Investment by Kenyan firms in foreign technology research and development experts has surged to nearly Sh21 billion, reflecting a significant shift towards global IT advancements. According to the Kenya National Bureau of Statistics (KNBS), local businesses increased their expenditure on non-resident research services to Sh20.9 billion in 2022, a dramatic rise from Sh575.3 million the previous year. This sector now represents 12.1 percent of all services expenditure by Kenyans, up from just 0.3 percent in 2021.
The surge in research expenditure contrasts with an overall decline in expenditure on services, which fell 7.9 percent to Sh172.2 billion. This decrease is attributed mainly to reduced spending on financial and insurance services. Despite this, expenditure on research services has become the fastest-growing category within the services expenditure band.
The growth in research services expenditure comes amidst a broader decline in overall service spending, driven by reduced financial and insurance expenditures. KNBS reports that financial services made up the largest portion of service expenditures, averaging 65.5 percent over the review period.
This increased investment in foreign research services arrives at a time when the government has reduced funding for local research by Sh2 billion over the past decade, affecting the National Research Fund. The reduction in government funding has led institutions of higher learning to seek alternative funding sources, including grants for research activities.
In addition to research services, technical and trade services also saw notable growth in 2022, with expenditures rising to Sh9.2 billion. This category accounted for 5.4 percent of overall expenditure, up from 1.4 percent in 2021. Other significant service categories sought from expatriates included insurance, computer services, intellectual property charges, and management consulting.
These trends highlight a strategic pivot by Kenyan firms towards investing in global IT and research capabilities, even as overall service expenditure declines. This shift underscores the growing importance of international expertise in driving technological and research advancements within Kenya.
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