Investment inflows into Kenya is little compared to Uganda and Tanzania despite existing huge potential in the east African nation, a newly published United Nations report revealed here Thursday.

According to the report titled Investment Guide to Kenya launched in Nairobi, investor confidence has been affected by several elements, including issues of governance, labor unrest, insecurity, poor infrastructure and high utility costs.

The deplorable state of infrastructure has scared away potential investors and has killed Kenya's agricultural sectors, said the report published by the United Nations and International Chamber of Commerce.

"Most foreign and domestic investors agree that any progress there has been lies in telecommunications, airports and perhaps power supply. Investors are very unhappy with roads, which rank at the top of what has shown the least progress," the report said.

According to the report, other factors which have contributed to unsatisfactory business climate are corruption and delays in judicial process.

The report added that Kenya has one of the most developed banking systems in the region and, due to its geographical location, it has the potential to provide maritime services to its land-locked neighbors.

"One senses a central frustration on the part of investors in Kenya. While they clearly think very highly of the special features Kenya offers -- its human resources, its location, its substantial business infrastructure -- they also think not enough is being done to make productive use of these strengths," said the report.

The report said due to reduced investors' confidence, foreign investment in Kenya remains low and this, in turn, has weighed on economic growth.

It noted that monetary and fiscal components of the reforms, combined with the adoption of a managed floating exchange rate system, have shown signs of success. And reform efforts have also been made in the area of trade.

Nevertheless, structural reform has been somewhat hesitant, lengthening the transition state in which Kenya has been for nearly a decade.

Kenya's Trade Minister Mukhisa Kituyi said the government has simplified procedures for investing in the country and that starting next week every investors will have only 21 days to start business in the country.

He said the National Investment Center which will replace Investment Promotion Center which was established in 1992 as a one- stop shop geared to promote investment in the country will simplify the procedures of starting a business.

Source: Xinhua