Abstract:
The purpose of this study was to assess factors that affect foreign direct investment (FDI) inflow in the Kenya’s horticultural industry. These was guided by twofold research questions namely how does the policy framework in place determine the extent of FDI flows into the horticultural industry? what drives the direction of FDI flows across the various sectors of the horticultural industry? By adopting descriptive research design, the target population constituted small, medium and large enterprises in the horticultural industry that were foreign owned. In total primary data was collected from 185 enterprises selected using stratified sampling. The study revealed low investment in horticultural industry by foreign investors. This was attributed to poor infrastructure especially road network and telecommunications. Others were cumbersome regulatory framework whereby potential investors are subjected to bureaucratic and multiple screening and approval system; erratic weather conditions; unfair investment policy requirements for foreign investors; unfavorable labor laws and trade union activities; inadequate policy framework for fair competition; stringent requirement imposed in the EU market. In lieu of this, the study recommended among other issues concerted efforts by government to improve road network in the horticulture growing regions, continuous consultation between the government, trade unions and horticultural farmers for negotiation on labor related laws, provision of necessary information on EU market requirements, reduction in overreliance on rain feed farming as well improved governance structures and implementation of antitrust laws to ensure fair competition.
