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Ethiopia topples Tanzania, Uganda for Kenya investments destination

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Ethiopia has emerged as the top choice for Kenyan investors seeking opportunities abroad, surpassing Tanzania and Uganda, according to the latest data.

Kenya’s direct investment in Ethiopia reached KSh60.2 billion in 2021, outpacing the KSh51.5 billion invested in Tanzania and KSh56.3 billion in Uganda.

Direct investment abroad, also known as outward direct investment, refers to cross-border investments in which a resident of one country exercises control or significant influence over the management of an enterprise in another country.

Ethiopia topples Tanzania, Uganda for Kenya investments destination

This form of investment encompasses equity ownership, investments associated with the relationship, investment in indirectly influenced or controlled enterprises, investments in fellow enterprises, debt (excluding specific types of debt), and reverse investment.

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The recently released Economic Survey 2023 reveals a notable shift in Kenya’s investment preferences. While Tanzania held the top spot as the preferred investment destination for Kenya at the beginning of 2015, Addis Ababa has since emerged as the new frontrunner.

This shift can be attributed to the expanding opportunities available to Kenyan businesses in Ethiopia, which serves as a massive neighboring market.

Ethiopian authorities have implemented policies and initiatives to attract foreign investment and foster economic growth, enticing Kenyan firms to explore the prospects available in this promising market.

Ethiopia topples Tanzania, Uganda for Kenya investments destination

The robust bilateral relations between Kenya and Ethiopia have also played a crucial role in driving investment flows between the two countries.

The strengthening of economic ties, coupled with Ethiopia’s large consumer base and growing middle class, has created a favorable environment for Kenyan businesses seeking to expand their operations beyond national borders.

As Ethiopia solidifies its position as Kenya’s primary investment destination, it is expected that this trend will continue, further enhancing economic cooperation and trade between the two nations.

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