Kenya is listed among the Big 4 that also includes Egypt, Nigeria and South Africa-as the giants of Africa’s silicon savannah, continually attracting the lion’s share of both private capital deal volume and value.
This is according to a report titled Funds and Funds Management Services in Africa published by the Kigali International Financial Centre(KIFC).
The KIFC report mentions that which attention has been on these four major destinations, some emerging destinations particularly within Francophone West Africa, have also shown growth trends that is likely to attract investor interest in the near future.
Kenya Enjoys the Comparative Advantage Of A Skilled Workforce
The report notes that while the Kenya Government has been a key strength in making the country attractive, what sets this destination attractive is the ease of finding skilled employees, where Kenya is ranked among the 25 top performers globally.
Kenya, considered East Africa’s biggest economy with a GDP of US$110.3billion and a growth rate of 7.5% in 2021, has been the most attractive destination for private capital investment in the region.
Nairobi’s conducive regulatory framework, ease of doing business here, the openness of Kenya’s economy along with its high competitiveness due to the quality of human capital, research, and innovation have positioned the country as a lucrative investment market both regionally and in Africa.
Private capital investment activity has grown impressively in Kenya (from just 27 deals in 2002-2008 to 192 deals in 2016-2022 H1), and as such the country has cemented itself as the region’s leading investment destination.
Given the country’s leading position within the East Africa Community (EAC) which provides investors access to a wider consumer market of up to 400 million people, investors have historically used Kenya as a launchpad to expand their investments into other parts of the region and consequently increase their regional footprint.
Other countries within the East Africa region – such as Uganda, Tanzania, Rwanda, and Ethiopia – have also been on the radar of investors.
At the forefront of the privatisation trend in Africa, Uganda is the second largest market by investment volume in East Africa driven by investments in Consumer, Financials, and Healthcare Sectors.
Moreover, Uganda’s electricity generation industry, which was unbundled two decades ago, has been an enabler of significant investment by major African and international investors in Uganda’s utilities sector.
East Africa’s venture capital landscape has gradually matured in recent years, evidenced by the growing specialisation amongst both investors and startups and the increasing separation between impact and venture funds.
In the past, investing in early-stage companies within the East Africa region was largely synonymous with impact investing, but the two have been uncoupled alongside changing narratives around the nature and scope of impact investing.
The value of private capital investments reported in East Africa has notably increased over the past two decades since 2002.
While some big ticket investments have caused ripples in terms of deal values, the average deal size has remained at US$4million – driven by private equity and venture capital deals sized below US$10 million.