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The technology industry in Kenya has overtaken banking, retail and manufacturing to become the country’s frontrunner for foreign direct investment (FDI). Essentially, this paradigm shift evidences the potency of Kenya’s digital economy. This Kenya tech sector FDI development also shows its growing global appeal over other sectors.
The 2024 Foreign Investment Survey released by the Kenya National Bureau of Statistics (KNBS) shows that those inflows into the tech sector jumped by 71 per cent. This development became further evident when it reached KES 64.7 billion ($500.9 million). Besides, the figure represented more than a quarter of total FDI into Kenya, which stood at KES 242.6 billion ($1.8 billion). Recall that four years ago, tech accounted for less than 10 per cent of inflows. Interestingly, the sudden, yet gigantic increase is a clear sign of reweighting away from traditional industries.
Digital Economy Emerges as Kenya’s Growth Engine
According to the report, the information and communication sector, which includes technology services, has emerged as the single largest recipient of foreign investment. Moreover, the FDI inflows increased by KES 26.8 billion in 2023 to hit KES 64.7 billion. Going by previous events, this is an outstanding record for the industry. Analysts posit that the increment shows sustained investor confidence in Kenya’s digital economy growth and innovation space.
Kenya’s tech sector FDI led the charts, but not in isolation. In other words, other industries also attracted inflows. However, this was at lower volumes. Banking and insurance secured KES 45.3 billion ($350.7 million). Manufacturing received KES 32.5 billion ($251.6 million). And lastly, wholesale and retail attracted KES 48.3 billion ($373.9 million). It is essential to observe that the retail figure represented a decline from the previous year, when the sector was Kenya’s top FDI destination.
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Furthermore, the KNBS data does not capture capital raised by startups. Essentially, there are separate figures from Africa. The Big Deal shows Kenyan startups raised $638 million (KES 82.3 billion) in 2024. This was more than one-quarter of startup funding in Eastern Africa. In the same vein, the development underlines how much of Kenya’s digital economy is driven by venture-backed firms. These firms include M-KOPA, BasiGo, Workpay, and Shukhiba.
Kenya Tech Sector FDI Surges: Policy Reforms Attract Global Tech Giants
Some observers have linked the rise in Kenya’s tech sector FDI to regulatory fireworks that the government is reforming. In 2023, President William Ruto’s administration scrapped a 20-year rule that required local partners to have 30 per cent ownership of the firm established by foreign tech founders. This requirement had discouraged global multinationals from entering the market.
However, the regulatory overhaul allowed for firms like Amazon Web Services, Microsoft, and Google to expand operations in the country. The policy shift has now positioned Kenya as a more attractive destination for foreign capital. In the same vein, this development aligns with government ambitions to make the country Africa’s innovation powerhouse.
Kenya Tech Sector FDI Outlook Remains Strong
Preliminary data for the first half of 2025 suggests the momentum is at a fair speed. KNBS figures reveal legacy companies have already secured KES 38 billion ($294.2 million) in inflows. This outfit confers on the tech industry the strength to maintain its lead for the second consecutive year.
Additionally, the strong showing of the Kenyan tech sector FDI reflects more than numbers. It has also altered how investors view the country’s future. The implications stretch beyond Nairobi’s startup scene as multinationals are increasingly using Kenya as a regional base. Moreover, these companies now export services across East Africa.
The Road Ahead
Like other countries with increasing tech participation, Kenya’s tech-driven future does have challenges. Other African countries have been attempting to close infrastructural gaps and regulatory enforcement in their countries. However, Kenya’s digital economy is no longer a supporting player. It, instead, is the stage itself. Therefore, these African countries still have Kenya to contend with year in and year out progressively. Again, Kenya’s innovation sector is drawing record capital and shaping its economy. Thereby, it positions Kenya as one of the leaders in Africa’s transformation.
