The flashing red lights on Kenya’s economic dashboard just got brighter. New data reveals that Foreign Direct Investment (FDI) inflows stagnated at KES 195 billion ($1.5 billion) in 2024, a worrying sign that the "Silicon Savannah" is losing its luster to regional rivals like Tanzania and Ethiopia.

The 2024 Foreign Investment Survey, released by the Kenya National Bureau of Statistics (KNBS), shows a 0.1% decline in inflows. While the global investment climate has been tough due to high interest rates, Kenya’s performance lags significantly behind East African peers who recorded double-digit growth in attracting capital.

Why Are Investors Leaving?

The report cites a "toxic cocktail" of domestic factors scaring away capital:

• Tax Unpredictability: The controversial Finance Acts of 2023 and 2024 created a volatile tax regime. "Investors hate uncertainty," explains Ken Gichinga, Chief Economist at Mentoria Economics. "You cannot change the tax code every six months and expect a multinational to build a factory here."
• The Corruption Tax: The cost of doing business remains high. Transparency International ranks Kenya 121st out of 180 countries on the Corruption Perception Index. Investors complain of "facilitation fees" required to clear goods at Mombasa or get power connections.
• High Energy Costs: despite being a green energy leader, Kenya’s industrial power tariffs are nearly double those of Ethiopia and Egypt. Manufacturing investors are voting with their feet, moving to Addis Ababa where electricity is cheap and labor is abundant.

The Winners and Losers

While traditional sectors like manufacturing struggled, the Renewable Energy sector was a bright spot, attracting the bulk of the inflows. The UK and Netherlands remain the top sources of capital, accounting for nearly 60% of liabilities.

The Wake-Up Call

The stagnation is a wake-up call for the Ministry of Trade. With the African Continental Free Trade Area (AfCFTA) opening up borders, capital is mobile. Kenya can no longer rely on being the "gateway to East Africa" by default; it must compete on cost, efficiency, and stability. As Tanzania reforms its investment laws and Uganda pumps oil, Nairobi’s position as the regional hub is under siege.