Changing patterns in foreign investments in Kenya and their impact on HR policies: case studies of China and Britain

Abstract

Most countries continue to strive in attracting foreign direct investment (FDI). This is because of FDIs acknowledged benefits as tools of economic growth and development. Africa and particularly Kenya has joined other countries in seeking FDI as shown by the formation of the New Partnership for Africa’s Development (NEPAD). NEPAD has been the centre of attraction of foreign investment to Africa. The major FDI investors in Kenya have for many years been Britain, United States of America, and other Western and European nations. However, Kenya has been shifting its priorities and started to attract FDIs from Asian Pacific nations such as China. The aim of this study was to explore the changing patterns of foreign investment in Kenya and their impact on HR policies. The study was guided by the following objectives: to investigate how foreign investors have impacted HR policies in Kenya, to analyse how China as a FDI investor has impacted HR policies, to investigate how different government regimes have handled, facilitated and implemented FDI change in Kenya, to analyse why Kenya has shifted its foreign policy on investment to the East (China) rather than the west (Britain) and to determine how foreign investors have impacted HR policies in terms of transfer of technology and how they differ by comparing polices for Britain and China. The study was based on the following theories, namely: Neoclassical growth theory as per Solow and Endogenous growth theory as well as the Harvard Framework of HRM. The three models are appropriate for the study because they provide a theoretical framework for exploring the changing patterns of HRM in Kenya, especially on HR policies. They aimed to test the following hypothesis: Foreign investment by China and Britain has positively impacted the Kenyan human resource policies and Human Resources managers have negative perceptions of Chinese HR policies in comparison to Kenyan HR policies. The study was conducted by the use of the case study design. Questionnaires and structured interviews were the primary data collection instruments. The study used a sample of three companies for comparative analysis, these included: National Oil Corporation of Kenya (Kenyan company), Standard Chartered Bank (a British Company) and China Jiangxi International (Chinese Company). The study established that Kenya is generally characterised by a positive investment climate, which has made it attractive to international firms that seek locations for their regional or African operations. Key challenges for investors are Kenya’s consistently low rankings on international measures of the ease of doing business and corruption. Kenya also faces increasing threat of insecurity from terrorism and crime. The findings show that FDI impact Human Resource policies in terms of transfer of technology. Technological transfers have taken place mostly through transfers of managerial skills and processes and not so much through embodied technology. The study concludes that FDI has the potential to absorb some of the surplus literate labour in the rural and urban informal sectors. It also concludes that foreign direct investment that is channelled into the country is supposed to be well applied towards the projects for which it is intended for considering reports that has shown mismanagement of funds meant for free primary and secondary education. The researcher recommends that FDI by Chinese companies in Kenya should be encouraged and the right investment environment provided for they have positive results in economic growth through human capital development, employment (jobs creation) and capital supply.