Trade & Investment

Economy of Kenya

Kenya is the gateway to the Eastern and Central Africa regions. The country has developed her infrastructure that is networked to serve East African Community (EAC) and Common Market for Eastern and Southern Africa (COMESA) economic regional blocs, which both have a combined market population of over 400 million which is about a half of Africa’s total population. Kenya’s position as the economic, commercial and logistical hub in Eastern Central Africa, places the country as one of the best investment destinations globally. 

The country’s economy has grown remarkably in recent years due to numerous advantages which include: a reasonably well-educated labour force, a vital port that serves as an entry point for goods destined for countries in the East African region, abundant flora and fauna. In addition, the country is endowed with kilometres of idyllic coastline, miles of soft white sand, all fringed by palm trees. Above all, the government is committed to implementing business reforms.

Kenya’s economy is anchored on the Vision 2030, a development agenda that aims to transform Kenya into a newly industrializing, middle-income country providing a high quality of life to all its citizens by 2030. The country’s development is also aligned to the Big Four Agenda which focuses on food security, affordable housing, manufacturing and affordable healthcare.  

In 2019, Kenya’s economic growth averaged 5.4%, putting Kenya as one of the fastest growing economies in Sub-Saharan Africa. The  economic expansion has been boosted by a stable macroeconomic environment, positive investor confidence and a resilient services sector. 

Key Economic Sectors

Kenya’s economy is driven by various sectors that are in production of goods and services. They include:

• Agriculture
• Manufacturing
• Tourism
• Arts and Crafts
• Financial and
• Investments sectors.

For more information on the overall economic outlook, and GDP growth of the Kenyan Economy click http://www.knbs.or.ke/

Advantages of Investing & Trading in Kenya

1. Membership in regional economic/trading blocks

Kenya is an attractive investment destination given her strategic membership in regional economic trading blocks such as the East African Community (EAC) with about 177 million consumers. 

In addition, Kenya is a member of the Common Market for Eastern and Southern Africa (COMESA) with a market of about 400 million people.

In the sector of textiles and apparel, Kenya equally enjoys preferential market access to the USA under the African Growth and Opportunity Act (AGOA).

2. Economic Reforms

Kenya has undertaken business reforms and this has led to her significant advancement in ease of doing business. The assessment, conducted by the World Bank and International Finance Corporation (IFC), takes into account the legal reforms which aim at simplifying requirements for starting a business, gain access to credit, ease tax burdens, enhance investor protections and expedite trade while reducing costs. Consequently, business start-ups have been streamlined while the time and costs of securing permits reduced tremendously. 

Furthermore, the Kenya Ports Authority and Kenya Revenue Authority have computerized the clearance system in order to cope with the growing demand from the region. The Government of Kenya continues to encourage public-private partnership. The partnership provides for pooling of resources for specific projects while allowing the company to recover its capital within a given period. Most of the projects are in the infrastructure sector.

Kenya has a development program espoused in the Vision 2030 aiming to make the country attain middle income status with a strong competitive emerging economy. In this respect, policies as well as investment opportunities have been aligned accordingly with the Vision 2030 objectives. 

3. Skilled labour

One of Kenya’s assets is its people. Kenyan workers are among the best educated in Africa, with literacy rates well over 80% (World Bank, 2018). Furthermore, Kenya has a well-developed business infrastructure and business support services because of historical and higher education levels.

4. Fiscal and Financial incentives

In order to encourage investment, the Government of the Republic of Kenya has put in place incentives to attract Foreign Direct Investment. 

For more information on investment incentives, please click the link https://www.invest.go.ke/

5. The Export Processing Zones Authority (EPZA)

The EPZA Act (Chapter 517 of the Kenya laws) was passed in 1990 and gave inception to EPZA as the regulatory body. There are 36 EPZAs in operation. Most of them are close to the capital city, Nairobi, and the port city of Mombasa. The largest one is in Athi River, 25km from Nairobi.

EPZA offers a variety of advantages including fiscal incentives such as 10 years tax holiday and a flat rate of 25% tax for the next 10 years; exemption from import duties; no restriction on management or technical arrangements; exemption from stamp duty and VAT or raw material, etc.

6. Investment protection and standards of treatment

• Expropriation: The Kenya law provides protection against expropriation of private property. Further, protection is also guaranteed by the various bilateral agreements with respective countries.
• National Treatment: The Kenya law provides for equal treatment to local and foreign investors.
• Dispute Settlement: Kenya is a member of the International Centre for Settlement of Investment Disputes (ICSID), A World Bank agreement for the settlement of disputes between States and Nationals of other States.
• Political Risk: Kenya is a democratic and stable country. The Government ratified the African Trade & Investment Agency Treaty in partnership with the World Bank which insures investments even in politically risky countries.

Procedures of Start a Business

Investors are urged to contact the Kenya Investment Authority (KenInvest), a statutory body mandated to facilitate implementation of new investment projects, providing After Care services for new and existing investments, as well as organizing investment promotion activities both locally and internationally.

The Kenya Investment Authority has created two platforms with detailed investment opportunities and simplified investment procedures. The information can be accessed through the links below

• General information and opportunities available to investors: https://www.investmentkenya.com and https://theiguides.org/public-docs/guides/kenya 
• Procedures to setup business : https://eregulations.invest.go.ke