| dc.description.abstract | Foreign Direct Investment (FDI) plays an important role in fostering economic growth
and development because not only does it provide capital for domestic investment but
also creates employment and helps transfer technology and managerial skills. FDI can be
a huge source of revenue for capital-starved countries which are typified by countries in
sub-Saharan Africa. The ability to attract FDI leads to a continuing relative advantage for
developing economies.
Kenya was a prime choice for foreign investors in the 1960s and 1970s but has however
been left out of the global surge of FDI inflow that started in the mid to late-1990s.
It is worrisome that FDI inflows to Kenya have been falling in the recent years. While
developing countries attracted an annual average of $41 of FDI per capita in the period
1996-2003, Kenya only averaged inflows of $1.3 per capita in the same period. Kenya is
ranked 125th out of 140 countries on the UNCTAD's FDI performance index in 2006 and
has not ranked better than 111that anytime since 1990. Though some studies have been
done to examine FDI hindrances this Kenyan phenomenon has received little attention
from scholars.
Using a sample of 30 investors from a list of investors provided by the Kenya Investment
Authority (KIA), this descriptive study sought to explore the factors hindering the growth
of FDI in Kenya.
The study found that though there are many efforts that have been made to attract foreign
investment in Kenya by the government such as maintaining political and microeconomic
stability, establishing policies and institutions that enhance investment, implementing the
privatisation programme, institutional constraints such as unfair competition, poor justice
administration, bureaucracy in the application process and politically motivated reforms
have adversely affected the attractiveness of Kenya as a foreign investment destination.
For this trend to be reversed, the government needs to continue its efforts at
liberalization, structural reforms especially in public administration. Continued economic
and political stability is still a general precondition to increased FDI. | en |
