Markets & Finance

Mineral wealth sparks rush of foreign investors to Kenya

eco drivers

Foreign investors are keen to invest in the Kenya’s ICT, energy, infrastructure, pharmaceutical and agribusiness sectors. Photos/FILE

Kenya can now be likened to a fair lady grabbing the attention of foreign suitors out to woo her to sign deals.

In a space of 30 days or so, hordes of foreign visitors have flown into Kenya’s capital, Nairobi. And no, they are not after the fun and sun this city in the Savannah of East Africa glows under. It is matters business.

Just what could be pulling investors from foreign countries in their numbers?

Officials hold the view that the recent discovery of mineral deposits in the country could be what has whetted the appetite of foreign visitors for the local market.

ALSO READ: Kenya’s mineral wealth profile rises with the discovery of gas

The smoke from oil drilling rigs, excavators and trucks at minefields has signalled beckoning opportunities galore to the investors.

“Multinationals are keen to tap into these new frontier markets,” James Mwangi Ndegwa the deputy chief executive of the Kenya National Chamber of Commerce and Industry told the Business Daily.

For the last one month alone, a record four foreign countries, represented by businesspeople have entered pacts with Kenya in a bid to ramp up trade relations with the East African economic power house.

A delegation of about 106 company representatives from Morocco made its way into the country first, followed by that of the United Arab Emirates (UAE). South Korea was next and the latest was Hong Kong on July 11.

These delegations are keen to invest in the country’s ICT, energy, infrastructure, pharmaceutical and agribusiness sectors with the opening of trade along these lines following subsequent partnership deals.

Another delegation from Brazil is expected into the country on July 24 for similar business arrangement.

Kenya is widely seen as a gateway into the hinterland of the East and Central African countries which are endowed with huge deposits of minerals too. 

The great lakes countries have in the recent days witnessed a flurry of activity following the news of the discovery of oil and liquefied petroleum gas (LPG) deposits.

In 2006, explorers struck oil in Uganda, the third largest East Africa’s economy whose reservoir was estimated to hold 3.5 billion barrels of crude oil. The drilling of oil is set to kick off in 2016.

Kenya’s hunt for oil has also borne fruit when the commodity was found in Turkana County at Ngamia-1 well last year.

READ: Tullow strikes new oil deposits in Turkana

There have been subsequent discoveries of other oil wells such as Twiga South-1 and Etuko-1, raising the country’s profile as a potential bulk producer of petroleum products.

“Oil is an economic catalyst, thus the rush of investors,” Mr Ndegwa observed.

The revelation of other minerals like coal in Kitui, titanium in Kwale and fluorspar in Kerio Valley that are viable for commercial exploitation, has also signalled a welcome open door for investors.

Kenya’s technological advancement that is characterised by massive use of innovative products in financial, telecommunication and construction sectors could also explain the rejuvenated interest in the country.

For instance, the electronic single window system set to go live on October 31 is expected to streamline the country’s customs and cargo clearance systems thereby making it easy and cheaper to do business in Kenya.

The single window system which is under the custodian of the Kenya Trade Network Agency (Kentrade) will integrate the functions of all government agencies involved in cargo certification process into an electronic one stop shop.

“The anticipated benefits from the system will continue attracting investors,” Joseph Kibwana Kentrade chairman said.

With the system in place, the World Bank’s ranking of Kenya’s index of doing business is expected to spike significantly.

Kenya is ranked position 121 out of 185 countries as an economy conducive enough for doing business.

Equally important, most foreign investors find Kenya’s workforce aggressive and competent, an essential ingredient for business success.

“Kenya has a rich pool of human resource making it easy for multinationals to carry out their business in the country competitively,” Mr Ndegwa said.

Kenya’s relatively calm political climate could also be seen to add impetus to the pull of direct foreign investment.