Kenya to top its East African peers in investment deals

Kenya is poised to be the most attractive economy to private investors in the coming 12 months, beating its East African peers; Tanzania, Uganda, Rwanda and Ethiopia.

This is according to the 2024 Private Equity Confidence Survey by professional services firm Deloitte, which says of the total private equity firms surveyed, 28 per cent say they will focus on Kenya.

On the other hand, 22 per cent, 18, 22 and nine per cent said they will channel their investments to Tanzania, Rwanda, Uganda and Ethiopia, respectively.

Like last year, Uganda and Tanzania have emerged as the next largest focus of funds in the region while Ethiopia has dropped from joint fourth place in the survey last year to fifth place.

Rwanda remains the fourth largest focus for funds in the region.

Notably, Tanzania's attractiveness has increased from 18 per cent in 2023 to 22 per cent in 2024, buoyed by the introduction of the Tanzania Investment Regulations Act of 2023, which aims to create an investor-friendly environment.

The constantly growing appetite for the Kenyan market, according to the report, is driven by the government's push to privatise key firms in different sectors such as hospitality, energy and manufacturing.

In November last year, the government unveiled the names of entities that would be handed over to private operators in the State privatisation programme.

The iconic Kenyatta International Convention Centre which defines Nairobi's skyline is one of the top national monuments that was listed for sale.

Others were Kenya Pipeline, Kenya Literature Bureau (KLB), National Oil Corporation (NOC), Kenya Seed Company Limited, Mwea Rice Mills, and Western Kenya Rice Mills Limited.

The list also included New Kenya Cooperative Creameries, Kenya Vehicle Manufacturers Limited, Rivatex East Africa Limited, and Numerical Machining Complex.

The announcement was preceded by the signing of the Privatisation Bill 2023 into law a month earlier, which handed the National Treasury unchecked powers in the sale of state entities.

Deloitte therefore says successful privatisation and increased investor confidence will largely be predicated on how the government streamlines the privatisation process, which includes rationalising the regulatory framework, simplifying the transaction approval process, and increasing public awareness.

"Public entities poised for privatisation, particularly those in the manufacturing sector, offer sizable investment potential. The manufacturing sector in Kenya is a key resource for the current government to achieve economic diversification and job creation goals," it says.

It adds that the private equity firms can leverage their expertise to modernise operations, improve efficiency and expand market reach, positioning these entities for robust growth and profitability.

"Further bolstering the case for PE investment in Kenya are capital markets reforms such as the recent legislative development, the Capital Markets (Public offers, Listings and Disclosures) Regulations, 2023, issued to deepen capital markets, address emerging issues and market dynamics."