Moses Ikiara, Managing Director, Kenya Investment Authority: Interview

Interview: Moses Ikiara

How can Kenya maintain its competitiveness as an investment destination in East Africa?

MOSES IKIARA: The most important thing that needs to be done is to continue our success in reducing the cost of doing business in the country. One primary component of this is to reduce the cost of electricity, and we are aiming to reduce the cost of power to about $0.9-0.7 per KWh. We have also identified the cost of logistics as a way of reducing the cost of doing business and are optimistic about the impact of the standard-gauge railway and other key infrastructure projects to this end. With both of these in place, we expect transport and logistics costs to drop by almost 50% for goods between the port of Mombasa and the capital city.

We are also currently addressing the high cost of credit in the country. We expect the capping of interest rates to have a profound effect on private sector borrowing, and preliminary data on the measure shows lending increasing to the private sector. Apart from this, we will continue focusing on increasing the ease of doing business in the country, while at the same time ensuring a steady stream of bankable projects for investors to take up.

What impact has devolution had on investment outside of Nairobi and Mombasa?

IKIARA: The impact so far has been very positive. There are many ongoing projects in infrastructure already under way that were not there previously. This is primarily because the speed of decision making is much faster at the county level compared to the federal level. An often overlooked effect of devolution has been increased political stability in the country, and this a crucial factor in attracting investment.

With devolution taking affect, there is a much larger segment of the population that is able to contribute towards localised decision making. Counties are now beginning to compete among themselves in terms of attracting investors. This added competition directly results in counties working to reform their local business environment, and we are in the process of formulating a county business index to rank counties on their attractiveness for investment.

What sort of steps do investors need to take in order to improve community engagement?

IKIARA: Actually, I think that the impetus for community engagement falls upon the shoulders of government. In other words, government needs to do more in terms of coordinating community engagement.

As part of our upcoming national investment policy, we are looking at how to include community engagement in the overall readiness of the project. This includes what ways to contribute towards community’s development, what permissions an investor must seek and so forth. This way, once an investor receives all the approvals, the local community will have already agreed to the terms of engagement. In case there is any necessary interaction between the community and an investor, the government needs to oversee these discussions.

To what extent has security been a concern for potential foreign investors?

IKIARA: If you look at the growth of foreign direct investment (FDI) over the past couple of years, it is evident that investors have confidence in Kenya. In 2012 we only received $259m in FDI. However, in 2015 we received $1.5bn. With this we have been able to catch up with countries like Uganda, Ethiopia and Tanzania. Investors are not like tourists, as they view investment on a long-term scale. They see threats like terrorism as a temporary phenomenon. Investors have reacted positively to policies that have increased the capacity of our security forces and intelligence gathering. Therefore, security may be a temporary challenge, but one that does not overshadow the long-term investment potential of the country.