Trade and Industrialisation Cabinet Secretary Peter Munya last week appeared on a local television station to give an update on the government’s Big Four agenda on doubling the country’s manufacturing capacity to 15 per cent of GDP by 2022 from the current eight per cent.
According to CS Munya, the Government is on course in improving the manufacturing sector’s output through several initiatives, including establishing county industrial parks and improving Kenya’s infrastructure to attract foreign manufacturing firms.
“There has been a steady flow of companies that want to set up shop in Kenya and we have been giving them incentives in terms of tax holidays,” said Mr Munya.
“Kenya is the third biggest destination for private investments inflow in Africa and if you look at the index, you will see after Nigeria and South Africa, Kenya is next.”
“And if you look at the numbers, not just the amounts, Kenya is number one in terms of those who are coming in and that tells you that the policy is working,” he added. The Financial Standard looked at the numbers and found Mr Munya’s claim fell short of the truth. Data from the enterprise division of the UN Conference on Trade and Development (UNCTAD) indicates that Foreign Direct Investment (FDI) inflows into Africa have been on a downward trend over the past few years.
This is in tandem with falling rates of investment returns from 12.4 per cent in 2013 to 7.1 per cent in 2015 and 6.3 per cent in 2017. Overall, FDI inflows into Africa fell to Sh4.2 trillion in 2017, recording a 21 per cent drop from investment reported in 2016 on the back of weak oil prices and lingering effects of the commodity bust.
Egypt leads the continent in terms of FDI, netting Sh1.3 trillion of FDI last year, with Ethiopia emerging a distant second with Sh360 billion while Nigeria came in third with Sh350 billion. FDI to Morrocco increased 23 per cent to Sh270 billion on the back of large investments to the country’s automotive sector while South Africa saw FDI levels fall 41 per cent to Sh130 billion due to an underperforming commodity sector and political uncertainty. While the overall value of FDI to Kenya increased by 71 per cent, the country still trailed Ethiopia in the region with Sh67 billion of FDI. At the same time, the EY Investment Readiness Report for 2018 placed Kenya third after South Africa and Morocco in terms of ongoing FDI projects while private equity fund Quantam Global placed Kenya ninth in Africa as the most attractive economy for investors in its 2018 index. CS Munya’s claim that Kenya is the leading economy in Africa in terms of FDI is, therefore, incorrect.