EAC Region Preferred Destination for Kenya’s Investments Abroad

The East Africa Corporation (EAC) was the main destination of Kenya’s investments abroad as revealed in the fifth series of the Foreign Investment Survey by the Kenya National Bureau of Standards (KNBS).

With a share of 56.5 percent and 61.4 percent of the total stock of foreign assets in 2016 and 2017 respectively, the EAC was the preferred destination for foreign investments by Kenyans.

The survey further revealed that Tanzania and Uganda were the leading destinations of Kenya’s investments, accounting for 23.9 percent and 21.1 percent of the total stock of external assets in 2017, respectively.

Kenya’s enterprises investing in the EAC region were mainly from finance and insurance, manufacturing, transport and; information and communication industries

Foreign Assets Held by Kenyans Increased By 2.4 Pc In 2017

The stock of assets held abroad by Kenyan residents increased by 2.4 percent from 210,858 million shillings in 2016 to 215,875 million shillings in 2017.

According to the survey, the improvement was on account of Foreign Direct Investment (FDI) which increased by 7.1 percent to 148,409 million shillings in 2017, attributable to equity and investment fund shares.

During the review period, FDI contributed 65.7 percent and 68.7 percent to equity and investment fund shares respectively.

The share of debt instruments in FDI assets increased as a result of a 28.9 percent growth in the long-term debt assets.

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The share of Other Investment assets to total external assets declined from 34.1 percent in 2016 to 31.1 percent in 2017. This was occasioned by declines in short term currency and deposits; and short-term loans. The stock of currency and deposits decreased from 45,788 million shillings in 2016 to 43,629 million shillings in 2017.

Short term currency and deposits contributed 79.3 percent and 65.1 percent of the total stock of the currency and deposits, over the review period.

The stock of loans decreased by 19.0 percent from 18,415 million shillings in 2016 to 14,914 million shillings in 2017, with a shift from short term to long term loans.

On the other hand, the stock of Portfolio Investment abroad increased by 7.2 percent from 264.2 million shillings in 2016 to 283.2 million shillings in 2017, on account of equity and investment fund shares.

Flows of Foreign Assets

Total outflow of foreign assets increased from 27,591 million shillings in 2016 to 46,002 million shillings in 2017, which was mainly attributed to an increase in Other Investment from 13,405 million shillings in 2016 to 31,152 million shillings in 2017.

This was due to a build-up of currency and deposits; and trade credit and advances during the review period.

Foreign direct investment outflows grew by 4.7 percent to 14,850 million shillings in 2017.

Inflows of foreign assets increased more than five-fold from 6,670 million shillings in 2016 to 37,940 million shillings in 2017, contributed mainly by Other Investment. This largely resulted from a drawdown of short-term currency and deposits abroad. Overall, net outflows of foreign assets declined by 61.5 percent to 8,062 million shillings in 2017.

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