Foreign direct investments surge after three-year lull

When former KenInvest Managing Director Moses Ikiara handed over leadership to acting MD Olivia Rachier as chairman Dennis Waweru looked on. [File, Standard]

Kenya's foreign direct investment (FDI) inflows are on the rebound after a lull in the last three years.

The slowdown was due to the global economic slowdown triggered by the Covid-19 pandemic.

According to the Kenya Investment Authority (KenInvest), the inflows point to a steady recovery to pre-pandemic levels, a trend expected to hold as the new government lays out its vision and earmarks strategic sectors to deliver economic transformation.

KenInvest acting Managing Director Olivia Rachier said foreign investors have been developing keen interest in key sectors such as green energy, infrastructure, agricultural value chain, oil and gas and information technology.

"We will proactively support investors through all avenues available to address their concerns whenever the need arises," she said.

The FDI is bolstered by the government's intent to pursue sustainable energy production to respond to the climate change crisis.

Ms Rachier said the plan is key to positioning Kenya among the integral players and respondents to global warming.

The pandemic not only battered Kenya's FDI stock but sent the entire global marketplace back to the drawing board regarding strategy as foreign investors adopted a wait-and-see attitude aimed at capital preservation.

As the pandemic continues to subside, the impact it has had on economies is far from being mitigated.

This is complicated further by the Russia-Ukraine war. Some countries are, however, coming up with innovative ways of building back better.

Kenya continues to align her policies to the modern investment climate demands in a bid to position herself as a leader in investment attraction and retention.

"The country's seamless political transition during the just concluded polls is a testament to its resolve to claim Kenya's leadership position as a haven where investors are assured of the security of their investments," Ms Rachier said.

Given that an estimated 42 per cent of the country's gross domestic product (GDP) is derived from climate-sensitive sectors such as agriculture, manufacturing and tourism, an effort towards promoting responsible production and sustainable energy generation is a welcome relief to Kenya.

"In the long run, the country will be able to manage with ease the effects of drought and floods. The trickle-down effect will have a positive impact on the overall economic performance."

Ms Rachier said the improved business environment brought about by government interventions in response to changes in investor needs has started bearing fruit.

"This is evident considering the frequency and number of registered interests from investment groups as well as source country enquiries and investor-aligned delegations that the authority continue to receive."

In 2021, KenInvest registered and facilitated 167 foreign investment projects worth Sh47.44 billion, an encouraging feat during such an unpredictable period.

Sectors that drew more interest were energy, construction, finance and manufacturing.

Ms Rachier said the Netherlands and Mauritius were among the fast-rising source countries for Kenya's FDI, joining the traditional source powerhouses - the UK, US, China and Japan.