Nearly 57% of foreign firms in Kenya plan major reinvestment, signaling confidence despite high costs and regulatory hurdles.
Foreign Investors Double Down on Kenya
Nearly 57% of foreign-owned businesses in Kenya are planning to reinvest or expand over the next three years—each committing at least KSh 100 million (~US$745,000)—according to the latest Foreign Investment Survey (FIS) by the Kenya National Bureau of Statistics (KNBS), in partnership with the Central Bank of Kenya (CBK) and KenInvest.
Snapshot of Investor Confidence
Conducted between November 2024 and February 2025, the survey captured responses from 968 enterprises—primarily in Nairobi—achieving a 77.6% response rate. Among these, 603 firms reported foreign assets or liabilities.
Investment intentions:
- 14% of firms plan to invest above KSh 1 billion (~US$7.45 m).
- 29.1% aim for KSh 101 m–1 billion (~US$752,400–7.45 m).
- In total, 56.9% will commit at least KSh 100 m (~US$745,000).
Over the next three years:
- 39.5% will reinvest or expand,
- 25% aim to diversify,
- 30.3% expect to maintain current operations,
- 3.9% foresee scaling down, and 1.4% plan to exit.
(Financial Times)
Rising Liabilities and Inflows
Kenya’s stock of foreign liabilities rose 42% in six years to KSh 2.34 trillion (~US$19.9 billion) in 2023, up from KSh 1.65 trillion (~US$14.1 billion) in 2018. A key driver was an 8.5% rise in FDI, worth KSh 199 billion (~US$1.7 billion).
Why Investors Choose Kenya
Among firms established since 2019:
- 22.9% cited skilled labour,
- 17.1% each pointed to market access and ease of doing business,
- 14.3% noted logistics advantages.
Other motivators included macroeconomic stability, technology and innovation, e-government services, and political stability.
High Costs Remain a Concern
Despite optimism, foreign firms flagged expensive enablers:
- Electricity supply (70.1%),
- Financial services (58.5%),
- Immigration services (55.8%),
- Business permits (51.8%).
Internet, water supply, construction, and environmental services were considered moderately costly.
Sources of Investment
- Europe: 35% of liabilities, led by the UK (46.4%) and Netherlands (17.3%).
- Africa: 26.4%, driven by inflows from South Africa, DRC, and Mauritius.
- Asia: 9.3%, with declines from India, UAE, and China.
- Americas: 9.1%, largely from the US, British Virgin Islands, and Canada.
Sectoral Focus
- Finance & insurance: 28.1% (KSh 409.7 billion / ~US$3.5 billion).
- Manufacturing: 14.8% (KSh 216.2 billion / ~US$1.84 billion).
- ICT: 8.1% (KSh 186.6 billion / ~US$1.59 billion).
- Wholesale & retail: slight dip to KSh 169.8 billion (~US$1.45 billion).
Investor Sentiment and Jobs
68% of foreign firms expressed confidence in Kenya’s business environment. Employment in foreign-owned firms rose 3.3% to 224,704 workers in 2023, with women making up 39.1% of the workforce, up from 37.8% in 2022.
The Road Ahead
While Kenya remains a magnet for foreign investment, challenges persist. High energy costs, regulatory bottlenecks, tax complexity, and corruption threaten competitiveness. Policymakers are urged to reform energy pricing, tax administration, and regulatory transparency to sustain investor momentum.
