NAIROBI, Kenya, May 28 – Kenya is registering growth in Foreign Direct Investment (FDI) despite insecurity challenges that have rocked the country.
Kenya Investment Authority Managing Director Moses Ikiara says the country received a total of Sh313 billion in 2013, which was four times more than the amount received in 2012.
“This is despite the fact that 2013 was an election year, as well as the numerous insecurity attacks that faced the country among them the Westgate mall attack,” he said.
He said that already, the country has received Sh29 billion as of April 31, 2014 and pointed out that the medium term would look good with manufacturing, agriculture, energy, mining, oil and construction being the leading sectors in Foreign Direct Investment inflows.
“We already are in talks with multinational companies who are set to invest in the country in 2014/2015. Most of them want to make Kenya a hub as they try and make entry into the East African market,” he said.
Among the companies set to invest include Carrefour (a French multinational retailer) Radisson Blu and Park Inn Hotel, Business Connexion(ICT service provider based in South Africa), as well as Imperial Health Science (healthcare supply chain based in SA) that is set to invest Sh1.7 billion by 2015.
Ikiara said that the authority is seeking legislation that will require all investments in the country registered with the authority.
Ikiara says this will help the authority in data collection that will guide it in marketing the country as an investment hub.
“We need enough data that can help in decision making, as well as help us track all FDI inflows and outflows,” he said.
He said that the one stop shop where business registration will be done has stalled by lack of funds.
“We require about Sh100 million to put up the one stop shop. We have asked for Sh1.1 billion in the 2014/2015 budget, we hope to complete the one stop shop in that financial year.
The authority is also planning to use about Sh600 million in creating a country promotion video in their attempt to market the country.
According to Ernest &Young (EY) attractiveness survey 2014, Kenya and Ghana featured in the top four rankings in 2013 for the first time, having previously ranked in the bottom half of the top 10 FDI destinations.
The report indicates that investors see the three regional hub markets – namely South Africa in the south, Nigeria in the west and Kenya in the east – as the most attractive investment destinations in SSA. These three countries account for over 40 percent of total FDI projects in Sub-Saharan Africa.
The report ranks Nairobi the third most attractive city for investment in the continent with Johannesburg clinching the first position followed by Cape Town. Lagos takes the fourth place.
“In order to attract greater investments, cities need to focus on the following critical factors: infrastructure (77 percent), consumer base (73 percent), local labour cost and productivity (73 percent) and a skilled workforce (73 percent).
Between 2007 and 2013, FDI projects into Kenya increased at 40 percent as Kenya attracted the second highest number of FDI projects behind South Africa in 2013.
Kenya is now ranked the second fastest growing FDI in Africa behind Ghana that increased FDI by 51 percent in 2013.
Among the FDI’s in 2013 in Kenya include Scania Sh879 million investment, Royal Philips electronics Sh800 million as well as GZ Industries Sh8.7 billion among others.
“The largest investor in the region is, in fact, Kenya. East Africa’s appeal lies in its large market opportunities, recent discoveries of natural resources and ongoing market integration through the EAC, made up by Kenya, Uganda, Tanzania, Rwanda and Burundi.
Home to approximately 210 million people, the region’s attractiveness for consumer-facing industries is growing. Opportunities also exist in the TMT sector, with more than 50 million East Africans having mobile phone subscriptions. The uptake of mobiles has jumped 550pc in five years, making East Africa the world’s fastest-growing market,” the report states.
However, bureaucracy, corruption, poor infrastructure, and Insecurity are the major unattractive traits that East African governments should look at in bid to increase FDI in the region.