NAIROBI, Kenya- Kenya has been crowned the top investment destination in the East African Community, bolstering its status as the region’s economic powerhouse despite political risk concerns.
According to the ‘Where to Invest in Africa 2024’ report by Rand Merchant Bank Holdings, Kenya’s fintech prowess, including mobile payments and agritech, alongside its stable economy, make it an attractive investment hub.
Kenya’s leadership in East Africa is underscored by its contribution to nearly half of the East African Community’s GDP.
Ranked 11th on the continent, Kenya is just shy of the top 10, with Seychelles, Mauritius, and Egypt leading the pack.
Neighboring countries follow closely with Tanzania at 12th, Rwanda at 15th, and Uganda at 19th, while DR Congo trails at 26th.
The government’s ambitious plan aims to double Foreign Direct Investments (FDIs) from last year’s $800 million (Sh103.2 billion) to at least $1.6 billion (Sh206.4 billion).
Despite this, current investment levels are seen as modest given the size and development of the economy.
The main investors in Kenya include the United Kingdom, Mauritius, the U.S., South Africa, and France, focusing largely on finance, insurance, ICT, wholesale, retail, and manufacturing sectors.
Kenya is a trailblazer in clean energy within the region. Over 90pc of its on-grid electricity comes from renewable sources, mainly geothermal energy, which constitutes nearly half (46pc) of the country’s electricity generation.
This makes Kenya the world’s leading geothermal energy producer. The country’s significant investments in solar and wind energy underscore its commitment to Sustainable Development Goal 7 (Affordable and Clean Energy).
With ongoing construction projects, Kenya aims to nearly double its geothermal power output by 2030, signaling a future of cheaper energy costs.
The nation’s dedication to green energy is not just about sustainability; it’s a strategic move to attract eco-conscious investors.
Despite the positives, Kenya faces challenges such as high electricity costs, an unpredictable tax environment, and political stability concerns, particularly after recent Gen-Z-led protests.
The Rand Merchant Bank report highlights that Kenya’s political stability ranks 25th out of 31 countries, reflecting issues like inequality, corruption, and regional security risks.
However, the Central Bank of Kenya maintains a positive outlook on the country’s economic growth.
The first quarter of 2024 saw a real GDP growth of 5pc, driven by strong agricultural performance due to favorable weather and robust service sector activities, including wholesale and retail trade, accommodation, and ICT.
Kenya’s journey as an investment destination is a tale of robust growth and significant potential. While challenges persist, the nation’s strategic focus on green energy and fintech innovations position it well for future investments.
