INVEST IN KENYA: EAST AFRICA'S ECONOMIC POWERHOUSE
Kenya is strategically located as a gateway to East and Central African region. With a border to the Indian Ocean, Kenya is well suited as a production and distribution base to service Africa.
Kenya is the largest and most advanced economy in East and Central Africa. Its GDP accounts for more than 50 per cent of the region’s total. In 2019, economic growth averaged 5.7%, placing Kenya as one of the fastest growing economies in Sub-Saharan Africa. The recent economic expansion has been boosted by a stable macroeconomic environment, positive investor confidence and a resilient services sector.
Liberalized and strong economy
The country’s strong growth prospects are supported by an emerging, urban middle class and an increasing appetite for high-value goods and services. 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 per cent 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 headquarters in the country. 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.
“Kenya is developing as the favored 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
Kenya is strategically located as a gateway to East and Central African region. With a border to the Indian Ocean, Kenya is well suited as a production and distribution base to service Africa, Europe, the Middle East, South Asia and other Indian Ocean Islands. Jomo Kenyatta International Airport functions as an effective Air hub between Africa, Europe and Asia. Kenya also serves as the Communication Hub of the region.
Kenya’s membership to regional economic blocs coupled with her strategic geographic position makes the country the best gateway to the huge East African Community (EAC) market with over 135 million people and the Common Market for Eastern and Southern Africa (COMESA) market with over 450 million people. Kenya is a beneficiary of several trade preferential arrangements which includes The African Growth and Opportunities Act (AGOA) which allows for quota free and duty free access to the USA market for over 6,000 items produced in Kenya and The new Africa Caribbean and Pacific-European Union (ACP-EU) Economic Partnership Agreement (EPA) which gives duty free access to the EU among others.
Political and Macro Economic Stability
Kenya enjoys a very stable macroeconomic environment. The government operates sound policies that promote growth by providing a secure environment for private sector investment decisions. Kenya provides political stability and a supportive legal environment. Kenya is a multi-party Democracy with a unicameral Parliament which creates laws that are administered by the Executive arm of the Government. The Kenyan Constitution protects private property and provides safeguards against expropriation of such property without compensation. Kenya is also a signatory to the Multilateral Investment Guarantee Agency (MIGA), an agency of the World Bank and a Member of the International Council of Settlement of Investment Disputes (ICSID). In case of Commercial disputes, Kenya has a Commercial Court under the Kenyan Judiciary.
Kenya has relatively well developed physical infrastructural facilities including, four international airports, an extensive road and railway network, a modern deep sea port at Mombasa capable of handling bulk and other containerized cargo, an expanding liberalized energy sector and comprehensive digital telecommunication networks. As a result, Kenya continues to develop as a financial, services and transport hub for the East and Central African region.
USD 14.5 billion Konza Technology City “Silicon City” IT hub to be built on 5000 acres of land in Machakos.
USD 5.5 billion Lamu Port Southern Sudan – Ethiopia Transport Corridor Construction of Lamu Port headquarters is in progress.
USD 3.6 billion Standard Gauge Railway 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 completion soon and complemented by the Nairobi Commuter Rail Service linking the city centre to the airport.
USD 366 million 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 Nairobi– Thika superhighway was recently completed.
Reducing energy cost and improving 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 6,700 MW in 40 months.
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
43,000 MW Geothermal Power Project in Baringo valued at USD 135 million.
COAL POWER PLANT
5900 -1,000MW Coal Power Plant in Lamu.
NATURAL GAS PLANT
6700-800 MW Natural Gas Fired Plant near Mombasa.
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: The Kenya Private Sector Alliance (KEPSA), Federation of Kenya Employers (FKE) and The Kenya Association of Manufacturers (KAM).
Skilled and Educated Talent Pool
Kenya has a huge pool of labor. The labor force is one of the best educated in the world, English-speaking and extremely adaptable. Highly qualified professional staff can be hired at reasonable pay-scales, in all occupations and at all levels of expertise.
Entrepreneurial and Innovative Environment
Kenya pursues a mixed economy and her dynamic and diversified private sector comprises numerous small scale local enterprises, medium sized businesses and multi-national companies. They provide an array of manufactured goods, business services and agricultural products for local consumption and also for export. Kenya was the first country in the world to launch mobile money, “M-PESA;” an innovation which allows users to transfer cash using mobile phones. Based upon its success in Kenya, M-PESA is currently under replication in a number of countries across the globe.
Diversified Tourist Destination
Tourism is one of Kenya’s most important industries, and has strong linkages with transport, food production, retail and entertainment. As one of the world’s most popular business and leisure tourism destinations, investors have the opportunity to leverage several Government-led programmes to attract investment into the industry. These include the establishment of resort cities, branding of premium parks, development of high value niche products and MICE tourism facilities, and the construction of new internationally branded hotels, among others. Kenya is endowed with a unique combination of tourist attractions such as beautiful coastal beaches, coral reefs, caves and river deltas, abundant wildlife including the ‘big five’ in their natural habitats, national parks and game reserves, good climate, beautiful geographical landscapes, Savannah grasslands, forests, salt and fresh water lakes.
