China’s FDI To East Africa Records Dramatic Rise

By  |  April 29, 2019

East Africa received an aggregate sum of USD 2.96 Bn in foreign direct investment (FDI) from China between 2011 and 2017. This is according to data extracted from the China-Africa Research Initiative.

Findings from the data gathered by China-Africa Research Initiative indicates that China’s continuous growing interest in the East African region is the reason why the region is among the major beneficiaries of Asian investments.

East African region has been registering growth in foreign direct investment. It has been performing stronger compared other regions across the continent. In 2017, it attracted 30 per cent of the continents total FDI with 197 projects.

The data, which was extracted from United Nations Conference on Trade and Development (UNCTAD), shows that Kenya received USD 1.3 Bn and had the largest share of FDI from China then followed by Tanzania which received USD 890 Mn between 2011 and 2017. Uganda came third and received USD 536 Mn, mainly in the energy, transport and communication sectors.

Burundi received a total of USD 9.91 Mn while South Sudan and Rwanda received USD 39 Mn and 18 Mn respectively in the period under review.

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The data further highlighted that there was a huge growth in FDI from USD 307.8 Mn which was received between 2004 and 2010 and the USD 2.96 Bn between 2011 and 2017. During the 2004 and 2010 period, Kenya received USD 166.38 Mn in FDI followed by Tanzania, which grossed USD 76.82 Mn while Rwanda received USD 38.22 Mn, Uganda and Burundi received USD 25.65 Mn and USD 0.69 Mn, respectively.

A recent study by South Africa’s Rand Merchant Bank (RMB) ranked Kenya, Rwanda and Tanzania to be among Africa’s most attractive investment destinations in 2019.

The report which was released in February 2019 ranked Kenya as the most attractive country in East Africa, attributed to the political reconciliation following the disputed 2017 presidential polls

The report placed Rwanda second. The Paul Kagame-led stated was rated one of Africa’s fastest growing economies with a government that is investing heavily in domestic industries.

Last in the top three came Tanzania, the report cited government tax breaks, development of special economic zones, investment in public infrastructure and growth in the services sector as incentives for foreign investors.

East Africa still remains a popular destination for these private Chinese investments despite not being resource-rich compared to the West African region. This has largely been attributed to the fact that it is relatively more developed in terms of infrastructure, including ports as well as its relative closeness to China.

Featured Image Courtesy: Kenya Broadcasting Corporation

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