This archive report was first published on 24 August 2020.
Kenya's economy has faced a significant decline in foreign direct investments (FDI) over the past year. According to the Kenya Economic Report 2020, the country's net FDI dropped by 27 percent between December 2018 and December 2019, amounting to a loss of Ksh42.6 billion (USD1 billion).
The report, compiled by the Kenya Institute of Public Policy and Research (KIPPRA), highlights a significant drop in the surplus in the capital account, falling by 18.6 percent from Ksh28.35 billion (USD262.5 million) in December 2018 to Ksh23 billion (USD213.6 million) in December 2019.
Another report published by the United Nations Conference on Trade and Development (UNCTAD) in June this year estimated FDI inflows to have fallen by USD294 million (Ksh31.3 billion) in 2019. The UNCTAD report estimated the inflows at Ksh141.84 billion (USD1.33 billion) compared to nearly Ksh173.15 billion (USD1.63 billion) that foreign investors injected into the Kenyan economy in 2018.
As per UNCTAD's report, Kenya's FDI was largely driven by new projects in Information Technology (IT) and healthcare sectors. The report had projected that the inflows would dip further this year as investors will opt to be cautious due to the COVID-19 pandemic.
Published on August 24, 2020, the Kenya Economic Report 2020 also shows deficits dominated Kenya's overall Balance of Payment (BoP) position. However, surpluses were recorded in March and April 2019.
Official reserves grew by 7.2 percent between January 2019 and January 2020, rising from Ksh890 billion (USD8.2 billion) to Ksh959 billion (USD8.8 billion) or 5.4 months of import cover.
