INVESTING IN KENYA
KENYA BUSINESS SEMINAR
IN OSAKA
27TH JUNE 2016

MS. HEATHER MUNYAO
Kenya Investment
Authority

OUTLINE
1. Kenya at a Glance
2. Kenya–Japan Trade
3. Investment Trends
4. Policies & Regulations
promoting Investment
5. KenInvest Support toInvestors
6. Overview of Investment
Opportunities

KENYA AT A GLANCE
GDP at current US$
US$ 63.4 billion,
2015

Population
44.2 million

Credit Rating (Stable)
S&P B+
Moody B1
Fitch B+

Political System
Devolved State with Multiparty
DemocracyArea582,646 km2

GDP per capita
US$ 1,436

Languages
Swahili and English are
official languages.

Currency
KES 100 : US$ 1

7th Most Attractive
place to dobusiness among
emerging markets(Fortune Magazine,
2015)

FDI Growth Rate:
98% in 2013&
92.4% in 2014
(UNCTAD)

ClimateKenya lies on both sides of theequator and enjoys a varied climate
ranging from tropical to temperate

Invest in kenya

3Why Kenya?
• East & Central Africa’s Largest Economy:
5th largest in SSA; strong growth prospects; fastest growing middle class.
• Nairobi is a Regional Hub:
• PwC ranked Nairobi as the most attractive FDI destination to Africa in2015.
• Nairobi ranked 11 among the top 20 cities most successful cities in theworld for its innovation, liveability and capacity to reinvent itself in 2016
• Strategic geographic location:• JKIA connects Africa to Europe, Asia and soon the USA• The Port of Mombasa is gateway to East and Central Africa region
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Why Kenya?
• Reputed to have the best human resource in terms of quality in Africa.
Strong public and private investment in education continues.
• Well Established Private Sector: Key players in voicing Private Sector
concerns include KEPSA, KNCCI, FKE, KAM, UBA.
• Wide market access: EAC & COMESA regional markets. Tripartite FTA
between EAC, COMESA & SADC (market of 600 million) has been agreed
upon. Access to USA market via AGOA; Access to EU market via EPAs.
• Political stability & favorable investment policy:
Vision 2030, new constitution, new devolved government• Numerous investment opportunities across all sectors and the 47 devolved
government units (counties).
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Why Kenya? - Global Reach

Invest in kenya | Core functions

Why Kenya? - Global Brand Presence

Invest in kenya | Core functions

Trend of Japanese Investment Activities in Kenya:
Diversified fields

Number of Japanese Companies on the rise, showing the increased confidence

24 Firms (2010)
SECTOR

Infrastructure Develoment

Energy Production
Processing

Manufacturing & Assembly

Consumer Goods

Automotive Sales
Consulting Services

71% Increase

41 Firms (2016)

PROJECT TYPE

PLAYERS

Mombasa Port Expansion

Toyota Tsusho & Toyo Construction with assistance from JICA

Transport Corridor

JICA activities in Norther Corridor & LAPSSET

Crude Oil Pipeline

Toyota Tsusho

Water Desalination

Toyota Tsusho

Geothermal Power

Toyota Tsusho and Toshiba

Fertilizer

Toyota Tsusho

Food Products

JKUAT Nissin

Dried Fruits

Kenya Fruits Solution

Vehicle Assembly

Toyota Tsusho

Motorcycle Assembly

Toyota Tsusho (Yamaha) & Honda

Food Products

AjinomotoFood Restaurants

Toridoll Kenya ( Teriyaki), Cheka Restaurant

Cosmetics

Rohto Mentholatum

Sanitary Equipment

Lixil Corporation

Personal & Commercial Vehicle Toyota, Honda, Nissan, Isuzu (GM) & Mitsubishi (Simba Colt)
Equipment & Machinery

Komatsu Limited

Investment Consultancy

Hankyu Hanshin Express, Africa Scan, Africa Development Partners,
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8Types of business growing more diversified

