DELEGATE PROGRAMMEDOING BUSINESS IN KENYA

Ms. Heather Munyao
Kenya Investment Authority
3RD JULY 2019

Overview of the Republic of Kenya
Kenya is the fifth largest economy in Sub-Saharan Africa.
It is the dominant economy in the East African Community (EAC), contributing more than 50% of the region’s GDP.

GDP (2018)
US$ 89.205B

GDP Growth (2018)
6%

Average GDP Per Capita (2018)
US$ 1,865

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Kenya’s Trade Relations
Sources & Destinations of Kenyan products

Kenya has signed Preferential Trade
Agreements with a total population ofover 1.4 Billion people &a market value of over $ 29 Trillion

Bilateral and multilateral agreements;

Source: KNBS

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

AGOA



EPA



COMESAACFTA**China remains the top exporter of its products into Kenya by value and quantity.

Growth Remains Robust, Over the Last 5 Years, Supported by Strong Public and Private Sector Investment
Kenya has Experienced Sustained and Resilient Economic Growth
Real GDP Growth Rates (2002-2017)
2002-2007

5.4

5.7

5.8

2015

2016

4.9

2017

5.9

2014

2008

2007

2006

3.3

4.6

2012

6.1

2013

8.4

6.9

0.2
2005

A Well Diversified Economy Underpins Kenya’s Resilient Growth

2013-2017

2011

5.9

2010

5.7

2008-2012

2009

4.6

2004

2.9
2003

0.5
2002

(%)
9.0
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0

Source: 2018 Budget Policy Statement. (19 January 2018) Kenya GDP growth averaged 5.5% (2013 - 2017)versus 4.5% (2008 - 2012) and 5.2% (2003 -2007).
 The strong growth reflects strong macroeconomic
and structural reforms implemented during the last 5
years.

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Source: KNBS

Kenya – Japan relations

1000
900

Amount in USD (Millions)

800
700
600

Exports

500

Imports

400

Balance of Trade

300
200
100
0

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Exports

13.018 23.415 22.279 20.909 23.151 24.565

27.11

35.259 40.543 40.711 45.047

Imports

411.43 449.57 488.53 582.72 565.93 631.35

837.2

865.54 882.39 824.09 816.62

Balance of Trade 398.41 426.16 466.25 561.81 542.78 606.78 810.09 830.28 841.85 783.38 771.58

Top Exports: Ores and concentrates of base metals, crude vegetable materials, non ferrous base metal waste andscrap, tea and mate, coffee, fruits and nuts
Top Imports: Motor vehicles, flat rolled products of iron and non alloy steel, mechanical handling equipment, parts
and accessories of motor vehicles, synthetic fibers, plant and equipment
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Japanese Investments in Kenya
According to JETRO report of 2019, Kenya is the most preferred investment destination for Japanese Companies
over the last 3 consecutive years

The Japanese Business Association in Kenya has recorded an increase in the number of Japanese companies setting
up in Kenya;24(as of Sept, 2010)56(as of Dec, 2018)

The companies have ventured into various sectors with vast opportunities;
Business typeCompany(ies)

Infrastructure and construction project

Toyota Tsusho, Toshiba, Toyo Construction

From trade to local production

Honda, Yamaha, Toyota, Nissin Foods, Kenya Fruits Solution

Inclusive business and targeting emerging middle class Ajinomoto, Toridoll Kenya, Rohto Mentholatum Kenya, LIXIL
Consulting services for Japanese companies

Hankyu Hanshin Express, Africa Scan, Nippon Express, MOL Logistics

SMEs and independent firms

CHEKA Japanese Izakaya, Vemmerge Ltd, Sakura Holdings Company
LimitedInvest in Kenya

Kenya offers an excellent business ecosystem…
Kenya's foreign investment inflows in 2017 soared to 71% defying Africa’s slump. The improved business environment has seen
a number of MNCs setting up in Kenya among them Japanese companies viz;

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Through the Sustainable Development goals, Kenya has been able to borrow immensely to identify the priority
needs of the country

