Kenya has set a target of attracting at least 8 billion U.S. dollars in Foreign Direct Investments (FDI) over the next five years, the country’s investment agency said this week.

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Kenya Investment Authority (KIA) Managing Director Dr. Moses Ikiara said that a lot of international firms have shown interest in setting up shops in Kenya’s diversified economy.

“We are therefore encouraging investments in the manufacturing, agro-processing as well as the services sector in order to increase the country’s foreign exchange earnings,” Ikiara said on the sidelines of the Kenya-Japan business forum held.

Data from the KIA indicated that Kenya attracted over 600 million dollars in FDI last year alone. “This also part of government’s strategy to reduce the widening trade deficit that is putting pressure on the local currency,” he said.

Ikiara added that Kenya has one of the highest growth rates in the FDI attracted yearly. “Kenya had lost ground in past two decades in attracting FDI to the rest of the east African region,” he said.

“This is primarily because these nations discovered natural resources such as hydrocarbons and minerals ahead of Kenya. So, the bulk of the FDI was used to exploit natural resources while Kenya’s capital inflows were seeing market opportunities,” he said.

The MD said that if Kenya maintains political stability it will overtake the rest of region in attracting FDI due to its huge natural mineral resources coupled with skilled labor force.

According to KIA, Kenya will target FDI that will generate the highest impact so as to improve the competitiveness of locally produced goods.

He said that FDI normally brings high level of technology and knowledge through joint ventures with local firms. “There is also a spillover effect including good international best practices which local firms can learn through observation,” he said.

Ikiara noted that in order to penetrate foreign markets, Kenyan goods will have to be both of high quality and competitively priced. “But Kenya will initially focus on becoming the manufacturing hub for east and central Africa,” he said.

KIA said that due to a myriad of challenges the country can only manage to export horticultural products to the advanced markets of the West.

He noted that the influx of imports in Kenya is due to fact that foreign products are of better quality compared to the local ones. “We therefore have to find a way through innovative technology to compete with imports as the economy is liberalized,” he said.

Ikiara said that Kenya’s economy is fairly diversified compared to the rest of the region. “Kenya is not just dependent on natural resource as agricultural, manufacturing and services sectors are all well represented,” he said.

Foreign Affairs and International Trade Cabinet Secretary Amina Mohamed said that Kenya is a much preferred investment destination that has continued to receive a major share of FDI in the region.

“This is due to the favorable business environment that the government has created and also due to the strategic location of the country,” Mohammed said.  She added that Kenya is a transport hub for Africa.

“So when you invest in Kenya, you have access to the rest of the region,” the cabinet secretary said.

Mohammed said that huge opportunities exist in the Kenya including in the proposed Information Communication and Technology (ICT) City, the Lamu Port South Sudan and Ethiopia (LAPSSET) project.

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