The relationship between work permits and the inflow of foreign direct investment in Kenya: A focus on the ministry of immigration and registration of Persons

Abstract

Kenya is losing the battle for foreign direct investments(FDI) to Uganda and Tanzania as heightened political tensions and restrictions on foreign ownership in some sectors turn away multinationals. The FDI inflows to Kenya dipped from $729 million in 2007 to $177 million last year, according to the United Nations Conference on Trade and Development (UNCTAD).In a similar period, Uganda’s FDI inflows jumped from $733 million to $797 million while Tanzania’s from $581 to $725 million. The drop in Kenya’s FDI inflows means there will be fewer new jobs as the freeze in corporate hiring continues. New capital is expected to create new jobs and help the government reverse the high unemployment rate estimated at about 50 per cent, meaning half of the people are unable to find work despite their willingness and ability. Unemployed youth, for instance, have been blamed for the chaos in 2008 after the disputed elections and are seen as a threat to future social stability. Foreign direct investment is critical to country’s development, especially in times of economic crisis. It brings new and more committed capital, introduces new technologies and management styles, helps create jobs, and stimulates competition to bring down local prices and improve people’s access to goods and services. With few people in employment, demand for goods and services also slows down, thus limiting business growth. This study examines FDI in Kenya, in the context of Kenya’s regulatory environment and investor permits issued by the Immigration Department in particular. The study presents FDI trends in Kenya, using official government data from central Bank of Kenya, the UNCTAD, and the World Bank. To supplement the official data, the study also discusses investor permits as issued by the Immigration Department of Kenya; it gives an overview on regulations on Immigration processes in investor permits issuance, provides comparative analysis of laws in effect and amendments introduced. It gives statistical data on the annual investor permits issued annually as well as some key points of the Kenyan immigration