SUSTAINABLE DEVELOPMENT GOALSOBJECTIVE
The proportion of the world’s workers living on less than $1.90 perperson a day declined significantly over the past two decades, fallingfrom 26.9 per cent in 2000 to 9.2 per cent in 2017.
After a prolonged decline, world hunger appears to be on the rise again.
Conflict, drought and disasters linked to climate change are among the
key factors causing this reversal in progress
Many more people today are living healthier lives than in the past
decade. Nevertheless, people are still suffering needlessly frompreventable diseases, and too many are dying prematurely
More than half of children and adolescents worldwide are not meeting
minimum proficiency standards in reading and mathematics. Refocused
efforts are needed to improve the quality of education.
gender inequality continues to hold women back and deprives them ofbasic rights and opportunities. Empowering women requires addressing
structural issues & developing progressive legal frameworks that
promote equality between women and men.
Increasing water efficiency and improving water management are
critical to balancing the competing and growing water demands fromvariousInvest
sectors
in Kenyaand users.

Through the Sustainable Development goals, Kenya has been able to borrow immensely to identify the Kenyan needs

SUSTAINABLE DEVELOPMENT GOALSOBJECTIVE
National priorities and policy ambitions still need to be strengthened to put
the world on track to meet the energy targets for 2030
Globally, labour productivity has increased and the unemployment rate
has decreased. However, more progress is needed to increase employment
opportunities, especially for young people, reduce informal employment
and labour market inequality
To achieve inclusive and sustainable industrialization, competitive
economic forces need to be unleashed to generate employment andincome, facilitate international trade and enable the efficient use ofresources.
ensuring adequate housing and infrastructure to support growing
populations, to confronting the environmental impact of urban sprawl, toreducing vulnerability to disasters.
Decoupling economic growth from resource use is one of the most criticaland complex challenges facing humanity today. Doing so effectively will
require policies that create a conducive environment for such change,social and physical infrastructure and markets, and a profoundInvest in Kenyatransformationof business practices along global value chains.

Through the Sustainable Development goals, Kenya has been able to borrow immensely to identify the Kenyan needs
SUSTAINABLE DEVELOPMENT GOALOBJECTIVE
Developed country Parties continue to make progress towards the goal of
jointly mobilizing $100 billion annually by 2020 to address the needs ofdeveloping countries in the context of meaningful mitigation actions.
This calls for urgent and accelerated action by countries as they implement
their commitments to the Paris Agreement on Climate Change.
Advancing the sustainable use and conservation of the oceans continues torequire effective strategies and management to combat the adverse effects ofoverfishing, growing ocean acidification and worsening coastal eutrophication
A growing number of forest areas are being sustainably managed, integrating
policies and practices that protect forest ecosystems and address drivers ofdegradation.
Progress is being made in regulations to promote public access to
information, albeit slowly, and in strengthening institutions upholding humanrights at the national level.
Strengthen global partnerships to support and achieve the ambitious targetsof the 2030 Agenda, bringing together national governments, the international
community, civilsociety, the private sector and other actors
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Through Vision 2030, Kenya has identified priority sectors to spur economic growth. Key and numerous
opportunities have been identified in these sectors…

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The Big Four Agenda
Kenya’s Strategic Development Priorities

The Big Four Plan: Policy priorities for Public investments to unlock growth constraints
The Big 4 Agenda is an accelerated 5 year development plan designed to fast track the realization of the country’s Vision 2030

15%

100%

Transforming
societies

UNIVERSAL HEALTH COVERAGE(UHC)

of GDP from the

MANUFACTURING SECTOR

100%
FOOD AND NUTRITION

Transforming
lives

Security

Equip Youthwith vocational
skillsInvest in Kenya

500,000

Transforming
the nation

Targeted
Infrastructure
Investments

EnsureGovernanceCompetitive
cost of Energy

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Security

Source: National Treasury, GoK, 2018 Budget Policy Statement. (19 January 2018)

AFFORDABLE NEW HOUSESfor Kenyan families

Technology& Innovation

Manufacturing
Objective: Raise the share of the sector to GDP from the current 8.3% to 15% by 2022 by adding $2 - $3 billion to the economy.
 Over the last 5 years, manufacturing has accounted for, on average, 20% of total FDIs to Kenya.
 An estimated 60% of Kenyan manufactured exports go to the EAC markets and 40% to the rest of the world.

