Factors influencing investment in Kenya by multinational corporations (MNCS) in transport sector: the case of Rift Valley Railways (K) limited

Abstract

Many researchers have carried out research studies in Multinational companies in various sectors operating in Kenya but no study has been carried out in Transport sector to establish the factors influencing investment in Kenya by MNCs. The primary purpose of this study was to establish the factors that influenced the three Multi- national companies (MNCs) to invest in Kenya Railways. The study used both Primary and Secondary data. Structured interview guide and personal interviews consisting of open-ended questions were used. Pertinent data were collected from the top and middle level management of the Rift Valley Railways at the headquarters. The Rift Valley Railways (RVR) officials targeted for interviewing were the head of Marketing, head of Operations, head of Human Resource, head of Finance and head of Administration. The response rate was 80% and the data collected was analyzed using descriptive statistics. The open-ended interview guide enabled the respondents to give as much information as possible without any form of limitation. The researcher designed the interview guide on the basis of the objective of the research and the study's literature review. The primary data was supplemented by secondary data from the existing records of Ministry of Transport, Kenya Railways Corporation, Kenya Revenue Authority (KRA), Journals and Internal circulars. The study findings established that factors such as; knowledge and experience of the foreign markets; size and growth of the foreign markets; government emphasis on FDI and financial incentives, economic policy; cultural closeness cost of transport, materials and labour, availability of resources; technology, political stability (that is, political stability of host country and political stability of neighbouring country), availability of raw material, availability of labour, conducive climate, availability of investment incentives, infrastructure, increase of sales and profit, entering rapidly growing markets, reduced operation costs and the government general legal guarantee that includes, foreign protection Act and international protection ,that is ICSID contributed immensely to the investors' decision to invest in Railway line services in Kenya and Uganda. The findings also revealed that the parent company is registered in South Africa and has only two subsidiaries in Africa that is, Kenya and Uganda undertaking their core mandate in railway line transport services under concessionaire type of agreement of twenty five years reviewed after five years of initial investment. However there is need for Rift Valley Railways (RVR) investors to speed up expansion strategy to many other countries in the continent and beyond.