Motorcycle assembly

Commercial vehicle assembly

Processing of food products

Kenya Fruits Solutions

Source: JETRO

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9Ajinomoto

Rohto Mentholatum Kenya

LIXIL

Invest in kenya
Source: JETRO

10

HIGHLY COMPETITIVE; STRONG FUNDAMENTALS
 4th largest stock exchange in SSA by market capitalization (2014)
 Financial market development: Rank 24/144 (Global Competitiveness Index,
GCI) 2013 Country Policy and Institutional Assessment (CPIA): Rank 3 in Africa (WB)
 Literacy rate, adult total (% of people ages 15 and above): 72.2% (UNESCO) Internet users (per 100 people): 39 in 2013 (WB) Mobile cellular subscriptions (per 100 people): 73.8 in 2014
 Kenya’s middle class (% of popn.): 36.1% in 2012. CAGR of 2% over last 10 yrs
 Quality of the education system: Rank 30/144 (GCI) Capacity for innovation: Rank 33/144 (GCI) Availability of research and training services: Rank 32/144 (GCI) Financing through local equity market: Rank 30/144 (GCI) Local supplier quantity: Rank 19/144 (GCI) Legal rights index: Rank 1/144 (GCI) Hiring and firing practices: Rank 17/144 (GCI)
Invest in kenya

Some findings of independent analysis
Parameter
Moody’s Rating
Country Policy and Institutional Assessment (CPIA)
Nairobi is Africa's Most Intelligent City
Kenya’s growth rate third globally 2015

Rank
B1 (STABLE)
4.32 (2013) Position 3 in Africa
Intelligent Community Forum
Bloomberg

Ranked 1st in improving the delivery of public services-2015
globally
Nairobi the most attractive destination FDI in Africa-2015
Ranked among seven most promising global investment
destinations with good governance structures-2015
Ranked the 6th most 'Internet-ready' country in Africa -2015

United Nations Public Service
Award (UNPSA)
PWC
Fortune Magazine

Africa largest producer of geothermal energy-2015
Kenya has received half of $ 9.3 billion to EA in impact
investment funds over the last 5 years - 2015
Ranked first in Brookings financial inclusion 2015
Ranked third in Barclays Africa Trade Index
Ranked 3rd most improved country in ease doing business 2015
Nairobi Ranked 7th hardest working city in the world

INSEAD, French business school
World Bank
DfID & GIIN
Brookings
Barclays BankWorld Bank
CNN MoneyInvest in kenyaKenya-Japan Trade

Main exports from Kenya to Japan: Ores and concentrates of basemetals, Tea and mate, Crude vegetable materials, Coffee and coffee
substitutes, Fruit and nuts (fresh or dried). Main imports from Japan:
Motor cars, iron or non-alloy steel products, accessories of the motor
vehicles of group, Synthetic fibres suitable for spinning Civil
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engineering and contractors' plant and equipment

INVESTMENT TRENDS
Over the last 3 years, FDI into Kenya isdoubling annually. It is coming fromdifferent parts of the world and going into
different sectors of the economy.

KENINVEST | INVEST IN KENYA |Investment Levels--Overall
To achieve the objectives of Vision 2030, investment aspercentage of GDP is expected to rise to and be
maintained above 32% for the period 2014-2030
Currently, overall Kenya’s investment as percentage of
GDP is at 24.7 %FDI is on rise as per UNCTAD data:

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FDI Source Markets

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Main FDI Recipient Industries
Industry

2010

2011

2012

2013

2014

2015

Total

Manufacturing

49.6

789.7

102.6

628.0

269.6

662.0

2,501

Electricity

235.9

471.8

300.0

-

1,023.4

122.6

2,154

ICT & Internet Infrastructure

219.4

150.0

-

900.0

458.2

27.4

1,755

Construction

98.8

-

-

864.9

-

514.9

1,479

Logistics, Distribution &Transportation

45.7

154.6

61.0

609.0

42.4

75.0

988

Business Services

37.2

162.7

158.2

112.7

173.4

230.7

875

Sales, Marketing & Support

94.8

99.2

177.7

196.9

99.4

205.3

873

Headquarters

39.8

90.9

61.1

30.7

93.8

72.5

389

Extraction

-

325.6

-

-

-

-

326

Design, Development & Testing

-

35.4

60.5

9.1

56.0

-

161

Education & Training

-

30.4

18.7

5.6

-

27.6

82

Research & Development

-

-

16.8

31.1

-

32.9

81

Customer Contact Centre

45.4

4.5

-

10.5

-

-

60

Maintenance & Servicing

8.4

7.5

23.1

-

-

-

39

Invest in kenyaEast African economy continues to be strong Real GDP growth of Sub-Sahara Africa for 2015 expected to be 3.5%.
 East African economy continues to be strong. Kenya expected to grow 6.5%.
（%）

