A Case Study of Market Strategy in Foreign Direct Investment in Kenya’s Construction Industry

Abstract

The widespread consensus is that foreign direct investment (FDI) plays a crucial role in both economic growth and the integration of nations into the global economy. In Kenya, FDI has become the primary source of funding and is essential for the growth of the construction industry. Given the various factors that influence FDI in the Kenyan construction sector, it is necessary to consider them when conducting business in the country. Therefore, this study aims to examine the impact of economic, political and social, factors in Kenya on foreign construction companies’ investments. The study employs a qualitative analysis approach and gathers data from secondary literature, government reports, statistics, and publicly available information sources such as the IMF and World Bank etc. The study analyzed using SWOT , PESTEL and Space Matrix tools with case study. The findings reveal that economic factors such as GDP, inflation, interest rates significantly affect investment in the construction industry. The political factors, including election and government corruption, also influence investor decisions. Additionally, strict environmental regulations have an impact on the construction investment industry. The study also highlights that construction investors’ management strategies during economic and social fluctuations align with the company’s financial reports. The findings suggest that FDI in the construction industry primarily manifests through the business activities of construction companies. Economic and political factors play a significant role in shaping investment decisions and project management within the construction industry. Consequently, changes in Kenya’s macro-investment environment directly impact the market strategies of foreign investors in the construction sector. These insights could serve as a reference for the Kenyan government in policy formulation and assist construction companies and investors in devising operational strategies to tackle challenges and mitigate risks.