UNCTAD: Kenya lags behind Ethiopia and Uganda in attracting foreign direct investment in East Africa
By Mabonga Makhanu, July 10, 2026According to the United Nations Conference on Trade and Development (UNCTAD), Kenya trails Ethiopia and Uganda in attracting foreign direct investment (FDI) in East Africa, with the two countries emerging as the region’s leading destinations for international capital.
The World Investment Report 2026 by UNCTAD, which was released on Wednesday, July 8, 2026, shows that foreign direct investment inflows into East Africa were driven by continued investment in large-scale projects and sustained activity in several least developed countries.
Foreign direct investments
Ethiopia retained its position among the region’s top investment destinations after attracting about US$4 billion (approximately Ksh517 billion) in FDI while also recording a significant increase in greenfield investment projects.
Uganda followed closely with US$3.4 billion (approximately Ksh439.5 billion) in FDI, supported by investments in oil refining and battery storage. Kenya is not listed among the leading FDI recipients in the East Africa regional review.
Overall, East Africa registered a stronger investment performance in 2025. The report indicates that FDI inflows into the subregion increased by 12 per cent, rising from approximately US$13 billion (approximately Ksh1.68 trillion) in 2024 to US$15 billion (approximately Ksh1.94 trillion) in 2025.
UNCTAD attributes the growth to increased investment in minerals, hydrocarbons, energy infrastructure, and selected manufacturing activities across several East African economies.
Despite not featuring among the leading FDI recipients, UNCTAD identifies Kenya as one of Africa’s most attractive destinations for digital infrastructure investment because of its energy mix.
“FDI inflows in East Africa were supported by continued investment in large projects and by activity in several LDCs.
Ethiopia maintained inflows of about $4 billion and recorded a significant increase in greenfield investment projects.
Uganda remained among the leading FDI recipients in African LDCs, with inflows reaching $3.4 billion, supported by investment in oil refining and battery storage.”
The report says
The report notes that nearly 90 per cent of Kenya’s electricity generation comes from renewable sources, mainly geothermal power, giving the country both a cost and credibility advantage when competing for investment.
It further highlights that Kenya has already secured a US$1 billion investment package (approximately Ksh129.3 billion), including the development of a geothermal-powered data centre.
The report also singles out Kenya’s investment in digital innovation. It states that Konza Technopolis is being developed as an innovation hub to support investment in the digital economy, while regulatory sandbox initiatives in the information and communications technology sector have created an environment where new products can be tested before full commercialisation, improving the country’s attractiveness to technology investors.
Regional trade operations
UNCTAD further points to regional cooperation as an important avenue for attracting investment into East Africa.
It highlights the East African Community (EAC) Market Access Upgrade Programme (MARKUP II), implemented jointly with the European Union, which has supported 37,819 small and medium-sized enterprises, helped more than 115 firms generate US$16 million (approximately Ksh2.07 billion) in sales and exports, and attracted US$1 million (approximately Ksh129.3 million) in investment for more than 70 businesses.
The report says the programme is complemented by regional initiatives such as the EAC Investment Guide, Buyer-Seller Platform, digital marketplace and Diaspora Desk to improve the region’s appeal to investors.