Kenya’s technology sector has overtaken banking, manufacturing, and retail as the country’s leading destination for foreign direct investment (FDI), underscoring the rapid rise of its digital economy.

The Kenya National Bureau of Statistics (KNBS) on Wednesday released the 2024 Foreign Investment Survey, which shows that foreign capital inflows into the tech sector surged by 71% to KES 64.7 billion ($500.9 million) last year. The sector now accounts for more than a quarter of Kenya’s total FDI inflows of KES 242.6 billion ($1.8 billion), compared to less than 10% in 2020.

Importantly, the KNBS figures exclude venture capital raised by startups. According to Africa: The Big Deal, Kenyan startups secured an additional $638 million (KES 82.3 billion) in 2024, representing more than a third of Eastern Africa’s $1.9 billion total. Together, the official FDI and VC inflows highlight a clear reallocation of foreign capital away from traditional sectors toward digital technologies.

“The Information and Communication sector was the largest recipient of FDI inflows, which increased by KES 26.8 billion to KES 64.7 billion in 2023, pointing to a sustained investor interest in Kenya’s digital economy and innovation landscape,” the KNBS report noted.

While tech surged ahead, other industries posted more modest inflows. Banking and insurance attracted KES 45.3 billion ($350.7 million), manufacturing drew KES 32.5 billion ($251.6 million), and wholesale and retail recorded KES 48.3 billion ($373.9 million)—a drop from the previous year, when the sector was the leading FDI recipient.

Preliminary figures for the first half of 2025 show that tech companies have already secured about KES 38 billion ($294.2 million) in inflows, putting the sector on track to retain its top spot for a second year running.

Analysts attribute the surge largely to regulatory changes. In 2023, President William Ruto scrapped a decades-old rule requiring foreign tech firms to cede a 30% ownership stake to local partners. The rule had long been viewed as a barrier to entry for multinational giants such as Amazon Web Services (AWS), Microsoft, and Google, which are now expanding operations in the Kenyan market.

Although KNBS tracks only inflows into legacy sectors, much of Kenya’s digital economy is powered by venture-backed startups. Companies such as M-KOPA (asset financing), Workpay (HR and payroll solutions), BasiGo (electric mobility), and Shukhiba (logistics) continue to attract significant funding, fueling innovation and extending access to digital services across the country.

With inflows continuing to grow, Kenya is cementing its position as a regional hub for technology investment, reshaping the balance of foreign capital in East Africa.

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