Faltering global growth likely to hurt FDIs, warns CBK governor

Faltering global growth likely to hurt FDIs, warns CBK governor

By MARTIN MWITA

Slowing global growth is set to hit foreign direct investments inflows into the country this year, the Central Bank governor Patrick Njoroge warned yesterday. He said subdued global growth, projected to expand 3.1 per cent this year, and the faltering China economy has created uncertainty in the global markets, hurting growth. That coupled with the successful June 23 vote by Britain to leave the 28-member European Union and low commodity prices, Njoroge said, will hurt FDIs to Kenya which, however, remains a top destination for FDIs inflow in the East African region. “Things are bad in terms of global economy. We have seen downsizing of assets by multinationals. Generally there is a big challenge for developing countries,” the CBK boss said. He said the country could witness a drop from 2015, which recorded an estimated $1 billion (Sh101.4 billion). He was speaking during the launch of Foreign Investment Survey that starts this month to October, targeting foreign assets and liabilities in about 900 enterprises. The research will be carried out by the Kenya National Bureau of Statistics.

Centeral Bank of KenyaSpeaking in Nairobi during the launch, KNBS Zachary Mwangi said the study will be used to improve the quality of data for compilation of Balance of Payments and International Investment Position statistics, which are key in detecting financial crisis.

“We intend to undertake the survey for the next 50 days. By the end of the year we will be having results,” Mwangi said, noting that the data will be used for Investment Promotion and policy formulation.

Kenya’s investment has risen from $ 500 million (Sh50.7 billion) in 2013 to $1.9 billion (Sh192.6 billion) in 2015, combined data by the The African Development Bank, the Organisation for Economic Co-operation and Development and United Nations Development Programme shows.

Kenya was ranked eleventh among the leading African investment destinations in 2015 lagging behind its regional neighbors where DR Congo was sixth with $2.5 billion (Sh253.5billion),Tanzania eighth with $2.3 billion (Sh233.2 billion) and Ethiopia ninth with $2.1 billion (Sh212.9 billion).

Sectors in the country which attracted investments include manufacturing, transport, services and information and communications technology.

“Several countries without significant resources are attracting investors, including Kenya, Tanzania and Uganda, reflecting the shift towards consumer goods,” the report reads.

The 2015 Africa Attractiveness Survey by Ernst &Young shows Kenya attracted about 8.6 per cent share of all the FDIs in Africa.

Source: Star

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