Kenya has emerged as one of the top investment priority destinations among American investors, even as US President Donald Trump's tariffs on Kenya begin to take effect.
A survey by the African Private Capital Association (AVCA) ranked Kenya among the top five preferred investment destinations over the next three years. The country’s strong performance was attributed to factors such as a robust market, active deal flow, and a growing innovation ecosystem.
''LPs and GPs participating in the survey have demonstrated divergent preferences in their selection of attractive regions and countries for private capital investment in Africa. While most LPs have chosen West Africa as an attractive region, the vast majority of GPs (83 per cent) consider East Africa the most appealing region for private capital investment, closely followed by West Africa (78 per cent of GPs). Kenya and Nigeria, the largest private capital markets in East and West Africa, have been chosen as the most attractive countries among the majority of GPs,'' the survey read in part.
Investors attribute Kenya’s appeal to its strong demographics and thriving innovation ecosystem. They cite the country's long-term growth potential—fueled by a young, growing population and underserved markets—as a key attraction.
Kenya’s leadership in tech and fintech, particularly innovations in digital currency and mobile payments, has solidified its position as a regional hub.
The investors identified financial services (especially fintech) and technology as the top sectors of interest for both limited and general partners. Kenya’s expanding tech ecosystem aligns closely with these priorities, making it even more attractive to American investors.
Interestingly, the American equity investors further attributed the calm political stability witnessed in the East African region, particularly Kenya, to their preference to make the country their top investment destination over the three years.
Among the sectors attracting strong investor interest are energy, healthcare, and consumer goods, which are expected to be key priority areas for general partners (GPs) in Africa, including Kenya.
The energy sector could be of interest to the government, given the quest by the administration of President William Ruto to have more investors in the Public Private Partnerships to help rebuild the country's ageing electrical infrastructure.
Other countries in the region where American investors are interested in include Egypt, South Africa, and Nigeria.
However, over a third of the investors expressed pessimism about raising funds this year, citing depreciating currencies across several African countries, including Kenya, and the impact of President Trump's policies, according to the survey.
''Exchange rate volatility on the continent remains high on the list,'' emerging as the top concern of 84 per cent of the respondents, according to the report. ''America-first investment approach, which may have a significant impact on foreign investments by US-based investors,'' was the second concern, expressed by 59 per cent of investors, it added.
Inflows of venture-capital funding for African startups dropped 22 per cent to Ksh468 billion (USD3.6 billion) last year, the association said in a separate report earlier this month. Trump’s tariffs upended global markets, spurring investors to shun risky assets.
Earlier this month, Trump announced that he would apply tariffs of at least 10 per cent on most goods coming into the US to counter trade imbalances, with higher duties on some 60 nations before pausing them for 90 days.
