Kenya has been ranked the third most attractive African market for private equity (PE) funding, indicating the huge promise in East Africa’s largest economy despite multiple challenges arising from a recent pile-up of public debt.
Consultancy EY (Ernst & Young) says in a report that is expected to be published today (Monday) that Kenya’s fast-growing technology sector, nicknamed “Silicon Savannah”, drew the most foreign investor interest, supported by an improved business environment.
“FDI [foreign direct investment] projects in Kenya increased by 44 per cent compared with 2016,” says the Turning Tides, Africa Attractiveness October 2018 report.
The increase, the report says, was “largely because of a conducive environment, including a pool of well-resourced IT developers and a high smartphone penetration rate.”
South Africa and Morocco are ranked as Africa’s top hotspots for PE deals ahead of Kenya, which beat Nigeria, Ethiopia, and Egypt – the number four, five and six respectively.
The report says Kenya’s top ranking has benefited from recent government’s action to make the country a viable and competitive technology hub through the formulation of policies to drive the initiative.
The country’s performance is described as significant given that 2017 was dominated by election-related investor jitters.
Kenya’s economy grew 4.9 percent in 2017, its lowest rate in five years, under the weight of a prolonged electoral process and adverse weather.