Information and communication technology (ICT) recorded the largest increase in capital investment of Sh27.6 billion from foreigners in 2022, partly reflecting the impact of funding local startups.
This saw the stock of foreign direct investment (FDI) liabilities in the ICT sector grow to Sh162.4 billion in the review period from Sh134.8 billion in 2021 according to data from the Kenya National Bureau of Statistics.
Stock of FDI liabilities refers to assets such as loans and equity positions owned by foreigners in Kenya-based entities like startups and listed companies.
Total FDI liabilities rose by Sh84 billion to Sh1.1 trillion in the review period when Kenya's assets abroad increased by Sh62.1 billion to Sh514.9 billion, leaving the country in a debtor position.
The growth in the ICT sector’s share in Kenya’s FDI liability stock points to the increased attractiveness of Kenya’s technology industry.
It has been acclaimed as one of Africa’s fastest growing, driven by a predominantly youthful, entrepreneurial, and innovative population.
The sector’s contribution to the country’s Gross Domestic Product (GDP) grew by an average of 9.9 percent in 2022, making it the second-fastest-growing sector after the hospitality industry, which grew by about 26 percent in the same period.
This was the fastest annual growth rate ever recorded by the sector in the last five years, an indication that the increased investments by foreigners in the industry significantly helped fuel the industry’s prospects.
The year marked major investment announcements by large foreign multinationals in the tech industry, among them Google, which invested Sh130 billion in African countries, including Kenya.
Microsoft also launched its Africa Development Centre stationed in Nairobi in the same year, while Amazon launched its Amazon Web Services office in Kenya, both developments coming with massive investments, bolstering the tech industry.
The ICT industry now accounts for 13.6 percent of Kenya’s FDI liabilities, making it the third largest sector, second only to financial services.
Financial services currently account for 32 percent with Sh375 billion in FDI stock, and the manufacturing sector, which has Sh194 billion or 16.2 percent of total FDI stock.
Wholesale and retail are now Kenya’s fourth largest sector where foreign capital is stashed but recorded a significantly slower growth in 2022.
It currently has about Sh158 billion worth of FDI, accounting for about 13.2 percent of the total FDI liabilities stock.
The four top sectors jointly account for three-quarters of the country’s FDI liabilities stock, with the other sectors sharing the rest.
The agriculture and mining industries hold seven and six percent of the total respectively.
In terms of countries, the United Kingdom is the top owner of assets in Kenya with an FDI stock of Sh261.1 billion in 2022.