Kenya surpassed South Africa in terms of investing in other African countries last year, a new study by Ernst & Young – a financial consulting firm – has shown.
The report, published on the Daily Nation, ranks Kenya as the largest investor in Africa with 36 projects, beating South Africa – Africa’s second largest economy – which only invested in 33 projects.
Kenyan companies, especially in the service sector, are slowly venturing outside their domestic markets, a model initially adopted by the South African corporate sector. Most of Kenya’s foreign direct investments (FDI) are within the East African community, according to the report.
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“Activity was largely concentrated in services, with financial and business services together accounting for nearly 78 percent of FDI projects originating from Kenya,” the report said.
The UK-based financial consulting firm also noted that Kenya’s global ranking in terms of Foreign Direct Investment within Africa has also significantly risen to position 7 from 13 in 2014.
The report further ranks Kenya as East Africa’s anchor economy, demonstrating substantial growth in its inward FDI in the year 2015. It says Kenya’s foreign direct investment within the EAC grew by 53.2 percent, with 33 new projects from the previous 62 in 2014.
“Kenya and East Africa [is] shining bright and even brighter in the comparison with its peers. Kenya is very much the leader in this region and because of a good component of diversification is maintaining a strong rate of GDP expansion,” Aly Khan Satchu, the CEO of Rich Management told the Daily Nation.
South Africa’s inward FDI projects also grew by 8.3 percent, investing in 10 new projects on top of the previous 120 in 2014.
While Kenya may have surpassed South Africa in terms of the number of investments in other African countries, the latter is still leading in terms of the net worth of the projects, the report has revealed.
Kenya’s FDI projects are estimated to be worth 100 billion shillings while South Africa’s are worth 200 billion shillings.
The report further reveals that while Africa attracted new FDI investments from a diverse, up-and-coming group of investors, its traditional investors such as US, UK, France, and India have expressed renewed interests in the continent.
In general, total intra-African FDI investments went up by 2.8 per cent in 2015, with capital investment increasing by 6.2 percent.