EDITORIAL: Balance foreign investment with local enterprise

Kenya must pursue a balanced policy: open the door to foreign investment while nurturing homegrown businesses /FILE 

Foreign direct investment is often seen as a vote of confidence in a country’s economic prospects. For Kenya, the inflow of foreign capital has helped diversify the economy, create jobs and inject new technologies into key sectors.

But while welcoming foreign investors, policymakers must ensure that Kenyan businesses are not left behind.

Recent data illustrates the significance of FDI to the country. Kenya recorded about Sh242.6 billion in FDI inflows, with the technology sector alone attracting Sh64.7 billion, more than a quarter of the total.

This represents a 71 percent rise in tech-related foreign investment, underlining Kenya’s growing reputation as a regional digital hub. 

Foreign capital has also strengthened sectors such as manufacturing, finance and retail, with investors from countries including the United Kingdom, South Africa and Mauritius remain among the largest contributors to Kenya’s investment stock.

However, the benefits of FDI can only be fully realised if local investors operate in a supportive environment. High lending rates, rising taxes and expensive energy continue to constrain many indigenous firms. When local enterprises struggle, the economy risks becoming overly dependent on foreign capital.

Kenya must therefore pursue a balanced policy: open the door to foreign investment while nurturing homegrown businesses.

Lower borrowing costs, reasonable taxes and affordable fuel and electricity would empower local firms to compete and grow. Only then can foreign and local investors thrive together in a resilient Kenyan economy.