KenInvest is riding on the back of revelations that local investors overtook foreign firms as the major source of project finance in 2010, but the gap has opened further in what is set to challenge the policy slant in favour of the latter.
KenInvest Acting Managing Director Julius Korir says the authority is carrying out a resource mapping exercise in which it will identify different projects at the county level which will be presented to residents to attract funds.
“We have realised that most of the people in the cities have invested in the cities, so they are the local direct investment we will be targeting. We want to align them with projects back in the counties where they come from that they could be interested in financing,” Korir said.
Data from KenInvest shows that projects registered by domestic investors grew to Sh5.8 billion between July and September 2010 compared to Sh1.3 billion in the same period last year, opening a huge gap with foreign direct investment that attracted Sh2.2 billion, reflecting a 47.6 percent drop.
This shift has seen local investors’ share of new investments grow to 72 percent in the three months to September up from 40 percent in the same period last year.
Korir said the trend indicated that domestic firms would be critical in creating new jobs over the next two years and the potential that exists in locally generating resources.
“When you look at the sort of investments we are attracting, local investments are taking a bigger chunk. We think that for Kenya to develop investments should be generated locally,” he said.
The growth of domestic investments means the country can be cushioned from a slump in foreign direct investments which are more sensitive to political risks and volatility of local currency – can help create new jobs, generate more revenues for the taxman and stabilise the economy.
Korir said the interest by local investors was a pointer of the need to support local entrepreneurs since the bulk of state incentives including tax holidays, regulatory exemptions and freebies such as land have been used to lure foreign investors in the quest to alleviate youth unemployment.
The economy slowed down to 4.1 percent in the three months to June compared to 4.6 percent in the same period last year.
“The bullish approach taken by local investors will be key in driving economic growth in the medium term,” Korir said.