Technology firms have leapfrogged banks, factories and retail stores to become the biggest recipients of foreign capital into Kenya, findings of a fresh State-commissioned survey show.The survey, whose findings were released on Wednesday, found that firms in Kenya’s fast-growing digital marketplace now account for more than a quarter of foreign direct investment (FDI) flows into Kenya, up from less than 10 percent in 2020. Conducted jointly by the Kenya National Bureau of Statistics, Central Bank of Kenya and Kenya Investments Authority, the survey results show that investments into Kenya’s information and communication technology (ICT) sector by foreign firms grew by Ksh26.8 billion ($207.43 million) to Ksh64.67 billion ($500 million) in 2023. Investments into Kenya’s ICT space leaped ahead of key sectors such as finance and insurance, manufacturing, wholesale and retail trade, as well as the mining and quarrying sector. The Foreign Investment Survey 2024 noted that the growth in investment pointed to “a sustained investor interest in Kenya’s digital economy and innovation landscape”.The FDI flows into the sector represented a 70.92 percent growth over Ksh37.84 billion ($292.88 million) in the prior year, making it the fastest-growing recipient.It was followed by manufacturing, whose flows grew 39.35 percent to Ksh32.46 billion ($251.24 million), and finance and insurance services at 34.96 percent to Ksh45.32 billion ($350.77 million). The wholesale and retail trade sector, which was the biggest magnet for FDI in 2022 with investments into retailers such as QuickMart and Naivas, posted a marginal 2.14 percent drop from Ksh49.36 billion ($382 million) to Ksh48.31 billion ($373.92 million) in 2023. The sector’s activities extend to the repair of motor vehicles and motorcycle services for the purpose of the survey. The increased foreign investment into Kenya’s tech space came in the year President William Ruto dropped a more than decade-long rule under the National ICT Policy for foreign firms to cede a 30 percent stake to local shareholders. Dr Ruto said at the time that the President Mwai Kibaki-era policy had made it impossible for big-ticket foreign ICT investors to set up in Kenya.“This position is untenable and has made it impossible for large corporations to invest in Kenya. We will review this position and remove this requirement to facilitate greater investment in our ICT sector,” President Ruto said on March 30, 2023.“I was persuaded by a good gentleman from Amazon Web Services (AWS) that it was impossible for Amazon to cede 30 percent equity to any entity its doesn’t have any business relationship with. And as a result, they were holding their investment in our country” he added. AWS, the cloud-computing division of Amazon, opened a development centre in Nairobi later that year, joining tech giants such as Microsoft, Google, Oracle, IBM and Germany’s SAP SE, which have a significant presence in Kenya – the “Silicon Savannah”. Besides the multinationals, Nairobi also hosts a raft of thriving start-ups within the tech space.The inaugural Africa’s Fastest Growing Companies in Africa by the Financial Times (FT) of the United Kingdom, in 2022, found that firms leveraging technology in offering products were the fastest growing by gross revenue.The ICT sector accounted for 26.66 percent of total FDI inflows of Ksh242.61 billion recorded in 2023 by 603 companies with foreign assets and liabilities, which participated in the 2024 survey. This total represented a growth of 28.92 percent over Ksh188.19 billion in 2022, the report shows. The wholesale and retail sector received 19.91 percent of the FDI inflows, followed by finance and insurance (18.68 percent) and manufacturing (13.38 percent). The FDI inflows estimates by the report of the survey, which is conducted every two years, differ from estimates by the Unctad, which put the value at $1.504 billion in 2023. Unctad’s World Investment Report arrives at FDI estimates by largely focusing on greenfield investment in selected industries, project finance in infrastructure, and the largest multinationals' production activities. (ICE NAIROBI)

Fonte notizia: Business Daily