Policy Brief No. 15 of 2006 on Attractig Foreign Direct Investment into Kenya

Abstract

Kenya has witnessed a decline in net flows of foreign direct investment (FDI) in the last two decades. A significant decline occured in the 1990s when the economy was going through various policy and institutional changes,coupled with un-sustained improvement in macroeconomic environment.While the early 2000s indicate a rise in inflows, this is coupled with huge outflows, meaning that the economy is losing in its ability to sustain FOi.The country shared 87% of FOi in East Africa in the 1980s.This declined to 21 % in 2001 and 5.3% in 2002.Kenyan firms are increasingly re-locating to Uganda and Tanzania, implying that Kenya is losing its competitiveness to the neighbouring countries.