Kenya climbed up to position four last year among the most attractive countries to invest in on the continent, according to a survey by a South African-based bank.
The country ranked fifth in 2018 and sixth in 2017, showing that there had been improvement in the past two years on the basis of the Rand Merchant Bank’s Investment Attractiveness Index.
“Kenya continues its steady climb up to number four in this year’s Where to Invest in Africa investment attractiveness rankings. Its economy benefits from diversity as well as a sustained expansion in consumer demand,” the bank said in a statement.
Other factors working in Kenya’s favour are urbanisation, East African Community integration, structural reforms and investment in infrastructure, including an oil pipeline, railways, ports and power generation.
“While there has been a decline in continental foreign direct investment (FDI) since 2015, Kenya has managed to buck the trend by increasing its share of FDI projects.
The report said Kenya’s resources sector presents a strong outlook.
It noted that although competition for consumers is the highest in Africa, Kenya’s consumer spending is the largest and fastest growing in East Africa due especially to improvements in distributions systems, supported by innovative ICT initiatives, and relatively low market saturation.
The bank’s report said that although Kenya has a relatively small market size, it has a strong manufacturing sector.
“The most striking growth is in chemicals, dairy, and fabricated metals. Key to Kenya’s plan to encourage investment is the development of its Special Economic Zones. Investors have benefited in SEZs where power interruptions are significantly less frequent and almost 20 per cent of manufacturing employment is located in export-processing zones,” the bank said.
Infrastructure investments are also an essential part of the country’s development strategy, for example, the construction of the railway connecting the capital to the port of Mombasa.
It noted however that in the near to medium term, there are some headwinds with which the East African economy will have to contend.
“The volatile global market and erratic weather patterns are key vulnerabilities that that the country has to adapt to,” said the bank in the report.