Reasons to Invest in Kenya
East and Central Africa’s Largest Economy
Kenya is the largest and the most advanced economy in East and Central Africa; with strong growth prospects supported by an emerging, urban middle class and an increasing appetite for high-value goods and services.
STRONG AND LARGE REGIONAL PLAYER
Kenya is the dominant economy in the East Africa Community,contributing to more than 50% of the region’s GDP.
Growing consumer market
Kenya has the second largest population within the EAC at 43 million and is growing at a rate of 2.7 per cent per annum. There is a rising trend towards urbanization, which is contributing to an increase in consumer demand for high value goods. This trend is forecasted to continue, with 50% of the population expected to live in urban areas by 2050. The size of Kenya’s middle class is growing as evidenced by the growth in its gross national income per capita, which has increased at a CAGR of 2 per cent over the past 10 years.
Low Risk Investment Environment
Kenya’s investment climate is the strongest in the EAC, with FDI flowing in from emerging and developed markets and a high volume of multinational companies with regional and continent-wide headquartered in the country.
POSITIVE INVESTOR SENTIMENT
FDI has been on the rise and is stronger than investment in other EAC countries. Given its position as the economic, commercial and logistical hub of East Africa, private equity capital is now flowing into Kenya.
In 2013, Kenya was the top destination for international investors in the Eastern Africa Region after attracting 12 private equity deals valued at over USD 110.5 million; and in 2015, PwC ranked Nairobi as the most attractive African city for FDI.
“Kenya is developing as the favoured business hub, not only for oil and gas exploration in the sub region but also for industrial production and transport. The country is set to develop further as a regional hub for energy, services and manufacturing over the next decade.” – UNCTAD.
- Kwale International Sugar Company invested USD 200 million in a sugar processing facility in Ramisi – one of the largest greenfield projects in Africa.
- Harith General Partners invested USD 870 million in a wind project in Lake Turkana – one of the biggest wind projects in Africa.
- GZI Kenya Limited is setting up a beverage aluminum can manufacturing plant in Sultan Hamud Kajiado County with capacity to produce 1.2 billion per year.
STRATEGIC GEOGRAPHICAL LOCATION
Kenya’s geographical location makes the country ideal for strategic partnerships aimed at improving regional and global market share.
Kenyan infrastructure, including the Ports of Mombasa and the KE-UG railway, is the gateway to the vibrant East and Central Africa region.
Jomo Kenyatta International Airport functions as an effective air hub between Africa, Europe and Asia.
East African community(EAC)
- Member Countries: 5
- Population: 143.5 million
- Total GDP: $110.3 billion
Source: EAC Facts & Figures Report (2014)
Kenya’s membership of regional economic blocs, coupled with its strategic geographic position, make the country the gateway to the huge EAC and COMESA regional markets and a beneficiary of several preferential trade arrangements.
- Member Countries: 20
- Population: 469 million
- Total GDP: USD 636 billion
Source: COMESA (2013)
PREFERENCIAL TRADE TREATMENT
Kenya is a member of several trade arrangements and beneficiary of trade promotion schemes that include the Africa Growth and Opportunity Act (AGOA), World Trade Organisation and EAC-EU Trade Agreement.
There will soon be Tripartite Free Trade Area (FTA) cooperation, a regional bloc of the EAC, COMESA & SADC nations – create a potential market of over 600 million.
- Market Integration
- Infrastructure development
- Industrial development
- Harmonization and improvement of functionality of regional trade agreements and programs
- Trade promotion
- Joint planning and implementation of infrastructure programs
- Free movement of business persons within the region
Political stability & favourable investment policy
Empowered by a new constitution and administration, the national and county Governments are approaching the private sector as a central partner in the development and growth of the Kenyan economy.
A NEW APPROACH TO THE PRIVATE SECTOR
A NEW GOVERNMENT
The new Jubilee Administration regards the private sector as a key centre of economic and social development. It has signaled this shift in the Government’s orientation through the divestment of its majority shareholding in state commercial companies through the Nairobi Securities Exchange.
BUSINESS ENVIRONMENT REFORMS
Kenya is making efforts to lower the cost of doing business by conducting extensive business regulatory reforms intended to substantially reduce the number of licensing requirements and to make the licensing regimes more transparent and focused on legitimate regulatory purposes.
OPEN MARKET ACCESS SYSTEM
Kenya has fully liberalized its economy and removed all obstacles that previously hampered the free flow of trade and private investment, such as exchange controls, import and export licensing, as well as restrictions on remittances of profits and dividends.
