Influence of the One Stop Center Facilitation in the Growth of Foreign Direct Investment in Kenya: A Case Study of Keninvest

Abstract

The role of foreign direct investment in the advancement of the economies around the world through innovation has intensified competition among developing countries by instituting ways through which they can attract more foreign investors. The innovativeness, creativity, and improvement in business registration processes have positioned Kenya as the Silicon Savannah, hence an attractive commercial centre on the African continent. One stop shops facilitate investor access to permits through reduction of the steps needed in the business registration, licensing, and approval process. The general objective of this study was to determine the influence of the One Stop Centre in facilitating the growth of foreign direct investment (FDI) in Kenya: case study of Kenya Investment Authority. The specific objectives were to: establish the influence of licensing in one-stop centre in facilitating the growth of foreign direct investment in Kenya; determine the influence of compliance advisory at one-stop centre in facilitating the growth of foreign direct investment in Kenya; investigate the influence of easing business registration at one-stop centre in facilitating the growth of foreign direct investment in Kenya. The research applied a correlational research design. The population of interest in this study was the 6 Kenya Investment Authority staff from the Managing Director's Office (MD), general manager, finance and administration, research, policy advocacy and planning, investment promotion, investor services, and legal & corporate affairs departments. Census sampling technique was used whereby all the 6 respondents were selected. The study used both primary and secondary data. The primary data was collected through a structured questionnaire while secondary sources were collected through time series data from Kenya National Bureau of Statistics (KNBS) publications as well as economic surveys and World Bank website. The quantitative data collected was analyzed using descriptive statistics including frequency and percentage distributions, central tendency measurements (mean) and dispersion measurements (standard deviation). Descriptive statistics was used to describe the basic features of the data in the study. Inferential statistics was done using regression analysis. Graphs and tables were used to present the data. The study established that corruption and governance are the main challenges affecting licensing, and the process of getting a business license is shorter. The research also established that there are no discriminations for locals when getting a business license and one stop centre has simplified procedures for getting license. On compliance advisory at the one-stop centre, the research however found that it was not certain whether the rule of law for institutions in Kenya is fully developed, the laws governing transfer pricing by foreign investors is not well laid down in Kenya, laws act as focal point for investment promotion and facilitation, and laws boost and expedite the investment process to acquire the essential documentation for purposes of investment. In regards to easing business registration at the one-stop centre, the research found that the availability of sitting area while waiting for services has made it easy to register businesses, and more global integration can drive growth of foreign investment inflows in Kenya. The research also found that more foreign direct investment cannot be attracted in Kenya through liberalizing trade to attract foreign investment. The study concluded that licensing in one-stop centre (β=0.589, p=0.000<0.05) significantly influences the growth of foreign direct investment in Kenya. The study also concluded that compliance advisory at one-stop centre (β=0.52, p=0.000<0.05) significantly influences the growth of foreign direct investment in Kenya. The study concluded that easing business registration at one-stop centre (β=0.667, p=0.000<0.05) influences the growth of foreign direct investment in Kenya significantly. The study recommends that the management of Kenya Investment Authority (KIA) needs to appreciate the importance of their institution in enhancement of the country’s status as a good destination for foreign investments. In this way they will need to further lobby the government to streamline all processes required for investing in the country. Kenya should formulate two policies: International Trade Policy and Foreign Investments Policy to positively impact on her international trade flows, enhance foreign direct investment inflows and inform the enactment of or reform of quality, comprehensive and efficient laws governing international trade and foreign investments. The study recommends that the government directs more resources to the financing of the Kenya Investment Authority in order to fulfil effectively its mandate.