African countries attracting 70 percent of those projects included South Africa, Egypt, Morocco, Algeria, Tunisia, Nigeria, Angola, Kenya, Libya and Ghana.
Mr Prosper however said the IFC would remain a major player in development projects in East Africa having invested $327 million (Sh30 billion) in its 2011 financial year.
“At IFC we have plenty of funds and Africa remains a key strategic priority for us,” he said.
In the 2011 financial year (July 31 2010 to June 30 2011), IFC invested a total of $2.2 billion in Africa, with increased financial and advisory support focused on prompting private sector growth and poverty reduction.
IFC was also able to mobilise an additional $589 million from other investors to fund projects.
The funds were spread across financial services, agribusiness, energy, infrastructure and the small and medium enterprise sector.
Earlier this the month, the IFC committed $100 million (Sh9.3 billion) to Kenya Commercial Bank to expand its lending program to the SME sector. KCB will also use part of the funds in its mortgage business.
The IFC Director revealed they were also in talks with private sector players for the financing of three power projects in Kenya, but declined to give further details when probed.
“We have not committed to these projects so I cannot get into the details, however we are actively working to have these projects on board soon,” he said.