Kenya attracts most new foreign projects, but political risk rises

Kenya attracts most new foreign projects, but political risk rises  – Business |theeastafrican.co.ke.

Kenya’s standing as East Africa’s most attractive destination for foreign investment is under serious threat from neighbouring states, who are cashing in on the country’s lengthy licensing procedures and sluggish commercial dispute settlement to sharpen their competitiveness.

By CHRISTINE MUNGAI The EastAfrican

Posted  Saturday, September 22  2012 at  12:09

IN SUMMARY

  • The Foreign Direct Investments (FDI) 2012 report published by FDI Intelligence, a specialist research agency of the Financial Times, shows that Kenya recorded a 77 per cent increase in the number of FDI projects last year, from 31 projects in 2010. It received 55 projects in 2011.
  • The rise in the number of new FDI projects comes at a time when Kenya has stepped up its search for international investors through eight investment summits to be held in the world’s major financial capitals over the next 12 months.
  • However, political risks and slow business reforms continue to taint the investment outlook. Delays in setting up crucial governing bodies under the Constitution enacted in 2010 are dampening investor confidence in the country.
  • Data from the World Bank shows that over the past three decades, Kenya has had its lowest growth periods in or just following election years, with GDP growth slumping one percentage point on average below the long-term trend.
  • Kenya’s vibrant private sector, advanced infrastructure and skills base have been its main selling points in the global investment market. But red tape, corruption, fears of political instability and a restrictive labour market remain key drawbacks.
  • According to the Financial Times FDI report, coal, oil and natural gas were the leading sectors that attracted the interest of foreign investors in East Africa.

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