Standard
Tuesday, February 26, 2013
Kenya’s local and foreign investment inflows dropped 160 per cent last year as East Africa’s largest economy lost its preferred status to its peers in the region.
Kenya Investment Authority ( KenInvest) the agency charged with investment promotion in Kenya says asset inflows into the country declined to Sh60 billion as at end of 2012 compared to Sh156 billion registered in 2011.
A number of investors are reportedly withholding investment proposals waiting for the outcome of the March 4, General Election. They cite growing insecurity and high interest rates that are hurting investments preferring instead Uganda and Tanzania.
KenInvest managing director Dr Moses Ikiara says that the sharp decline in new investment has been registered since mid-2012 owing to factors such as the security concerns especially the issue of Al Shabaab threat, uncertainties attached to the elections and high interest rates.
“The whole of last year interest rates remained high of about 28 per cent. In 2011, foreign investors registered into the country Sh74 billion while Sh82 billion was received in form of Direct Domestic Investments (DDI). Last year, foreign investors brought in Sh50.6 billion while DDI accounted for Sh10 billion,” Ikiara said.
“The bulk of direct investments come through KenInvest which could be estimated at around 60 per cent of the total.”
Between 2008 and 2012, local and international investors placed in the country investments worth Sh570 billion creating 65, 000 jobs. In the same period, about 2000 experts were engaged in the investment projects.
There are a number of investments that don’t pass through the agency especially those in the financial and telecommunications sectors that go through respective industry regulators. But KenInvest says it is pushing for a situation where all investments coming into the country are registered under one platform.
“We will soon sign a memorandum of understanding with the registrar of companies with the view to exchanging information on the number of companies registered every year. In this, way we will know the magnitude of investments any time of the year,” he added.
Between 2008 and 2012, the country received more than Sh500 billion worth of investment from local and foreign investors. In the last two years, China took the first position in terms of the countries that heavily invested into the country.
China in the past two years placed investment in Kenya valued at Sh21.6 billion, followed by Germany at Sh16.7 billion, United Kingdom Sh7.4 billion and Yemen Sh5.1 billion.
Simiyu Werunga the chief Executive African Centre for Security and Strategic Studies in a recent interview said investors especially those from Somalia have been fleeing the country citing insecurity incidences for their businesses especially in Eastleigh area.
“These investors are relocating in big numbers to countries such as
Uganda, Yemen, Djibouti, Omar and other Arab countries citing
insecurity,” he said.
Kenya equally has of late become a source of FDI outflow to the East
African countries. Local and foreign companies with bases in Kenya but
also operate subsidiaries in the neighbouring countries lead in
extending their investment.