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Investment Policy Review - Kenya

image of Investment Policy Review - Kenya

Kenya was a magnet for foreign direct investment in East Africa in the 1960s and 1970s. The Review highlights, however, that the country has underperformed significantly in terms of FDI attraction in the past couple of decades. The reasons include poor or inconsistent economic policies, deteriorating infrastructure and poor growth performance. Rising corruption and insecurity also discouraged FDI throughout the 1980s and 1990s. The Review warns the government on the possible drawbacks of the recently adopted Investment Promotion Act, which introduces minimum capital requirements for FDI entry. Subsequently, the Government has proposed amendments to Parliament to lift these requirements.

English

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Main conclusions and recommendations

Kenya has dramatically underperformed in attracting FDI over at least the past two decades. This was the consequence of increasing corruption and insecurity, deteriorating infrastructure and poor economic policies, rather than of formal restrictions on FDI entry. Surprisingly, however, Parliament put in place such formal entry restrictions at the end of 2004, overturning decades of openness to foreign investors.

English

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