China's direct investment in Kenya drops sharply

Nairobi, Kenya — A report by Kenya's National Bureau of Statistics shows a significant drop in direct investment from China. The report says Beijing's investments in Kenya fell by more than a third over the last three years. Analysts say China is increasingly focused on exporting products rather than investing.

Jimmy Yimming, a Chinese manufacturer who makes human hair products, showcased wigs at a Kenyan mall. Yimming said he traveled to Nairobi to try to find Kenyan partners for his business.

''I think the Kenyan market is very good,” Yimming said. “I'm looking forward to staying here for a long time in the future, I hope I can have a chance of that.''

China has invested heavily in Kenya and other African countries in recent years, often as part of its Belt and Road Initiative. Beijing became Kenya's top source of imports, according to national data, and remains so.

But Kenyan data show that between 2020 and 2022, Chinese expenditures in Kenya’s construction sector, which is China's leading area of foreign investment in the country, dropped more than 34%.

Investments over the same period from the U.S. increased slightly, to 7.4% from 7.1%.

Research analyst Churchill Ogutu said Washington is setting foot in Kenya's crucial areas of need for investment.

“Broadly we are looking at a number of sectors that are usually the beneficiaries,” Ogutu said. “Health, ICT [information and communications technology], pharmaceuticals are the main beneficiaries of FDIs [foreign direct investments] into Kenya, and this is where America stands out.''

In a State Department report last year, the U.S. said Kenya's positive business climate has made it attractive to international firms seeking a location for regional or pan-African operations, adding that American companies continue to show strong interest in establishing or expanding their presence there.

The National Bureau of Statistics report indicates India is now the leading nation for foreign investment in Kenya, followed by Japan, then China.