New registered investments fail to hit Sh100bn target
Kenya Investment Authority (Keninvest) Managing Director June Chepkemei (left), State Department for Investment Promotion PS Abubakar Hassan Abubakar (centre) and Keninvest Chairperson Sally Mahihu during the launch of Kenya Investment Authority Strategic plan 2023-2027 on December 20, 2023 at Serena Hotel Nairobi. PHOTO | WILFRED NYANGARESI | NMG
Foreign and domestic investment projects registered by the State failed to inject the targeted cash into the economy last financial year, investment promotion agency says, blaming the underperformance on inadequate funding.
The Kenya Investment Authority (KenInvest) issued certificates to 207 projects valued at Sh74.17 billion in the year period through June 2023, it says in a budget review report.
The value of the projects fell short of the Sh100 billion goal it had set despite the number of investments surpassing the 200 it had projected. The investments were, however, 63.98 percent more than Sh45.23 billion in the prior year ended June 2022.
“The Authority’s value of investments projects attracted and registered were not capital intensive, therefore, bringing down the achievement (of the target), " KenInvest says in the report which will form the basis for budget allocation for the year starting July.
“The target was not achieved due to low bankability of investment projects.”
The investors who were issued with certificates created an estimated 5,400 jobs: slightly above half (54 percent) of the 10,000 employment opportunities earlier projected.
Investment certificates qualify firms to get incentives such as investment deductions for targeted sectors such as manufacturing and tax rebates from Treasury through the Kenya Revenue Authority.
“The target (for employment opportunities) was missed because investments attracted were not labour intensive,” the investment promotion agency says.
Foreign firms are required to provide proof of raising at least $100,000 (about Sh16 million under prevailing US dollar conversion rates) as part of conditions to be granted the investment certificates, while the floor for domestic companies has been set at Sh1 million.
A report by the State for Investment Promotion estimated that deals worth Sh135.85 billion were signed with foreign investors in the review year, suggesting some of the projects were not registered with KenInvest.
The value of the foreign direct investments will be fully unlocked when the projects are completed in subsequent years.
“This is attributed to signing of MoUs (memorandum of understanding) by Moderna, Taifa Gas, UK Green and Kisumu County, ICRC and AA Jumbo,” the department, headed by Principal Secretary Abubakar Hassan, wrote in a budgetary report to guide the expenditure for the next financial year from July 2024.
Kenya sent five investment promotion missions abroad in the review year, covering the USA, UK, Indonesia, Malaysia and Germany in the review period, according to the Investment Promotion department.
Nairobi was the darling of foreign investors seeking to set up operations in Eastern and Southern Africa in the 1960s and 1970s.
However, a past analysis of the country’s investment landscape by the United Nations Conference on Trade and Development suggested that “poor economic policies and inconsistent efforts at structural reforms, growing problems of corruption and governance, and the deterioration of public services have discouraged FDI since the 1980s”.
“KenInvest will enhance its investment promotion efforts by targeting industries and sectors with high potential for job creation. This will involve conducting thorough research and analysis to identify investment opportunities that align with the country’s priorities for economic growth and employment generation,” reads the agency's Strategic Plan 2023-27.
