The Role of Foreign Direct Investment (FDI) in Advancing Kenya’s Green Energy Transition

Wainaina Samuel Mburu (2025) The Role of Foreign Direct Investment (FDI) in Advancing Kenya’s Green Energy Transition. Külkereskedelmi Kar.

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Absztrakt (kivonat)

Kenya is a pioneer in the sector of renewable energy within the sub-Saharan part of Africa, sourcing approximately 80% to 90% of its electric power from geothermal, wind, and solar power as of 2023. This research project investigates the critical role FDI plays in driving Kenya's green energy transition. It examines how FDI helps overcome financial and technological barriers in the renewable sector, enabling large-scale infrastructure deployment and advanced technology adoption. It also explores the policy and regulatory frameworks influencing FDI attraction and retention for Kenya's renewable energy goals. By analyzing these dynamics, the study clarifies the mechanisms through which FDI can contribute to Kenya's target of a 100% renewable electricity mix by 2030. Despite ample literature on FDI and renewable energy globally, specific research on their intersection in sub-Saharan Africa, particularly focusing on optimizing FDI's long-term impact, remains limited. This study addresses this gap using Kenya as a case study, acknowledging its progress alongside challenges in leveraging FDI effectively. The researcher integrated qualitative and quantitative data by utilizing a convergent parallel mixed-methods research design. Primary data came from a structured online survey of 140 diverse stakeholders validated through a pilot study. Quantitative survey data were analyzed using descriptive statistics in Excel, while qualitative responses underwent thematic mapping. Secondary data analysis utilized a multivariate time series dataset (1990-2023) and an Autoregressive Distributed Lag (ARDL) regression model, estimated using EViews, to assess FDI's short- and long-term effects on renewable energy production, controlling for relevant economic variables. Primary data indicates stakeholders perceive FDI as beneficial for expanding energy access, reducing costs, and enhancing energy security. Blended financing was identified as the most vital for mobilizing resources. However, inconsistent policies, currency risks, and land disputes were cited as major barriers. Key recommendations included ensuring policy stability, developing supportive infrastructure, strengthening public-private partnerships (PPPs), and enhancing community engagement. The ARDL regression revealed significant short-run effects of FDI on renewable energy production, with initial negative impacts potentially reflecting lags, followed by positive effects in subsequent years. However, the analysis showed no statistically significant long-run impact of FDI alone on renewable energy output. This suggests that while FDI provides a vital initial boost, sustained long-term growth in the sector is more strongly linked to broader economic growth and supportive domestic policies and institutions rather than foreign investment in isolation. In conclusion, FDI plays a vital catalytic role within Kenya’s renewable energy domain in the short term, but its long-term effectiveness hinges on a stable domestic environment characterized by supportive policies, institutional strength, and consistent economic growth. Aligning foreign investment with national priorities and building domestic capacity are crucial to green energy projects' long-term viability after initial FDI infusions. This study provides insights into FDI's nuanced role and offers policy recommendations to maximize its contribution to Kenya's sustainable energy future.

Intézmény

Budapesti Gazdasági Egyetem

Kar

Külkereskedelmi Kar

Tanszék

Nemzetközi Gazdaságtan Tanszék

Tudományterület/tudományág

NEM RÉSZLETEZETT

Szak

Nemzetközi gazdaság és gazdálkodás (angol)

Mű típusa:	diplomadolgozat (NEM RÉSZLETEZETT)
Kulcsszavak:	energiapolitika, fdi, Foreign Direct Investment, green energy, Kenya, megújuló erőforrások, renewable energy, zöld energia
SWORD Depositor:	User Archive
Felhasználói azonosító szám (ID):	User Archive
Rekord készítés dátuma:	2025. Okt. 27. 14:27
Utolsó módosítás:	2025. Okt. 27. 14:27

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