Determinants of investment attraction in special economic zones in Nairobi County and its environs, Kenya

Abstract

In 2008, the Kenyan government launched the first Special Economic Zone called Konza Technopolis as its premier project in Kenya’s Vision 2030. It is Kenya's government mandate to promote investment, create job opportunities, and boost exports through tools such as SEZs. However, the number of operating projects in the zones is significantly lower than the targeted projects. For instance, Konza City has only one completed project, accounting for only 25 percent of the registered projects. In light of this, this research paper examined the factors that attract investors to SEZs in Nairobi County and its environs. The primary objectives of the research were: to determine the effect of zone bulk infrastructure on SEZ investment attraction; to examine the influence of fiscal incentives on SEZ investment attraction; to establish the role of zone management on SEZ investment attraction and to explore the role of marketing strategies on SEZ investment attraction in Nairobi County and its environs. The theories that underpinned this study were institutional and OLI paradigm theories. The study employed positivism research philosophy and used a descriptive correlational research design. The study target population consisted of 5 SEZs, with the target respondents being 60 zone investors. This research used purposive sampling to select the 5 SEZs in Nairobi County and its environs. The study used questionnaires applying the Likerttype scale method to investors who have invested in the zones. Statistical software SPSS version 24 was used to analyse quantitative data. The findings revealed that zone management was the most significant factor influencing investment attraction, with investors valuing efficient administration and competent service delivery. Marketing strategies also showed influence, though a negative regression coefficient suggested that promotional efforts must align with operational capabilities to be effective. Fiscal incentives were moderately important but statistically insignificant, implying that incentives alone do not drive investment unless accompanied by stronger institutional support. Zone bulk infrastructure, while highly rated in perception, did not significantly influence investment attraction when evaluated alongside other factors. The study concludes that institutional quality, particularly in the form of responsive and well-managed SEZ operations, is the most critical driver of investment. These insights can guide policy reforms focused on strengthening SEZ governance, aligning marketing with delivery, refining incentive schemes, and prioritizing infrastructure that responds to investor needs. Key words: Zone bulk infrastructure, fiscal incentives, investment attraction, marketing strategies, zones management and special economic zones