Consultancy EY has named Kenya as the second most attractive investment destination in Africa after Morocco in 2017 despite last year’s poor performance, where FDI dropped by 57.9 per cent.
EY’s Africa Attractiveness Index 2017 (AAI 2017) showed Kenya scored highly in the long-term outlook in governance and human development (16 out of 20), economic diversification (10 out of 20), infrastructure and logistics (16 out of 20) and improved business environment rating that stood at 10 out of 20.
“Kenya, which is East Africa’s anchor economy (and SSA’s fourth largest), saw investment flag in 2016 after a bumper year in 2015. FDI projects were down 57.9 per cent, while capital investment declined by 55.5 per cent. But on a longer-term perspective, FDI flows into Kenya has tended to ebb and flow year-on-year,” it said.
The report blames Kenya’s poor show in 2016 to ongoing uncertainty over Britain’s planned exit from the European Union, which saw UK companies reduce investment in Kenya.
“Kenya had a strong 2015, mainly driven by a surge in projects from the UK. These understandably slowed in 2016, as the UK copes with uncertainty following the vote to leave the EU. Our confidence in Kenya’s investment prospects remains firm, underscored by the country’s strong ranking as the second-most attractive FDI destination in 2017,” it says.
The report adds that multinationals keen on reaching the thriving 180 million people-rich East African Market are seeking to establish regional hubs in Kenya to take advantage of the free trade area that allows free movement of goods, people and capital across East Africa.
However, EY urged Kenya to go slow on public debt, which it says is worrying and threatens its current account.
But it gave a bright long-term outlook on inflation though Kenyans are currently going through tough times.
The report observed that Kenya’s newly built infrastructure notably tarmacking of roads and the soon to be opened 472 kilometre long Mombasa-Nairobi Standard Gauge Railway was a recipe for increased industrial activity and trade.