Estimated GDP growth rate by IMF “World Economic Outlook Database”

8.0
6.0

(before update)

(5.8)

(6.0)

(7.3)

(7.2)

4.0

3.0

4.1

2015
Nigeria
Nigeria

2016

(7.0)

(7.1)

8.1

6.9

7.0

2016

2015
Tanzania

2016

4.0

(3.8)

(4.0)

2.0

3.1

3.4

3.5

2015
World
World

2016

2015
2016
SSA
Sub-Sahara
Africa

0.0
（%）

10.
0
8.0
6.0
4.0
2.0
0.0

8.7

(8.5)

6.5

6.8

(6.2)

(6.4)

(8.5)

2015
Kenya

2016

2015
Ethiopia

Kenya
Source: IMF

Ethiopia

Tanzania

after update

(2.3)
1.3

(2.8)
0.7

2015
2016
South South
Africa Africa

(6.3)

(6.5)

5.2

5.5

2015

2016

editionUganda“World Economic Outlook Database” October 2014, October 2015, Uganda and January 2016
Invest in kenya

18

BUSINESS ENVIRONMENT:
Facilitative Policies & Regulations
Business-friendly environment to stimulate
growth of private investment is a key priority of
government. Key institutions like a Cabinet
Committee, Business Environment Delivery Unit,
One Stop Shop for investors are in place or inprocess of set up. Kenya is improving in various
business environment indices.

KENINVEST | INVEST IN KENYA |KENYA VISION 2030
Kenya Vision 2030 is transformative and hence strong investability credentials• The economic pillar in V2030 focuses and consists of the following priority
sectors:•

Tourism

Manufacturing

Trade
•
•
•

Agriculture

Oil & other minerals

Livestock &fisheries

BPOS/ITES

It aims to transform Kenya into a newly industrializing ‘middle-income country providing a highquality life to all its citizens by the year 2030’.
Aimed at increasing real GDP growth to at least 10% per annum.
Kenya’s Industrial Transformation Programme is equally transformative: to turn Kenya into anindustrial hub!
20
Invest in kenya | Core functions

Reform of Policies & Regulations
Reducing Burdensome Regulation: The government has initiatedreforms to hasten, streamline and simplify procedures directly
affecting businesses with reference to the Doing Business Indicators
by the World Bank. The Government is also in the process of coming
up with Investment One Stop Centre. Ranking up from 137 to 108!
Investment promotion and facilitation: KenInvest, EPZA, other publicagencies and private sector. SEZA on the way.
Review of Public procurement regulations: To speed up business andcreate affirmative action for special groups like youth, women andpersons with disability. Also support for products manufactured in the
country.
Invest in kenyaReform of Policies & Regulations
Infrastructure development: Generation of electricity from cheaperand renewable sources (280 MW from geothermal in 2014), Standard
Gauge Railway, Thika Road, Improvement of Northern Corridor e.t.c.
Enhancing Security for Investment: the government continues toallocate substantial resources on security modernization to ensure
effective enforcement of law and order and protection of property.
CCTV security cameras in major cities, increase of police officers andvehicles available to them, improvement of terms of service tomotivate officers, e.t.c.
Fight against corruption: The president has been an advocate oftackling Kenya’s culture of corruption within government. Kenya has
put the necessary legal framework in place to address this problem
including strengthening of EACC.
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Attractive Incentives to Investors
 Some of the plant, machinery andequipment are exempt from VAT
 Plant, Machinery and equipment are
duty exempt
 100 % Investment Allowance:- To qualify Investment should be morethan Kshs. 200 million
 Preferential corporate tax treatment
for newly listed Company for the first
three years
 Feed-in-tariff for power generated
from renewable energy source (wind,solar and geothermal)
 Shipping Investment Deduction- 40%

