Kenya’s private capital investment was the second highest in Africa last year after South Africa’s having risen nearly five times to $1.1 billion (Sh163 billion at current exchange rates).
This is an increase from the $226 (Sh33.5 billion) recorded in 2021, according to the Finance in Africa report, published by the European Investment Bank (EIB).
The new report also found that the four markets of Kenya, South Africa, Egypt, and Nigeria accounted for nearly two-thirds of all private capital investments across the continent during the year.
According to the study, the financial services sector attracted the biggest share of private capital, accounting for almost 40 percent of the investments made last year.
This was followed by industrials, consumer products, information technology (IT), renewable energy, healthcare, conventional energy and telecommunications in that order.
“Information technology, which typically attracted less than three percent of private capital before the pandemic, accounted for just over 10 percent of investment in 2022,” reads the report.
“The impact of the war in Ukraine might be reflected in the increased share of conventional energy, which rose to eight percent in 2022 from four percent in 2021. This represents the sector’s largest market share since 2017, having fallen out of favour before the war.”
The East African region emerged as the most competitive in terms of share of assets held by banks, predominantly driven by Kenya where the top three banks have a 37 percent share of bank assets.
Kenya was also rated the most advanced financial market in the region with a credit-to-GDP ratio of 30 percent followed by Burundi at 24 percent and Djibouti at 21 percent.
“Ethiopia, Uganda and Tanzania have the lowest credit-to-GDP ratios at 12 percent, 14 percent, and 15 percent, respectively, despite having more banks than Burundi, Djibouti and Rwanda,” reads the report.