Kenya’s tech sector has overtaken banking, manufacturing, and retail because the main vacation spot for overseas direct funding (FDI), in response to new authorities knowledge, revealing the expansion of the digital economic system.
On Wednesday, the Kenya Nationwide Bureau of Statistics (KNBS) launched the 2024 International Funding Survey, exhibiting overseas capital inflows into the tech sector rose 71% to KES 64.7 billion ($500.9 million) in 2024. The expansion made it the one largest recipient of FDI, accounting for greater than 1 / 4 of the KES 242.6 billion ($1.8 billion) complete inflows, up from lower than 10% in 2020.
The determine doesn’t embrace capital raised by tech startups. VC-backed startups raised an extra $638 million (KES 82.3 billion) in 2024, greater than a 3rd of Jap Africa’s $1.9 billion complete, in response to Africa: The Massive Deal, a funding tracker. The expansion in FDI into the tech sector factors to a reweighting of overseas capital away from conventional sectors corresponding to banking and manufacturing.
“The Info and Communication sector was the most important recipient of FDI inflows, which elevated by KES 26.8 billion to KES 64.7 billion in 2023, pointing to a sustained investor curiosity in Kenya’s digital economic system and innovation panorama,” the report mentioned.
Banking and insurance coverage attracted KES 45.3 billion ($350.7 million), manufacturing KES 32.5 billion ($251.6 million), and wholesale and retail KES 373.9 million (KES 48.3 billion), which was a decline from the earlier 12 months when the sector was the highest FDI vacation spot.
Preliminary knowledge for the primary half of 2025 reveals legacy corporations have already secured about KES 38 billion ($294.2 million) in inflows, suggesting the sector is on observe to keep up its lead for a second consecutive 12 months.
The surge into Kenya’s tech sector might be attributed to regulatory change. In 2023, President William Ruto scrapped a two-decade-old rule requiring overseas tech companies to cede a 30% possession stake to native companions. The coverage had been a dealbreaker for giant multinationals like Amazon Net Providers (AWS), Microsoft, and Google.
Whereas the KNBS knowledge solely tracks inflows into legacy sectors, a lot of Kenya’s digital economic system is powered by startups that obtain hundreds of thousands in VC funding, corresponding to M-KOPA, Workpay, BasiGo, and Shukhiba.
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