 EPZ Scheme:- 10 year tax holiday- 25% corporate tax for
another
10years- Duty & VAT exemption- Single license- Exemption from stamp duty
- Exemption for withholding tax

 Incentives for
Capital Market

listinginthe- Issuance of at least 40% of sharecapital- 20% tax for 5 years- Issuance of at least 30% of sharecapital of share- 25% tax rate for 5
years- Issuance of at least 20% of sharecapital- 27% tax rate for 3 years.
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Attractive Incentives to Investors

Special Economic Zones (SEZs)
1. Corporate tax of 10% (1st 10 years); 15% next 10 years
2. Exemption from all taxes and duties payable under:a. Excise Duty Act
b. Income Tax Act
c. EAC Customs Management Act andd. VAT Act
2. Exemption from stamp duty
3. Entitlement to work permits of up to 20% of their full-time workers
4. Exemption taxes on dividend income

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Location of SEZ’s AND EPZA’s

EPZ
SEZ

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Security of Investment• KENYA CONSTITUTION
guarantees against expropriation of private property except for purposes of public use
or security.
• NO EXCHANGE CONTROLS
guarantees repatriation of capital, profits and interests.
• Member of the International Centre For Settlement Of Investment Dispute (ICSID)• Member of the Multi-lateral Investment Guarantee Agency (MIGA)
an affiliate of the World Bank that insures foreign investments against non-commercial
risks.
• Member of The Africa Trade Insurance Agency (ATIA), headquartered in Nairobi andinsures against commercial and non-commercial risk.
• Bilateral Investment Treaties: Kenya has negotiated and signed and continues to sign
various investment promotion and protection agreements (IPPAs) and avoidance of
double taxation agreements (DTAs) with a number of countries.
• MOST IMPORTANTLY, KENYA GOVERNMENT HAS NOT CONFISCATED OR
NATIONALIZED PRIVATE PROPERTY SINCE INDEPENDENCE IN 1963.

Invest in kenya | Core functions

Invest in kenya | Core functions

KenInvest | Core Functions

INVESTMENT PROMOTIONINVESTMENT FACILITATION•

Providing information on
investment opportunities orsources of capital.

•••

Promoting the opportunities
for investment available in
Kenya by organizing forums,
workshops and othermarketing initiatives.

•

•

•

Investor tracking after careservices
Assisting in issuinginvestment certificates
Assisting in obtaining
necessary licenses andpermits
Assisting in obtaining
incentives or exemptions
under various acts of law &other regulations.
Facilitate joint venture

between local & foreign
investors

POLICY ADVOCACY• Reviewing the investment
environment and making
recommendations
toGovernment
and
other
stakeholders with respect tochanges that would promoteand facilitate investment,
includingchangesinlicensing requirements.
Invest in kenya | Core functions

OVERVIEW OF INVESTMENTOPPORTUNITIESInvestment opportunities in Kenya
are many across all sectors and the
47 Counties. The opportunities range
in size from mega to small. There issomething for everyone and thereturns are highly competitive.

KENINVEST | INVEST IN KENYA |Agriculture
AGRICULTURE, LIVESTOCK AND FISHERIES“Innovative, Commercially Oriented and Modern Farming Livestock and Fisheries
Sector”
 Emphasis is placed on increasing productivity at the same time expanding
processing activities.
 Contributes to 26% of the GDP (CBK) Accounts for 65% of Kenya’s total exports, 18% & 60% of the formal andtotal employment respectively.

