Kenya
overtook South Africa to become the biggest investor in other African
countries in terms of the number of projects in 2015.
Kenya
invested in 36 projects last year in other parts of the continent
against South Africa’s 33, a new study by financial consulting firm
Ernst & Young shows.
It noted that most of Kenya’s intra-Africa investments went into countries within the East African Community (EAC).
The
study said Kenya’s global ranking as a source of foreign direct
investment (FDI) to the African continent also improved strongly to the
seventh position in 2015 from 13th in 2014.
“Activity was largely
concentrated in services, with financial and business services together
accounting for nearly 78 per cent of FDI projects originating from
Kenya,” said the report released Monday.
“Many Kenyan companies
are playing the role initially adopted by South Africa’s corporate
sector, who were the first to venture outside their home markets,” it
adds.
South Africa however beat Kenya in terms of the worth of the projects as it had Sh200 billion compared to Kenya’s Sh100 billion.
In
the past decade, Kenyan banks and retail businesses, for example, have
ventured into the region including in the volatile South Sudan and
Somalia.
“East Africa is the primary destination for Kenyan
investors, in line with overall sub-regional integration plans,” said
the study.
It further shows that Africa attracted FDI from a diverse and growing group of investors.
In
2015, the US retained its position as the largest investor in the
continent, despite a four-per cent fall in FDI projects. Historical
investors, including the UK, France, the UAE and India, expressed
renewed interest in Africa.
Other notable investors in Africa
were Italy and Luxembourg, which became among the largest 15 investors
in 2015. Overall, intra-African FDI projects rose 2.8 per cent in 2015,
with capital investment up 6.2 per cent.
In terms of inward FDI
in 2015, the study shows that Kenya, touted as East Africa’s anchor
economy, posted a resurgence with projects standing at 95 compared to 62
the previous year, an increase of 53.2 per cent.
At the same
time South Africa had more inward FDI projects numbering 130 in 2015
compared to 120 projects in 2014 , an 8.3-per cent increase.
“Kenya
and East Africa is shining bright and even brighter in the comparison
with its peers. Kenya is very much the leader in this region and because
of a good component of diversification, is maintaining a strong rate of
GDP expansion,” Rich Management CEO Aly Khan Satchu said of the
report’s findings.
The report however warned that potential investors are wary of downside risks to growth forecasts.
“For
example, in Kenya’s case, a large current account deficit and growing
debt levels provide the government with less flexibility to fund
longer-term growth,” it said.
Across the whole continent on the
other hand, inward FDI project numbers increased by seven per cent year
on year, from 722 projects in 2014 to 771 projects in 2015.
But
the capital value of those projects was down year-on-year to $71.3
billion in 2015 from $88.5 billion in 2014. Even after falling, the 2015
figure was still higher than the average of $68 billion between 2010 to
2014. |
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