Markets & Finance

Oil sector raises Kenya’s FDI inflows 98 per cent

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Kenya is developing as a favoured business hub for oil and gas exploration. Photo/FILE

The oil sector pushed Foreign Direct Investments (FDI) inflows into Kenya up almost twice in 2013.

United Nations Conference on Trade and Development (UNCTAD) World Investment Report 2014 says FDI inflows in 2013 stood at $514 million (Sh45.18 billion), up from $259 million (Sh22.7 billion) a year earlier which is a 98 per cent increase.

The report says the capital mainly went to oil, gas and the manufacturing industries.

“Kenya is developing as a favoured business hub, not only for oil and gas exploration in the sub-region but also for industrial production and transport. The country is set to develop further as a regional hub for energy, services and manufacturing over the next decade,” says the report.

The study says that Kenyan companies had been active in investing beyond the borders.

Expansion of companies

Sameer Group which has interests in agriculture, manufacturing, finance and construction and Comcraft Group — which deals in heavy steel, are expanding in Africa, Asia and North America.

UST Global, a subsidiary of Kenya-based Comcraft Group, plans to set up an IT services and solutions facility in León, Mexico, to cater for US, Mexican and Latin American markets.

‘‘The company will invest between $100 million (Sh8.7 billion) and $150 million (Sh13 billion) in the facility, which will employ 10,000 staff by 2014 or 2015,” says the report by fDi Intelligence, a division of The Financial Times.

Kenya’s share of FDI inflows was however smaller than its neighbours. Flows to the East African region stood at $6.2 billion (Sh545 billion) in 2013.

Tanzania recorded the highest inflows at $1.872 billion (Sh162.8 billion) followed by Uganda $1.146 billion (Sh99.7 billion) and Ethiopia $953 million (Sh82.9 billion).

Rwanda and Burundi were behind Kenya with FDI flows of $111 million (Sh9.6 billion) and $7 million (Sh609 million) respectively.

FDI inflows to Africa stood at $57.24 billion (Sh4.9 trillion). Flows to the manufacturing sector are expected to rise this year based on planned expansion of companies and setting up of new ones.