Kenya is losing out to regional peers Uganda and Tanzania in alluring Foreign Direct Investments (FDIs), the latest World Bank Economic Update report for Kenya shows.
Uganda’s FDI dwarfs Kenya’s seven times with Tanzania receiving six times more foreign investment than what Kenya gets. The Bretton Woods Institution says Kenya is still unable to attract significant foreign direct investments to finance economic activity and power its growth. Kenya’s average inflows remain below 1 per cent of the country’s gross domestic product. Latest data shows that although FDI inflows rose to $249 million (Sh21.4 billion) in September this year from $177 million (Sh15.2 billion) in December 2012, the total economic output remained flat at 0.6 per cent. In the first three quarters of 2013, Kenya managed to attract just $186 million (Sh16 billion). Uganda attracted Sh154.8 billion ($1.8 billion) in FDI, most of it going into the oil, gas and mining sectors. Tanzania, which recently discovered vast deposits of gas, received Sh129 billion ($1.5 billion).
Although the country stands as the economic giant in the East Africa region, the World Bank terms Kenya’s regulatory environment as hostile to investment. Kenya’s ease of doing business index, according to the bank’s data, has consistently declined to position 129 out of 189 countries in the present 2013/14 financial year from position 72 in 2007/8. Even though Kenya’s ease to attract foreign investment has been low compared to its neighbours, it is the only country in the region that has made investments in the other four countries in the region.
Kenyan firms A number of Kenyan firms have made inroads into the region. Most of them are banks. Diamond Trust Bank, Commercial Bank of Africa, Bank of Africa, African Banking Corporation, Fina, Equity, I&M, NIC, Co-operative Bank, CfC Stanbic and Imperial Bank have also invested heavily in Uganda, Tanzania, Rwanda, Burundi and South Sudan.