DEVOLUTION INTO COUNTY GOVERNMENTS
Empowered by the new constitution, devolution offers an opportunity for investment through localised innovation and through collaboration, by building commercial ecosystems that expand employment opportunities and empower local communities.
- The Kenya Constitution guarantees against expropriation of private property
- No exchange controls guarantee repatriation of capital, profits and interests
- A Member of the Multilateral Investment Guarantee Agency (MIGA) and the Africa Trade Insurance Agency (ATIA), which both insure foreign investments against non-commercial risks
- A member of the International Centre for Settlement of Investment Disputes (ICSID), which arbitrates cases between foreign investors and host Governments.
Kenya’s infrastructure landscape is also undergoing significant transformation as evidenced by commitment of over USD 20 billion towards infrastructure development through public-private partnerships.
Increasing investment in infrastructure under PPP arrangements
USD 14.5 BILLON
KONZA TECHNOLOGY CITY “SILICON CITY”
IT hub to be built on 5000 acres of land in Machakos County.
USD 5.5 BILLION
LAMU PORT SOUTHERN SUDAN-ETHIOPIA TRANSPORT CORRIDOR
Construction of Lamu Port headquarters is in progress.
USD 3.6 BILLION
STANDARD RAILWAY GAUGE
links Kenya’s Indian Ocean port city of Mombasa to the capital Nairobi
USD 654 MILLION
JOMO KENYATTA INTERNATIONAL AIRPORT EXPANSION
comprises of a 178,000m2 facility due for completion in 2017, complemented by Nairobi Commuter Rail Service linking the city centre to the airport.
USD 366 MILLION
THE PORT OF MOMBASA HARBOUR CHANNEL
was deepened by 15 metres and widened to 500 metres to accommodate larger vessels.
USD 360 MILLION
Construction of the eight-lane controlled-access 50km
was completed in 2012. It has led to the emergence of new businesses, especially in retail and real estate including the creation of three major malls.
Reducing cost of energy and 07improving energy availability
Kenya is ideally positioned to unleash Africa’s power generation capacity through its focus on green energy and cost effective sources of energy, set to contribute to a 5000MW increase in the national power grid.
POWER & ENERGY STRATEGY
Increasing share of power generated from green and more cost effective sources, with a target to increase electricity generation capacity by 5,000MW from the current 1,644MW to 6,700MW in 40 months.
KEY POWER PROJECT AND RECENT RESOURCE DISCOVERIES
WIND POWER PROJECT
300 MW Lake Turkana Wind Power Project valued at USD 823 million.
Two new water sources at Turkana Basin and Lotikipi Basin holding 250 billion m3 of water, sufficient to supply Kenya for 70 years.
Discovery of reserves by Tullow oil are estimated to extract as much as one billion barrels.
GEOTHERMAL POWER PROJECT
3,000 MW Geothermal Power Project in Baringo valued at USD 135 million.
COAL POWER PLANT
900-1,000MW Coal Power Plant in Lamu.
NATURAL GAS PLANT
700-800MW Natural Gas Fired Plant near Mombasa through a PPP.
Well established private sector
Kenya’s private sector is substantial and includes a number of foreign investors.
Key players in voicing private sector concerns include:
1. Kenya Private Sector Alliance (KEPSA);
2. Federation of Kenya Employers (FKE); and
3 The Kenya Association of Manufacturers (KAM).
A skilled and educated talent pool
Kenya prides itself on its large, highly educated and skilled work force – with 55% of the population aged 15-64.
Vibrant capital markets
Foreign participation in NSE: 54.1% of total equity turnover (January-June 2014).
Bilateral Trade Agreements
Kenya has signed bilateral trade agreements with several countries around the world. Some of the countries are already members of existing schemes offering market access/duty reduction preferences as above.
|1. Argentina||15. Nigeria||Agreements Under Negotiations|
|2. Bangladesh||16. Pakistan||1. Belarus|
|3. Bulgaria||17. Poland||2. Czech Republic|
|4. China||18. Romania||3. Ethiopia|
|5. Comoros||19. Russia||4. Eritrea|
|6. Congo (DRC)||20. Rwanda||5. Iran|
|7. Djibouti||21. Somalia||6. Kazakhstan|
|8. Egypt||22. South Korea||7. Mauritius|
|9. Hungary||23. Swaziland||8. Mozambique|
|10. India||24. Tanzania||9. South Africa|
|11. Iraq||25. Thailand|
|12. Lesotho||26. Zambia|
|13. Liberia||27. Zimbabwe|