Skip to content
Safaricom PLC CEO Peter Ndegwa during a past event. Several Kenyan firms including giant telecommunications company Safaricom have ventured in the Ethiopian market.
Ethiopia has toppled Tanzania and Uganda as the leading destination of Kenya’s investment abroad, buoyed by the expansion of local firms in the giant neighbouring market.
Fresh data shows that Kenya’s direct investment in Ethiopia hit Sh60.2billion in 2021—surpassing Tanzania and Uganda’s Sh51.5billion and Sh56.3billion, respectively.
Direct investment abroad-also referred to as outward direct investment— is a category of cross-border investment associated with a resident in one economy having control or a significant degree of influence on the management of an enterprise that is resident in another economy.
As well as the equity that gives rise to control or influence, direct investment also includes investment associated with that relationship, including investment in indirectly influenced or controlled enterprises, investment in fellow enterprises, debt (except selected debt), and reverse investment.
The newly released Economic Survey 2023 shows that although Tanzania was the leading destination for Kenya’s investment abroad at the start of 2015, the table has since tilted in favour of Addis Ababa.
Also Read: Fresh relief for defaulters in KRA aircraft, land, cars seizure law
“Tanzania was the leading destination for the country’s investment abroad at the start of 2015 the review period, with investments declining in 2018, but later recovering to reach Sh51.5 billion in 2021” the survey said.
“Kenya’s direct investment in Uganda reached its peak at Sh56.3billion in 2019, while investments in Ethiopia reached Sh60.2billion in 2021” it added.
Several Kenyan firms including giant telecommunications company Safaricom have ventured in the Ethiopian market where it operates under the subsidiary Safaricom Telecommunications Ethiopia private limited company (STE).
Safaricom Ethiopia’s phased launch commenced in August 2022 in the city of Dire Dawa and will spread to 24 other cities, including Addis Ababa in the months that follow.
The new operation has ambitions of achieving gross margins of 40 percent in 10 years. The target is backed by heavy investments that the subsidiary will make in hiring staff and building infrastructure to acquire customers in the country with a population of more than 100 million.
The Nairobi Securities Exchange-listed Safaricom is the major shareholder of the subsidiary whose other owners are Vodacom Group, Sumitomo Corporation, and CDC Group.
Kenyan lenders, including KCB Bank, have expressed interest in entering the Ethiopian market. A delegation of senior executives from KCB Bank visited the Ethiopian Investment Commission (EIC) in Addis Ababa in October last year where they held talks with Ethiopian government officials.
The visit by the KCB team came a month after Ethiopia’s Council of Ministers passed a landmark decision to open up the country’s banking sector to foreign investors.
The Economic Survey further shows that Kenya’s overall direct investments abroad generally exhibited an upward trend over the review period with a value of Sh239.6billion as at the end of 2021 compared to Sh93.5billion as at the end of 2015 with the exception of 2020 where the stock of outward direct investment declined by 8.4percent to Sh161.1billion, due to the Covid pandemic.
“The movement in positions of direct investment assets was mainly attributed to transactions as opposed to revaluations resulting from price and exchange rate movement,” the survey released last week said.
Equity and investment fund shares accounted for 84.4 percent of total direct investment assets as of the end of 2021. The stock of equity and investment fund shares declined by 6.4 percent in 2020 but rose to Sh202.2 billion in 2021. – nation.co.ke
Mari bermain judi slot online pada situs nexus slot untuk mendapatkan kemudahan dalam permainan slot online, karena slot nexus engine memiliki sistem yang sangat aman dan nyaman, sehingga anda bisa mulai mendaftar dan bermain slot online