"Investors will find living and working in Kenya a pleasant experience. The country has in abundance excellent accommodation, shopping, education, healthcare and recreational facilities which will provide a high quality of life for both the investor and his family."
"Kenya has made significant political, structural and economic reforms that have driven sustained economic growth, social development and political gains over the past decade. Kenya has the potential to be one of Africa’s success stories; from its growing youthful population, a dynamic private sector, highly skilled workforce, improved infrastructure, and its pivotal role in East Africa."
- World Bank
KEY INVESTMENT SECTORS
Kenya’s Energy sector is among the most active in Africa. Kenya is projected to be the third fastest growing economy globally (Bloomberg) and thus energy demand is expected to support this growth trajectory.
Kenya is an innovation leader in Fintech and Financial inclusion. Kenya’s financial sector is the third-largest in sub-Saharan Africa and it makes a significant contribution to economic growth and job creation. Through Vision 2030, the Government aims to create a vibrant and globally competitive financial sector.
Information Communication Technology
Kenya is an innovation leader in emerging markets. Kenya has become the global technology hub of choice when it comes to attracting the strategic business activities of ICT companies in emerging markets. Kenya is the regional leader in ICT in East and Central Africa and considered as one of thee top innovation hubs in sub-Saharan Africa.
Kenya is the regional leader in Agro-Processing. Kenya has one of the highest agricultural productivity levels in the EAC region. 70% of the country’s exports have an agricultural focus and the sector employs 85% of the rural workforce. The sector has continued to grow at almost 5% annually and has huge potential for further growth. Kenya invites investors to explore business opportunities across the Agri-business value chain from primary production to value addition and processing of food produce. Agri-business already attract 20% of total FDI to the region which shows its huge investment potential. Kenya is the largest exporter of horticulture in East Africa and the third largest Tea exporter globally.
Kenya envisages a massive upgrading and extension of the country’s infrastructure.The Kenyan government is actively seeking bids to improve and expand the nation's infrastructure networks, domestically and across East Africa to improve trade flows in the region. The Infrastructure development projects are expected to open up significant trade opportunities within East and Central Africa. The Lamu Port and South Sudan Ethiopia Transport (LAPSSET) projects will open up a new corridor for increased trade opportunities with Kenya’s northern neighbors of South Sudan and Ethiopia.
Kenya is a regional manufacturing hub. Manufacturing is a key sector in Kenya’s economic development in terms of both its contribution to national output and exports, and for job creation. Key targets and specific goals have been set to steer industrial growth. These include the development of Special Economic Zones, industrial parks and clusters, and niche products. There are a wide range of direct and joint-investment opportunities in this sector, including agro-processing, garments, the assembly of automotive components and electronics, plastics, paper, chemicals, pharmaceuticals, metals and engineering products for domestic and export markets.
Real Estate and Construction
Kenya has a well-developed building and construction industry with quality engineering, building and architectural design services. With a fast growing population, and increasing demand for affordable housing, opportunities exist in the construction of residential, commercial and industrial buildings. Investors can also manufacture and supply construction materials and components for the sector.
Development of Resort Cities: The government invested in a new transport corridor (LAPSSET). The program has targeted the development of new resort cities as part of the project. Other opportunities are available within new tourist circuits.
Construction of Hotel Chains: Major international hotel Brands have set up in Kenya to tap into the growing business tourism market. The sector presents further opportunities.
Film Industry: Kenya presents highly diversified and very scenic sites for the film industry. Several world renowned movies were set in Kenya.
Investment in Conference Facilities: Kenya is increasingly becoming a major attraction for conference tourism. Major National and International Events are held in Kenya.
Investment in Entertainment Facilities: Amusement Parks, Clubs, Casinos, Theaters and Specialty Restaurants.
Construction of Golf Cities: Kenya's fine weather provides perfect opportunities for premium golf facilities.
LIVING THE GOOD LIFE
Kenya offers many advantages that make it a great choice for settlement and investment. There is the spectacular and diverse nature with landscapes ranging from mountains to beautiful beaches. The country has many wild and spectacular animals and birds. Nature scenes like the Maasai Mara that was recently branded as the 8th wonder of the world and Tsavo national parks which draw thousands of visitors every year. Kenya also offers a rich cultural experience and many forms of entertainment where residents and visitors alike can gain insight into the many diverse and fascinating cultures found in the country. Well-stocked shopping malls open 24 Hours a day, a wide range of quality restaurants, world-class private primary and secondary schools, and high quality health care are widely available. Quality housing is also available in all the key towns.
To find out more, please contact KenInvest: www.invest.go.ke