Kenyan investors are bullish about opportunities in the greater East African region with most firms eyeing mergers and acquisitions regionally.

Scores of Kenyan companies have expressed interest in investing across the East African region especially in the Democratic Republic of Congo (DRC) and Ethiopia which can enhance faster growth, due to the huge populations of the two nations.

Analysts say, most firms are poised to do well by exploiting new opportunities, but it will also help them de-risk.

Early this month, KCB Group announced a Sh15 billion deal to take over Trust Merchant Bank, one of DRC’s three largest banks as the lender followed in Equity Group’s footsteps, which acquired a majority stake in DRC’s Banque Commerciale du Congo (BCDC) in 2020.

DRC and Ethiopia

Both KCB and Equity Bank already have operations in Uganda, Tanzania, South Sudan, Rwanda and Burundi. However, in April, 26 Kenyan companies pledged to invest in excess of Sh185 billion ($1.6 billion) in DRC.

The firms include Rentco Africa Limited, Optiven Group, Greenlight Planet Limited, Jumbo Foam Limited, Bidco, Geomaps and Nyanja Associates. The companies were part of a 15-day business delegation which last December sought to scout and identify potential trade investments in DRC.

Safaricom has already entered the Ethiopia market where it plans to invest $8.5 billion (Sh1 trillion) in fifteen years. The telco plans to begin operations in the country this month.

Economics Consultant at University of Nairobi and former Transport Principal Secretary, Gerrishon Ikiara is optimistic about Kenyan companies doing well in the regional foray, saying such investments are usually preceded by thorough market research.

“The only thing that can make them fold up operations in these countries is insecurity, like the civil war that was in Ethiopia recently,” he said.

“Even in Tanzania, although Tanzania has always been wary of Kenyan investors, Kenyan companies have had a big impact and it has also helped those countries,” he added.

Firm poised to do well

Samuel Nyandemo, a senior economic lecturer at the University of Nairobi, noted that despite the instability in countries such as DRC, Kenyan investors were poised to do well in the regional market as evidenced by the good performance reported by Equity Group in DRC. The country is a rich one, with a high population, and cheap power.

“In due course, DRC will be a bit stable, and there will be more lucrative opportunities for Kenyan investors there and for other investors in the East African Common Market,” he said.

“I am quite optimistic that they will be able to penetrate that market. The sky should be the limit for investors eyeing that region,” he said.

Nyandemo’s sentiments were echoed by Churchill Ogutu, a senior research analyst at IC Group calling DRC a virgin market.

“Here the banking sector is more or less a mature market. But DRC’s is still emerging so the investors can leverage on the strengths that they have built in Kenya but which they cannot deploy here,” he said. 

“Their way for expansion now is to get outside their borders,” he added.

Both Democratic Republic of Congo and Ethiopia huge populations, mostly unbanked, a lucrative market for investors.

For DRC, businesses are also flocking to the mineral-rich country looking for opportunities in agro-processing, mining, energy and the hospitality sector.

Rwanda has also emerged as a hot investment destination for Kenyans in the recent past.

According to Rwanda Development Board, over 1,000 Kenyan companies have been domestically registered in Rwanda, directly employing close to 250,000 Rwandese.