While Kenya was a magnet for foreign direct investment in East Africa in the 1960s and 1970s, the country has underperformed significantly in the past couple of decades. A wide array of TNCs are nevertheless present in the country, and FDI has played a key role in some of the dynamic sectors of the economy. The IPR recommended a more pro-active strategy of FDI attraction and proposes policy measures to enhance the impact of FDI on growth and economic development, focusing on:
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The manufacturing of basic consumer goods and industrial inputs for the regional market.
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The development of Kenya into a regional services hub.
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Agri-business activities.
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Diversification of activities in export processing zones.
The IPR also warned the government on the possible drawbacks of the then recently adopted Investment Promotion Act, which introduced minimum capital requirements for FDI entry. Subsequently, the Government proposed amendments to the Parliament to lift these requirements.
Following the publication of the IPR, UNCTAD has assisted the Government in a number of ways. It
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held a workshop with members of the Parliament to sensitize them to the key findings of the report;
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conducted training workshop for the staff of the investment promotion agency on corporate taxation;
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produced and recently updated an Investment Guide to Kenya;
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assisted the investment promotion agency to develop an investor targeting strategy;
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produced a Blue Book on Best Practice in Investment Promotion and Facilitation;
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organized two investment fora, with the investment promotion agency. One, with EXIM Bank India, to attract Indian IT investment and the other, with the China Africa Business Council, to attract Chinese SME investment;
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provided advisory services on the revision of the model BIT and recommendations to improve existing and future BITs;
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provided support to revise and improve existing legislation and suggested an approach for inter-institutional coordination on investment-related issues;
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provided support on the creation of a mechanism on investment dispute prevention policies;
