Foreign investment into Kenya rose by 37.7 per cent in 2025, making the country East Africa’s top investment destination.
According to the United Nations Conference on Trade and Development (UNCTAD), the country attracted a record $3.2 billion (Sh413.6 billion) in Foreign Direct Investment, driven by growing investments in the digital economy and renewable energy.
The latest figures show that Kenya’s FDI inflows increased by $876 million (Sh113.22 billion) from a revised $2.32 billion (Sh299.9 billion) recorded in 2024, marking the strongest performance the country has ever achieved.
The growth helped Kenya strengthen its position as a leading destination for foreign investors in East Africa despite increased competition among countries seeking global capital.
UNCTAD said multinational companies are increasingly directing funds towards digital infrastructure, artificial intelligence (AI), semiconductors and selected energy projects as governments compete to attract high-value investments.
The agency noted that global foreign investment remained stable in 2025, rising by six per cent to $1.6 trillion (Sh206.8 trillion), but warned that investment patterns are changing as companies become more selective when choosing where to invest.
“However, investment activity became more selective, with growth concentrated in a limited number of host economies and in capital- and technology-intensive sectors,” UNCTAD wrote in its latest World Investment Report 2026.
Across East Africa, FDI inflows into 11 countries increased by 12.1 per cent to $14.6 billion (Sh1.89 trillion) in 2025 from $13.02 billion (Sh1.68 trillion) the previous year.
Kenya accounted for more than half of the region’s additional foreign investment, contributing $876 million (about Sh113.22 billion) of the $1.57 billion (Sh202.92 billion) increase recorded in East Africa.
The country’s share of regional foreign investment also grew to 21.9 per cent in 2025 from 17.9 per cent in 2024, the highest level recorded in six years.
Kenya’s performance surpassed that of several neighbouring economies, with investors continuing to favour the country despite regional competition and global uncertainty affecting cross-border investments.
Uganda’s FDI inflows increased by 7.8 per cent to $3.36 billion (Sh434.28 billion), while Tanzania recorded a 3.7 per cent rise to $1.72 billion (Sh222.31 billion). Ethiopia, however, saw its inflows decline by 4.7 per cent to $3.8 billion (Sh491.2 billion).
UNCTAD attributed part of Kenya’s strong performance to reforms introduced to improve the country’s investment environment.
“Kenya reduced corporate income tax rates and introduced dividend tax exemptions for companies accredited under the Nairobi International Financial Centre, while also extending investment allowances in telecommunications to spectrum licences,” reads the report.
The agency also identified Kenya’s renewable energy sector as a key factor behind increased investor confidence, especially among technology companies seeking reliable and cleaner sources of power.
The report noted that “Kenya has a renewable-heavy electricity system, with nearly 90 per cent of generation coming from renewable sources, led by geothermal power”.
This renewable energy advantage gives Kenya “both a cost and a credibility advantage in attracting digital infrastructure investment”, according to UNCTAD.
The report further revealed that Kenya has attracted “a $1 billion investment package that includes a geothermal-powered data centre,” highlighting the growing role of clean energy in attracting global technology investments.
UNCTAD also pointed to Kenya’s digital innovation efforts, noting that Kenya has focused on digital innovation infrastructure and regulatory experimentation, with Konza Technopolis being developed as an innovation hub supporting growth in the digital economy.
The agency also recognised Kenya’s use of a regulatory sandbox in the ICT sector, which allows emerging technologies to be tested before being introduced to the wider market.
Despite the record foreign investment, UNCTAD warned that Kenya must continue strengthening its ability to attract strategic investments as global competition becomes tougher.
The report said countries attracting the largest investments are increasingly those with strong industrial policies, advanced infrastructure and technological capacity rather than those relying mainly on tax incentives or low labour costs.
It noted that the rise in FDI in 2025 was concentrated in economies that had the ability to support large-scale and strategic projects, reflecting the growing importance of technology-driven industries.
The shift signals a new phase in Kenya’s efforts to compete for global capital.
For years, Kenya has promoted its strategic location, growing infrastructure, financial services sector, technology ecosystem and access to regional markets as key advantages for investors. However, UNCTAD warned that these strengths may need to be supported by stronger technological and industrial capacity.
UNCTAD also noted that Kenya’s deposits of critical minerals such as rare earth minerals, niobium, coltan and copper could become important in attracting future investments.
However, competition for foreign capital is growing as countries invest heavily in semiconductor manufacturing, battery supply chains, clean energy industries and advanced manufacturing.
The agency said the world’s top 20 investment destinations attracted more than 80 per cent of global FDI in 2025, showing the challenge developing countries face in securing major international projects.
Although Africa’s foreign investment inflows declined to $69.5 billion (about Sh8.98 trillion) from $94.3 billion (Sh12.19 trillion) in 2024, UNCTAD said the figure remained the continent’s third-highest FDI performance in 25 years after excluding one-off mega projects.
“Downside risks are mounting. Real investment activity is likely to remain subdued, weighed down by geopolitical tensions, trade policy uncertainty and economic fragmentation,” reads the report.
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