Kenya’s Foreign Direct Investments will be the hardest hit by the exit of Britain from the 28-member European Union in the short term, Central Bank governor Patrick Njoroge has warned.
This will have an impact on oil, energy and financial sectors, Njoroge said, noting the UK contributes about 27 per cent to the country’s FDIs.
Njoroge said the country is, however, safe from the immediate effects of the Brexit following a successful referendum vote on June 23.
“We are yet to be affected, but in the near future the impact will be on FDIs. There have been substantial projects which we hope they will continue doing,” Njoroge said, adding the impact could be felt in about two years. Other potential effects from the Brexit include trade barriers, where exporters will have to negotiate separate trade deals with the UK and other EU markets, the governor said.
“There is a lot of uncertainty and going forward investors will be much more conscious with a wait-and-see impression. This can slow down our trade with the UK,” he said.
This comes against the backdrop of Kenya being one of the countries attracting the highest FDIs in Africa and the Middle East at 47 per cent in 2015, the FDI intelligence 2016 shows. This covered 84 projects in the real estate, renewable and geothermal energy as well as roads and railway totalling about Sh102 billion.
“Even without the data for December, it is already clear that Kenya enjoyed a major increase in inward investment in 2015 when compared with 2014,” the report states.