OPPORTUNITIES
1.There are several large scale farming & Agroprocessing opportunities in
the Counties
2.Tana Delta Irrigation Sugar Project – Joint Venture – Project Promoter:
Tana Athi Rivers Development Authority (TARDA)
3.Fish Port Development Project – PPP – Coast Development Authority(CDA)
4.Agricultural Development along LAPSSET Corridor
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Galana-Kulalu Food Security Project
The Galana-Kulalu Scheme is a flagship project worth USD 2.88BN to be implemented over five years on
one million acres with an aim to enable Kenya to become a food secure nation
Overview of the Scheme


The Galana-Kulalu project is a government
initiative to enhance national food security by
optimising on the productivity of the Galana andKulalu Ranches on one million acres of land
irrigated over the next five years– This will occur through targeted investmentsin the production of crops, livestock andfisheries, the optimisation of eco-tourism
activities and the integration of sustainableutilization of other natural resourcesCore Benefits






Integrated farming for crops and animal
production
Export of surpluses to regional and international
markets
Revenue generation
National food security
Social and political stability

Source: Presidential Strategic Communication Unit , January 2014, NIB 2014

Government Support in
Galana-Kulalu

Production Opportunities for
the Private Sector

Water development on the
Tana and Sabaki Rivers

Maize:
500 000 acres

Establishment of
production support andvalue chain structures

Sugarcane:
200 000 acres

Development of transportand communication
infrastructure

Livestock:
150 000 acres

Horticulture:
100 000 acres

Land use planning anddevelopment

Crop Rotation:
50 000 acres

Environmental and social
impact assessments31

Other Investment Opportunities in Kenya’s Agriculture

There are many in different sub-sectors and parts of thecountry. Agro-processing is top priority in the country’s
industrial transformation programme.
1. Processing of other fruits: passion fruits, citrus,
avocadoes
2. Mombasa Food Hub: Logistics and Services
3. Cold storage infrastructure for various produce ranging
from milk, meat to fruits and vegetables: cost of powercoming down substantially.
4. Meat and Leather processing: another major priority
subsector in industrial transformation programme.
32

Water Sector• Water is a critical resource whose availability and proper use is a key factor for Kenya's
sustainablesocial and economic development. The country is water scarce at 670M3 per

capita freshwater endowment and water storage well below international standards.
• The economic and social developments anticipated by Vision 2030 will require more highquality water supplies than at present.

1. Construction of Water and waste water systems. Eg The supply from Thwake
Dam
2.Construction of dams- Bute and Itara dam supplies
3.Nairobi Bulk Water Supply Project. Construction of Maragua and Ndarugu Dams
and the supply of bulk water to Nairobi County.

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Manufacturing, Wholesale & Retail
Manufacturing
“ Robust Diversified and Competitive
Manufacturing Sector”
Objective is to increase its contribution to
Gross Domestic Product (GDP) by at least
10% per annum & propel Kenya towards
becoming Africa’s industrial hub.
The Eastern African market is dominatedby imports from outside the region andtherefore provides potential market for
Kenyan products.
Opportunities
Shimoni Cement Production - PPP –Project Promoter: CDA
Establishment of SEZs – MoIED
Development of SME & Industrial Parks –MoIED
Development of Industrial Clusters- Textile
and Leather Cities top priority

Wholesale & Retail“A Formal Sector that is Efficient, Multitiered, Diversified in Product range andInnovative”
Identified as one of the key engines of theeconomy due to its immense contribution to
Kenya ’ s GDP & employment creation
through trade and investments.
Opportunities
Development of Wholesale Hub Markets
Establishment of SEZs in Mombasa
Construction of 3 wholesale hubs
Construction of 3 Tier-1 Retail Markets
Establishment of world class Trade,
modern Exhibition and Convention centre

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OPPORTUNITIES UNDER THE EPZ
PROGRAMMEMANUFACTURING
1. LEATHER PRODUCTS :Jackets, Skirts &Pants,Boots, Shoes & Sandals,
Bags, Belts, Wallets, gloves,
Upholstery.

.

2. MINERALS AND GEMSTONE PROCESSING:
Gemstone Cutting/Polishing, Base Metal
production, Dimension stone, Jewelry
3. MEDICAL AND PHARMACEUTICAL
products: Human and Veterinary medicines,
Medical Supplies incl. catheters

AGRO-PROCESSING: Food products
including value added tea, fruit juices, Value added
dairy including dried milk, processed cheese, Plant
extracts, post-harvest processing of flowers andhorticulture. Fibre e.g. sisal, essential oils andvegetable extracts

COMMERCIAL
Regional distribution of assorted products
targeting Ethiopia, Southern Sudan,
Somalia, DRC and other COMESA
countries, but excluding EAC Countries(i.e. no local sales).

