Medidas de Defensa Comercial

Kenya has a unique internationalisation path based on its socio-political and economic background. After independence in 1963, Kenya became a diverse community made up of post-colonial Europeans, Indian migrant settlers, and the African tribes local to the area. This diversity continued over the years and impacted on its business sector, which reflected this mixed background in its establishments. This became an advantage to Kenya because its firms and entrepreneurial environment developed faster as a result of the multiple talents available to the sector. In this regard, some Kenyan firms had become established in local and even regional business activities in East Africa from the 1960s and 1970s. Kenya has always had a form of democratic rule and never experienced a military government. However, on the back of its balance of payments crises in the 1970s, it moved towards becoming a closed economy for a period of about 20 years (Gertz, 2008). During this time, Kenya adopted import substitution and foreign exchange restriction policies, which helped to develop the Kenyan local manufacturing and agriculture sectors but also eventually limited the inflow and outflow of foreign direct investment. However, due to pressure from international finance institutions and trade partners, Kenya commenced IMF- and World Bank-stimulated liberalisation of its economy and monetary policies from the early 1980s until the mid-1990s, within which trade liberalisation and privatisation of the economy was a priority. Furthermore, Kenya went ahead and relaxed its strict foreign exchange restrictions by 1994, which paved the way for the flows of foreign direct investment in and out of the country. This eventually revived Kenya’s export sector, which went on to develop competitive advantages in the trade of horticulture and textiles to foreign countries (Gertz, 2008). In addition, the advantages developed in manufacturing during the 1980s were also developed by Kenyan firms in the new dispensation.

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4.4.1

OFDI Flows from Kenya

OFDI flows from Kenya in the 20-year period from 1994 to 2013 were reported to be just $219 million, accounting for only 0.4% of the $54billion total flows from SSA (UNCTAD, 2013). These OFDI figures for Kenya do not appear to tally with the perceived level of foreign direct investment being made by Kenyan firms into other countries. The cumulative flow of just $219 million between 1994 and 2003 as reported by UNCTAD is at variance with the robust firm-level data of internationalising Kenyan firms and the activities of their overseas subsidiaries, which depict huge foreign operations. This variance can be attributed to data measurement challenges that could have been encountered by UNCTAD during the collation of data from organisations in Kenya. In addition, it can be argued that incomplete statistical data was provided by the bodies responsible for this in Kenya. The complete OFDI figures from internationalising firms may not have been accessible because many of the firms are privately owned and are not under any obligation to give OFDI figures to Kenyan statistics-gathering organisations. In this regard, it is very likely that the UNCTAD OFDI data figures do not fully reflect the extent of OFDI activities in Kenya due to these data collection challenges.

4.4.2

Kenyan Greenfield FDI and Mergers and Acquisitions

The OFDI figures, however, do show some seemingly compensating levels of activity with regard to greenfield OFDI. From Figures 4.12 to 4.15 below, it can be seen that Kenya invested a yearly average of $630 million in 165 greenfield FDI projects between 2005 and 2013. However, the merger and acquisitions figures are low, as they show only $29 million being invested in 28 projects in the same period. All the same, there is OFDI activity coming from Kenya, and this is geographically targeted to the East African Community (EAC) region. Kenya is the business hub of EAC, which includes, among others, Uganda, Tanzania, Burundi, Rwanda, Ethiopia, and South Sudan. In the EAC, the major beneficiaries of Kenyan OFDI are Tanzania, Uganda, and South Sudan. Furthermore, through the Common Market for East and South Africa (COMESA), regional trade agreements exist between Eastern, Southern, and Central African countries, which are home to 479.3 million people, representing the largest regional economic zone in Africa (Muuka & Ezumah, 2015).

80 KENYAN GREENFIELD OFDI

Figure 4.12 Figure 4.13

Source: United Nations Conference on Trade and Development (UNCTAD), World Investment Report, 2014.

NUMBER OF KENYAN GREENFIELD OFDI TRANSACTIONS VOLUME OF KENYAN GREENFIELD OFDI

(2005 - 2013) (2005 -2013) Constant $USm

GREENFIELD GREENFIELD

TRANSACTIONS OFDI

81 KENYAN MERGERS AND ACQUISITIONS

Figure 4.14 Figure 4.15

Source: United Nations Conference on Trade and Development (UNCTAD), World Investment Report, 2014.

NUMBER OF KENYAN MERGERS & ACQUISITIONS (2005- 2013) VOLUME OF KENYAN CROSS-BORDER MERGERS & ACQUISITIONS (2005 -2013) Constant $USm

M & A M & A

TRANSACTIONS

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Kenya has benefitted from this and has extended its OFDI operations to many other countries in Central and Southern Africa, like the DRC, Zambia, Malawi, and South Africa. In the Western and Northern African regions, some Kenyan OFI activity exists in countries like Nigeria and Egypt; however, there is little evidence of major OFDI activity of Kenyan firms in most of the countries in these regions. However, Kenyan firms are active in OFDI internationally, with some firms having operations in Europe, North America, Asia, and the Middle East.