NAIROBI, Kenya, Sep 10 — From the boardrooms of the capital to the industrial parks of Kiambu and the port of Mombasa, counties are competing for a larger share of private investment.
New data offers the clearest picture yet of where Kenya’s strongest investment ecosystems are — and where the biggest gaps remain.
For decades, the answer to where one should invest in Kenya has seemed almost obvious.
Nairobi is where multinational corporations establish regional headquarters, banks and financial institutions are concentrated, professional services firms operate and some of the country’s largest consumer markets are found.
But what if that assumption is tested against data covering all 47 counties?
The County Competitiveness Index (CCI), developed by the State Department for Investment Promotion, measures the investment readiness of counties using a common set of indicators.
Nairobi emerges as Kenya’s most competitive county, scoring 77 per cent.
But the more interesting story lies beneath that headline.
Nairobi’s lead is not simply a reflection of its status as the national capital. The index shows that the county has built a powerful combination of economic activity, infrastructure and institutions.
Yet the same data reveal an uncomfortable contradiction: the country’s economic powerhouse performs poorly when it comes to business efficiency.
That raises a bigger question for investors: is Nairobi really the best place to do business, or is it simply the place where Kenya’s biggest business ecosystem happens to be?
A formidable advantage
The CCI assesses counties across six broad areas: government and institutions, economic development, productive infrastructure, human capital, business efficiency, and climate and environment.
Nairobi scored 100 per cent in government and institutions, 100 per cent in economic development and 100 per cent in productive infrastructure.
Those scores explain much of its dominance.
An investor setting up in Nairobi enters an economy that already has the infrastructure and networks required to support sophisticated businesses.
There are banks to finance businesses, lawyers and accountants to provide professional services, universities supplying skilled workers, transport networks connecting businesses to markets, technology companies providing digital services and a large consumer population.
In other words, Nairobi’s biggest investment advantage may not be any single road, building or institution.
It is concentration.
Businesses attract businesses.
A technology company benefits from being close to other technology companies. A financial institution benefits from proximity to regulators, clients and professional services. A manufacturer can draw on established supply chains.
That creates an economic ecosystem that is difficult for another county to reproduce overnight.
The CCI’s overall ranking reflects that advantage. After Nairobi’s 77 per cent came Kiambu at 73 per cent, followed by Nyeri and Murang’a at 61 per cent each.
Nakuru scored 57 per cent, Machakos 56 per cent and Mombasa 53 per cent.
But the rankings should not be read as a simple list of where every investor should put money.
The index is designed to benchmark competitiveness and guide policy and investment decisions across the 47 counties. An investor’s best location will ultimately depend on the sector, infrastructure needs, market access and operating costs.
Nairobi’s glaring gap
For all its advantages, Nairobi has a glaring weakness.
Its score for business efficiency was just 26 per cent.
That compares with 100 per cent in Kiambu, 81 per cent in Murang’a, 83 per cent in Kirinyaga and 69 per cent in Machakos.
It is one of the most revealing findings in the index.
Nairobi has Kenya’s largest and most sophisticated business ecosystem, but that does not necessarily mean individual businesses experience the county as the easiest place in which to operate.
The capital’s advantages come with familiar costs.
Land and commercial property are expensive. Traffic congestion raises the cost of moving people and goods. Competition for skilled labour is intense, while businesses navigate a crowded regulatory and administrative environment.
Nairobi therefore has the country’s strongest investment ecosystem without necessarily having its most efficient business environment.
That distinction could become increasingly important as investors pay greater attention to the cost and speed of doing business.
Kiambu’s proximity advantage
Kiambu is only four percentage points behind Nairobi overall, with a score of 73 per cent.
But its business-efficiency score tells a different story: 100 per cent compared with Nairobi’s 26 per cent.
Kiambu also recorded 77 per cent in productive infrastructure and 89 per cent in climate and environment. Its major weakness was economic development, where it scored 37 per cent.
The picture is of a county benefiting from its proximity to Nairobi while developing an investment proposition of its own.
For businesses that need access to the capital’s large market but do not necessarily need to be located in central Nairobi, Kiambu could offer an attractive alternative.
This is particularly relevant to investors in manufacturing, logistics, property, agribusiness and businesses serving the wider Nairobi metropolitan area.
Why Mombasa matters
Mombasa ranks seventh overall with 53 per cent, well behind Nairobi.
Yet the coastal county scored 93 per cent in productive infrastructure, making it one of the country’s strongest counties in this category.
For businesses whose fortunes depend on trade and the movement of goods, that matters enormously.
Mombasa’s port gives the county a strategic advantage Nairobi cannot replicate.
A logistics company, importer, exporter, hospitality investor or business targeting the blue economy may therefore find Mombasa more relevant than its overall CCI ranking suggests.
This is one of the central lessons of the index: the best investment location depends on what an investor is trying to achieve.
Looking beyond the headline score
Nyeri and Murang’a each scored 61 per cent overall.
Yet Nyeri scored 100 per cent in human capital, while Murang’a scored 91 per cent. Murang’a also recorded 81 per cent in business efficiency.
Kirinyaga, meanwhile, scored 52 per cent overall but achieved 96 per cent in human capital and 83 per cent in business efficiency.
These figures illustrate the limitations of judging counties solely by their overall score.
A county with a smaller economy may possess a particular advantage that makes it highly attractive to an investor in a specific sector.
For agribusiness, for example, proximity to agricultural production, availability of labour, water, land and access to processing and transport networks can matter more than the size of the local economy.
The investment opportunity may therefore be hidden inside the individual components of the index.
The counties at the bottom
At the other end of the scale are counties where the fundamentals remain a major constraint.
Wajir recorded the lowest overall score at 13 per cent, followed by Tana River at 14 per cent, Marsabit at 16 per cent and Mandera at 17 per cent.
The figures point to persistent gaps in infrastructure, economic activity, human capital and institutional capacity.
A county can possess significant natural resources or geographical advantages and still struggle to convert those assets into commercially viable investment opportunities if basic infrastructure, skills, institutions and business systems are weak.
That is where public investment can play an important role.
The national government has been promoting County Aggregation and Industrial Parks, Special Economic Zones and Export Processing Zones as part of efforts to attract investment outside Nairobi and strengthen local manufacturing and value addition.
The CCI provides a useful way of thinking about what comes next.
Kenya does not necessarily need to reproduce Nairobi in every county.
Instead, counties can build around their particular advantages — Mombasa around trade and the blue economy, Kiambu around its metropolitan location and business efficiency, agricultural counties around production and agro-processing, and other regions around their human capital, natural resources or strategic location.
The next big investment opportunity may therefore not be where Kenya’s economy is already strongest.
It may be where a county’s particular strengths meet an investor’s particular needs.