Investment opportunities
1. Textile & Apparel production: 90% of the fabric used in Kenya’s Apparel sector is imported. There is therefore a great
opportunity for import substitution through local production e.g. in Cotton processing and Ginning industries, Existing andnew textile mills and apparel manufacturing within existing and planned Special Economic Zones (SEZs)
2. Leather processing: Processing of finished leather and leather goods; substituting approximately USD 86 million in shoe
imports yearly; Setting up of Tanneries
3. Manufacture of Construction materials and equipment for use in the ongoing developments in airports, malls, hotels,
railways (SGR) and pipelines; Scalable low-cost construction technology and modern innovative building technologies
4. Agro-processing opportunities: Local value addition for tea, coffee, meat, dairy, fruits, nuts and oils, fish feed mills,
Warehousing & Cold chains
5. Heavy industries (Oil & Gas, Mining and Iron & Steel): Exploration, exploitation and production of coal, oil & gas andminerals deposits in Joint Ventures with the Government of Kenya
6. ICT products & services: Local consumer and light electronics assembly i.e. phones, laptops and televisions; Business
Process Outsourcing (BPO) services

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Affordable Housing
Objective: Develop innovative affordable housing (about 500,000 units) and increase Real estate & construction sector GDP
contribution from 7% to 14% by 2022.
 22% of Kenyans live in cities and the urban population is growing at the rate of 4.2% every year; nearly 56% of these urbanhouseholds live in slums.
 Kenya has a deficit of 250,000 housing units annually. The low cost housing agenda seeks to plug in on the acute shortageof habitable housing units nationally through; Cutting the cost of construction through the use of innovative technologies
 Reducing the cost of mortgages;
 Raising low-cost funds from private and public sector for investment in large-scale housing construction.

Investment Opportunities
1.

Development of affordable housing to cater for the needs of low income Kenyans (PPP - USD 265 Million) viz; Kibera Zone B(approx. 3,000 units); Mariguini (approx. 2,100 units) and Mavoko (approx. 5,000 units)

2.

Setting up factories for Industrial Building Systems (IBS) for timely delivery of construction inputs

3.

Financing of affordable homes - Investment in the Housing Fund; provision of affordable long term Tenant Purchase
Schemes (TPS);

4.

Engage in joint ventures with county governments towards delivery of affordable housing in respective counties.

5.

Construction and operation of mass rapid transit systems within urban centres

Incentive: 15% corporate tax for developers of 100 low cost residential units and above.
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100% Food & Nutrition Security
Food and nutrition is strongly linked to vibrancy in the Agricultural sector, which is the mainstay of Kenya’s
economy and contributes about 51% to GDP: 26% directly & 25% indirectly.
A high proportion of the population have no access to food in the right amounts and quality, a majority of whom
rely on food relief due to poverty and frequent droughts in most parts of the country.

Available opportunities;
 Large-scale commercial agricultural production: Fisheries (aquaculture), Crop production, Orchards,
Animal products (dairy & meat) Production of agricultural inputs: Local manufacture, distribution & direct sales of fertilizers, highquality animal feeds, pesticides, certified crop seeds, livestock feed mills & animal brood stock.
 Agricultural equipment: Leasing, direct sales & operation of warehousing, cold store chains, driers,
storage & handling equipment, tractors, transplanters, combined harvesters, weeders & irrigationequipment
 Agriculture support services: Dairy processing and cold chain development, Provision of crops andanimal insurance services
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100% Universal Health Coverage (UHC)

Objective: Ensure 100% Universal coverage Current health coverage: 16.5Million
 Target: 35Million
 Population covered by 2022: 51Million
Pilot project for UHC launched in Dec 2018 to equip health facilitiesin 4 Counties.

