Already $2.9bn investments announced.
Foreign domestic investment (FDI) in Kenya is looking forward to a bumper year in 2020, reports the authoritative London daily Financial Times.
Kenya is already attracting more FDI than its neighbours because of its success in attracting IT investment, states the report.
Now the FT data service fDi Markets, tracking greenfield cross-border investment (that is, investments in which a company will build its own brand-new facilities from the ground up), says Kenya has already attracted 54 new projects for next year totalling $2.9bm in announced investments. The country was already the second most innovative in sub-Saharan Africa after South Africa, according to the World Intellectual Property Organisation’s Global Innovation Index.
Over 60 foreign companies have made greenfield investments in Kenya in the software and IT sector since 2009, earning it the nickname of “Silicon Savannah”. Last spring Microsoft opened an Africa development centre and Cisco, a supplier of networking equipment, set up an innovation hub, both in Nairobi, says the FT. In addition, Standard Chartered Bank, the US healthcare group Abbott Laboratories, and Cigna, a US health service company, are among recent high-profile investors.
Although the country came in last for cost-effectiveness, its quality score was far ahead of the competition: 181.22, which is double that of Uganda, the second-ranked location, continues the report.
“Kenya as an investment destination has huge potential,” says Jonty van Zeller, director of regional business co-ordinator for east Africa Alamaya, according to the FT. But, in common with many other emerging markets, he says foreign investors considering investments in the country need to employ “local knowledge and local experience” to overcome barriers to doing business.
A recent review from Unctad, the UN trade body, highlighted Kenya’s advantages for investors, which include its geographic position as a regional economic hub, its growing entrepreneurial middle-class and expanding services sector, concludes the FT article.
Nevertheless, numerous obstacles to investment persist, notably the country’s poor-quality infrastructure, skills shortages, instability related to terrorist risk and political, social and ethnic divisions, ineffective rule of law and corruption, warned Unctad.
Photo: Downtown Nairobi