Changing patterns in foreign investments into Kenya

Foreign direct investments flows into Kenya grew up until 2015, but are forecast to decline in 2016 and 2017 despite efforts by the Government to attract investments into the country.

According to the latest data by the Kenya Bureau of Statistics (KNBS), FDI inflows grew 10 per cent to Sh588.9 billion by end of 2015, compared to Sh534.7 billion in 2014.

The United Nations Conference on Trade and Development in June said inflows in 2016 slumped, despite what the UN body said were investment reforms and a supportive domestic policy environment.

The KNBS data published earlier this month indicated foreign liabilities – which include investments by foreigners into the country – reached Sh1.081 trillion in 2015, a marginal growth from Sh1.026 trillion in 2014.

“The stock of FDI accounted for the largest share of the total foreign liabilities at 52.1 per cent and 54.4 per cent in 2014 and 2015 respectively,” said KNBS.

“FDI increased 10.1 per cent from Sh534 billion in 2014 to Sh588 billion in 2015 as a result of a 13.3 per cent increase in equity and fund shares.”

The report also noted the shift in FDI inflows into Kenya, with countries such as China emerging as key investors and fighting it out with countries that have traditionally been major sources of investments into Kenya such as the UK.

“Europe remained the largest source of investment, accounting for 33.7 per cent and 34.6 per cent of total foreign liabilities in 2014 and 2015, respectively. The UK, France, and Netherlands were the leading sources of foreign liabilities within the European Union (EU), with a combined stock of Sh301 billion in 2015,” said KNBS.

“Asia was the second largest investor accounting for 15.5 per cent and 17.1 per cent of the total stock of foreign liabilities in 2014 and 2015, respectively.” Other than China, investments were coming from Japan and India.

The stock of foreign liabilities from other African countries grew 16 per cent to Sh149 billion in 2015.