Opportunities & Initiatives
 Enhance low cost private insurance coverage and schemes
 Private healthcare facilities and services
 Provision of medical commodities and equipment
 Digitization of healthcare e.g. Supply chain telemedicine
 Provision and implementation of alternative financing

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LAPSSET Project Overview

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LAPSSET Project Summary
Component

Project Description

HighwaysoLinks Lamu Port with Addis Ababa

US$ 420M
EIRR = 21.7%

RailwayooBilateral agreement signed btn Kenya & Ethiopia.
Preliminary design and feasibility study completed

US$ 7.099B
EIRR = 17.8%

Port

o
o
o

To be the largest deep sea port on East coast of Africa
1st three berths under construction, funded by government.
29 berths available for investment through PPP arrangement

US$ 5BEIRR = 23.4%

SEZ & LAMU Port Cityoo

700 sq km of land identified to be developed in phases
To be financed and constructed by the private sector> US$ 10B

Oil pipelineoFrom Lamu Port to Hawassa in Ethiopia

US$ 1.532B
EIRR = 13.9%

Regional Airportsooo

At Lamu, Isiolo, Turkana & Hawassa.
Isiolo Airport completed.
Lamu and Lokichogio (Turkana) Airports to be constructed: byprivate sector

US$ 15.1M
Lamu EIRR = 19.1%
Lokichogio EIRR = 12%

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Cost

KONZA Project: Kenya’s Silicon Savannah

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E-opportunities portal
https://eopportunities.org/
 A market place for investment opportunities in Kenya.
 Allows investors to search for investment opportunities by sector, county, and the type of opportunity(whether a merger and acquisition, PPP, Joint venture, equity ...)

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Why Kenya?

Kenya’s business environment has continued to improve thus making the country a destinationof choice for investors..
Kenya Steps Up in Ease of Doing BusinessLeading ICT Innovation Hub in Africa(Out of 190 countries, rank 1 is the highest)

Year

Rank

2018

61

2012

170

Sub-Sahara
Africa Rank

High Level of Mobile Penetration
Sub-Saharan Africa (excluding high income)

3

Kenya

81.3

74.4

Logistics Outperformance Cementing Kenya’s
Status as East Africa’s Trade Hub(Out of 160 countries, rank 1 is the highest)

Year

Rank

2018

68

2012

122

Mobile cellular subscriptions (per 100 people- 2016)
Change54
Well-adopted mobile money ecosystem

Large Young & Educated Population

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79%

29.2MnTotal adult literacy(age 15+ years)

Population aged 15-64 years(total population estimate of 51.12Mn asof 2018)

Domestic government debt
securities traded on mobile
platform

Source: World Bank Logistics Performance Index 2016, World Bank Doing Business 2016, World Bank Databank 2016, UN Human Development Index 2016

Kenya’s business environment has continued to improve …..
Kenya’s business environment has improved substantially, as indicated by rankings under various indices….
160
140

Rank

120
100

KEY

80

EODB

60

GCI

40

GII

20

IIAG

0
EODB
GCI
GII
IIAG

2013

2014

2015

2016

2017

2018

129
106
99
21

136
96
85
17

108
90
92
14

92
99
80
12

80
96
80
11

61
91
78

Ease of Doing Business rankings

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The safety of your investment is guaranteed in Kenya…

•

No foreign exchange control, allowing for full repatriation of profits,
capital or interests•

Foreign Investments Protection Act (FIPA)- FIPA guarantees against
expropriation of investment by the government ensuring investments
by foreigners is protected•

Member of the International Centre For Settlement Of Investment
Dispute (ICSID).

•

Member to the Multilateral Investments Guarantee Agency (MIGA),
providing political risk insurance guarantees to private sector
investors and lenders in member countries.

•

A member country of the Africa Trade Insurance Agency (ATIA)provides export credit, political risk insurance and investment
insurance lowering the risk and cost of doing business.

•

Explicit Constitutional protection of private property.

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A number of incentives have therefore been put in place to facilitate entry and expansion of investment..