REAL ESTATE DEVELOPMENT
Development of Private EPZs: Offices andoffice parks for Regional HQ, ICT and service
companies
Warehouses
Industrial sheds
Service plots for sub-lease
For lease to EPZ investors

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OPPORTUNITIES UNDER THE SEZ
PROGRAMMEThe Special Economic Zones seek to promote andfacilitate global and local investments in Kenya. Thesefacilities include:•Free Trade Zones (FTZ)•Industrial parks,•Free ports,•Information Communication Technology parks,•Science and Technology parks,•Agricultural Zones•Tourism and Recreational Zones• Business Service parks.
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Tourism

TOURISM“To be a top 10 long haul tourist destination offering a high-end, diverse, and distinctive
visitor experience.” Sector vital for the Kenyan economy. Target of at least 3 million international
tourists p.a. against current level of 1.5-1.8 million.
 Based on: abundant wildlife, over 500 km long all-year warm sandy coastal
beaches, a rich and diverse cultural heritage & a robust and thriving businesshub that attracts most of regional and international business travelers.

OPPORTUNITIES
1.Development of Lamu, Isiolo and Lake Turkana Resort Cities – PPP – Promoter:
MEACT;
2.Mombasa International Convention Centre (MICC) – PPP – Promoter: TFC;
3.Bomas International Convention & Exhibition Centre (Bomas of Kenya)– PPP;
4.Accommodation and other services.

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ENERGY

Current power generation: About 2,300 MW
Generation of additional 5,000+MW of electricity in lessthan 3 years from various sources.
OPPORTUNITIES•Coal Fired Power Plants – IPP• 480 MW x 2 – Coast (Initial Imports)• 480 MW x 2 – Kitui (Local Coal)•Geothermal: 1,000 MW•Liquefied Natural Gas (LNG): 1,000 MW•Other sources: 1,070 MW
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Infrastructure

INFRASTRUCTURE
 Kenya Government has laid down ambitious plans to construct a total of over
10,000 km of tarmacked roads across the country in the next 3 years. This will
cost over USD 90 Million.

OPPORTUNITIES
1.Construction of Isiolo Airport;
2.Development of Lamu Port;
3.Opportunities along Mombasa-Nairobi Standard Gauge Railway;
4.Nairobi Commuter Rail – Concession;
5.Railway Cities – Joint Venture – Nairobi, Mombasa and Kisumu;
6.Thika Toll Road – Concession;
7.Dry Port at Voi – PPP;
8.Mombasa 2nd Container Terminal – PPP; and9.Multi-Storey Terminal at Likoni – PPP.

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Building and Construction
BUILDING & CONSTRUCTION Kenya requires a minimum of 150,000 housing units per annum to meet demand.
 Kenya has a well-developed building and construction industry with quality
engineering, building and architectural design services being readily available.
 Returns to investment in real estate are very high in Nairobi and Mombasa.

KEY ONGOING AND PLANNED PROJECTS:
1. Many large private integrated development projects around the country e.g. Two
Rivers, Tilisi, Tatu City;
2. 39 Storey Hazina Trade Centre;
3. Proposed Kilifi Resort City;
4. Konza Techno City (5,000 acres), Machakos/Makueni;
5. Proposed Resort Cities;
6. Development of Lamu Port;
7. Mombasa City Convention Centre (MICC).

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LAPSSET CORRIDOR PROJECTPROJECT COMPONENTS
1 Lamu Port2 Railway Line
3 Highway
4 Crude Oil Pipeline
Product Pipeline
5 Oil Refinery
6 Resort Cities
7 Airports
SUPPORT INFRASTRUCTURE

High Grand Falls--- Lamu Metropolis

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WE WELCOMEYOU TO MAKE IT
KENYA!
KENINVEST | INVEST IN KENYA |Thank you