Influence of Government Regulatory and Fiscal Policy Requirements on Foreign Direct Investment in the Oil and Gas Sector in Kenya
Abstract
Reliable energy supply in a country is recognised as a significant contributor to an improved
economy and society. Oil and gas is seen as a major source of energy. Since 2014, foreign
capital in the oil and gas sector has relatively become scarce as international oil and gas
companies focus on exploitation of known commercial reserves rather than focus on
exploration of potential reserves; consequently, Kenya is one of the countries that has been
adversely impacted. This is presumably due to weak global prices of crude oil and increased
competition among suppliers. The purpose of the study was to establish the influence that the
government’s regulatory and fiscal policy requirements have on foreign direct investment in
the oil and gas sector in Kenya. The study adopted a survey design. The population of the study
was the 11 foreign oil and gas firms currently participating in oil and gas exploration business
in Kenya. The study relied on primary data collected using semi-structured questionnaires. The
collected data was analysed using descriptive and inferential statistics as well as content
analysis. From the analysis, it was found that there is a positive relationship between key
government regulatory and fiscal policy requirements in the oil and gas sector and foreign
direct investment, inferring that these requirements significantly affected foreign direct
investment in the said sector. The study recommends to the relevant policy makers in
Government, to review the current policy framework in consultation with industry players, so
as to ensure formulation of sound fiscal policies that spur foreign direct investment in the sector
whilst ensuring adequate control and fair revenue collection for the Government. The study
concludes with a recommendation for further research on the extent to which regulatory and
fiscal policy requirements affect foreign direct investment in the sector in relation to other
factors that are generally attributed to attracting investment in a country.
Publisher
University of Nairobi
Rights
Attribution-NonCommercial-NoDerivs 3.0 United StatesUsage Rights
http://creativecommons.org/licenses/by-nc-nd/3.0/us/Collections
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