General Incentives

1. Capital goods and raw materials are zero-rated (Plant, Machinery and equipment)
2. SOME of the plant, machinery and equipment are exempt from VAT;
3. Investment allowance:-100% Nairobi, Mombasa and Kisumu cities; and-150% for those in other parts of the country (must have invested over KES 200 Million)
4. Market access in COMESA & EAC markets with no taxes

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Incentives in the EPZs & SEZs…

EPZs

SEZs

1

10 years corporate tax holiday

1

10% corporate tax for the first 10 years

2

25% corporate tax for another 10 years; 30% from the 21st year;2

15% corporate tax for another 10 years; 30% from the 21st year;3

10 years withholding tax holiday on remittances to nonresidents

3

10 years withholding tax holiday on remittances to nonresidents

4

Stamp duty exemption

4

Stamp duty exemption

5

Import duty and VAT exemption on raw materials, machinery andother inputs

5

Import duty and VAT exemption on raw materials, machineryand other inputs

6

100% investment deduction over 20 years on building andmachinery

6

100% investment deduction over 20 years on building andmachinery

Other benefits in the designated Zones

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1

Full operation under one single license

6

Ready-made factory building and office premises

2

Project approval and licensing within 30 days

7

Readily available services – water, sewerage, electricity,
landscaping etc.

3Foreign currency accounts and offshore borrowing
allowed – no exchange controls

8High security standards – 24 hours security, illuminatedperimeter fences.

4

Unrestricted investment by foreigners
One-stop shop service for facilitation and aftercare

9

On-site customs documentation

5

Location of SEZ’s AND EPZA’s

EPZ
SEZ

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Priority Special Economic / Industrial Park Zones

Kenya boasts of an open & diverse economy with encouraging prospects…

Stable macroeconomic environment - supported by stable inflation rates
Preferential market access – EAC, COMESA-SADC, AGOA, EU, CFTA
Distribution hub and commercial powerhouse in the East & Central Africa
Fully liberalized economy
Repatriation of capital, profits
Highly developed social and physical infrastructure
Favorable Tax treaties and investment protection Agreements
Pool of Highly Productive, Skilled & Youthful workforce
Well established & Vocal private sector – KEPSA, KNCCI, KAM
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Step By Step Guide To Investing & Doing Business in Kenya
REINVEST

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E-regulations portal
https://eregulations.invest.go.ke/ An online guide on the step by step procedure of investing in Kenya.
 Currently, over 115 investment procedures published in the portal. Has since become the most visited ofsuch portals in Africa.

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Kenya Investment Authority (KenInvest)
A state corporation under the Ministry of Industry, Trade & Cooperatives established under the Investment
Promotion Act No. 6 of 2004, with the mandate of promoting & facilitating investment in Kenya.

Investment Promotion
Profile investor ready projects and provide information on investment opportunities.
Business advisory services and Enterprise development.

••

Investment Facilitation
•
•
•
•
•

“We are a One Stop Center
for all your investment needs”

Assist in obtaining necessary licenses and permits
Assist in obtaining incentives/exemptions under various regulations
Investment Tracking & Aftercare services
Issuance of Investment certificate
Facilitate Joint Venture between local & foreign investors

Policy Advocacy•

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Review investment environment and make recommendations to Governmentand other stakeholders with respect to changes that would promote andfacilitate investment

ONE-STOP-CENTRE (OSC) at KenInvest•

KenInvest provides a wide range of pre-investment facilitation services.

•

The OSC has streamlined the overly complex processes. Some of the key functions currently facilitated by the
OSC are;EPZ or SEZ
Set Up

Obtain an
Environment
PermitInvest in Kenya

Obtaining a Work
PermitRegistration ofLand

Power Connection

Obtaining import/
export permits

Obtaining aConstruction
PermitSocial Security
Registration

Company
Registration

Tax Registration

The One Stop Centre

Think investment…

Kenya Investment Authority
www.invest.go.ke
Email: info@investmentkenya.com
Tel: +254 730 104200

www.industrialization.go.ke
Email: ps@industry.go.ke

Welcome and be part of the success!
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