Kenya’s Outward Foreign Direct Investments in East Africa: Challenges and Prospects

Abstract

FDIs, from emerging economies, continue to play an important role in world economic activities. Studies on the nature, the number, and factors that drive their growth have not received adequate research attention from scholars both within East Africa and elsewhere. Studies on outward FDIs in East African countries of Burundi, Kenya, Rwanda, Tanzania and Uganda, are very scanty. This study, conducted between 2013 and 2017, was aimed at finding out symbiotic influence of entrepreneurial initiatives, and business environmental factors that have led to the expansion of Kenya’s outward FDIs in Eastern African Region. The study was anchored on internationalization trade theory, and specifically, on John Dunning’s eclectic paradigm theory, and Michael Porter’s competitive advantage of nations. Field work was conducted in 10 Kenyan outward FDI operating in EAC countries. Investigations carried in the five member states of EAC, indicated that there were factors that were specific to particular locations and country. Kenyan firms that were started from infancy and grew through intermediate stages had matured to become OFDIs. The study was aimed at finding out the relationship between entrepreneurial initiatives and the role of environmental factors that led to an increase of Kenya’s outward FDIs within the EAC region. Results of the study showed that there was a direct correlation between entrepreneurial initiatives and the increase of Kenya’s outward FDIs in the host countries of EAC. It is concluded that successful growth of Kenya’s outward FDIs in EAC countries, although attributable to several factors, were mainly influenced by entrepreneurial aggressive nature of Kenyan businessmen and environmental factors that played a big role in enabling Kenyan OFDI businesses to thrive.

Keywords: Entrepreneurial initiative, outward FDI, Emerging Economies, Eclectic paradigm, Internationalization, Preferential treatment.