Investing in Kenya

The current business environment in Kenya is upbeat and optimistic. The strong presence of multinational corporations and professionals in a wide range of fields indicates that the country is suitable for FDI. Getting an investment underway has been made easy and transparent. The Kenya Investment Authority (KIA),  specializes in guiding foreign investors. KIA can be contacted directly or through the nearest Kenyan Embassy or High Commission.
Among the prime points that make Kenya the ideal FDI destination is;

  • Political stability,
  • Dynamic private sector,
  • Harmonious industrial relations,
  • Fully liberalized economy,
  • Qualified workforce,
  • strategically positioned as a communication the hub to the rest of Africa,
  • Kenya is an active member of many regional and international trade agreements.

Investment Opportunities in Kenya:
As one of the emerging economies to watch and the largest in east and Central Africa, Kenya offers plenty of investment opportunities for both local and foreign investors which are outlined  below;

(A) Agriculture
Agriculture is the mainstay of the economy, providing livelihood to approximately 75 per cent of the population.  There is considerable scope for diversification and expansion of the agricultural sector through accelerated food crop production and increase of non-traditional exports.  There are also opportunities for improvement in technological infrastructure such as packaging, storage, and transportation. Intensified irrigation and additional value added processing are marketable areas for investments.

(B) Tourism
Tourism is Kenya’s third largest foreign exchange earner. The tourism industry is growing as a result of the liberalisation measures, diversification of tourist generating markets and continued Government commitment to providing an enabling environment, coupled with successful tourism promotion and political stability. Enormous opportunities exist for investment in film production; recreation and entertainment facilities in the following areas:

    • Conference Tourism
    • Cultural tourism
    • Cruise ship Tourism
    • Aviation/tour and travel Tourism
    • Eco-tourism

Potential investors can take full advantage of these opportunities through direct investments or joint-ventures with Kenyan entrepreneurs. Opportunities also exist in this sector in the construction of tourist hotels and game lodges all over the country.

(C) Manufacturing
Manufacturing sector is an area where investment opportunities exist. Initially developed under the import substitution policy, there has now been a shift to export oriented manufacturing as the thrust of Kenya’s industrial policy. The sector plays an important role in adding value to agricultural output and providing forward and backward linkages, hence accelerating overall growth.
The manufacturing sector now comprises of more than 700 established enterprises and employs directly over, 218,000 persons as at the year 2000. A wide range of opportunities for direct and joint-venture investments exist in the manufacturing sector, including agro-processing, manufacture of garments, assembly of automotive components and electronics, plastics, paper, chemicals, pharmaceuticals, metal and engineering products for both domestic and export markets.

(D) Information technology
The government of Kenya has made ICT a priority in it’s economic recovery strategy initiatives. With the incentives and benefits that Kenya has to offer, the following areas can be invested in:

    • I.T. Enabled Services
    • Call Centers for both inbound and outbound calls
    • Wide range of Business Process Outsourcing activities
    • Disaster recovery
    • Software development
    • Education and Training
    • ICT Habitats
    • Development of Broadband infrastructure

To compliment all the above sectors, Kenya aspires to attract internationally reputable educational institutions, universities and training centers. The following areas exist for investment:

    • Science and technology centers
    • IT Centers of Excellence
    • Training Centers for Hospitality industry
    • School Fashion and Design
    • R&D institutes

(E) Business and Finance
Some areas for investment opportunities:

    • Lease Hire
    • Micro-Financing on whole sale basis
    • Investment Banking
    • Insurance Services
    • Business Advisory services – trusteeship and Receiverships

(F) Energy
Kenya’s energy policy emphasizes the need for sustainable energy supplies in adequate quantities at effective costs, so as to achieve national development goals. The policy also emphasizes delivery of quality energy services so as to ensure that Kenya will continue to attract investments in those economic activities of which energy inputs are basic to production at competitive prices. The country is dependent mainly on three forms of energy namely: petroleum, electricity and wood-fuel. To a lesser extent wind, solar and biogas are used as alternative energy sources.
Petroleum is the major source of commercial energy in the country providing about 87% of the country’s requirements. The transport sector consumes more than half of the petroleum fuels used in the country. Industry consumes some 31% of petroleum fuels.

Supply of electricity rose by 4.1 percent in the first seven months of 2006 from 3,149.5 million kilowatt hours (KWH) in a similar period last year. Consumption of electricity grew by 4.9 percent to 2,682.1 million KWH during the period in line with the increase in economic activity. Completion of Sondu-Miriu project towards the end of 2007 is expected to add about 60.0 million kilowatt hours (KWH) to the national grid system. A breakdown of electricity supply by source shows that Hydro-power, Geo-thermal and Thermal generation increased by 1.0 percent, negative 1.1 percent and 14.7 percent, respectively in the January to July 2006 period. The respective shares in the total electricity supply were 53.2 percent, 18.3 percent and 28.5 percent for hydropower, geo-thermal and thermal generation. In Petroleum sector, crude oil price increased by 27.85 percent to US $ 73.00 per barrel in July 2006 up from US $57.10 per barrel in July 2005.

(G) Building and construction
Kenya has a relatively developed construction industry. Quality engineering, building and architectural design services are readily available. The government has been placing emphasis on the rehabilitation of all major road networks in line with the Vision 2030. On the other hand, with increase in population, opportunities exist in the construction of residential, commercial and industrial buildings, including prefabricated low-cost housing.
Extensive opportunities for investment exist particularly in the area of upgrading slums and informal settlements, urban renewal, construction of middle and low income housing, manufacture and supply of building materials and components. Rural roads, especially feeder roads serving the country’s main agricultural and industrial areas are also being prioritized to create employment and improve Kenyans incomes. Possibilities also exist through participation in concessioning and dualing of the Mombasa-Malaba-Busia highway on the North Corridor Programme. Transport linkages are set to be established with our northern neighbours of Sudan and Ethiopia to open up markets for Kenyan goods. These initiatives provide opportunities for the provision of credit to construction companies.

Some of the recent project opportunities considered as key drivers of Vision 2030 include;

    • Road Construction
    • Development of the rail link to South Sudan
    • Rehabilitation of Airports
    • Development of a Second Port at Lamu
    • Kenya – Uganda & regional pipeline extension (Petroleum)
    • Construction of upstream refinery
    • Construction or upgrading of storage, distribution, and product handling facilities (Petroleum)
    • Solar / wind energy plants
    • Urban housing development by private and public sector

(H) Environment and Natural resources

  • Mining
    Kenya has well-developed cement processing plants that satisfy the domestic market and exports to the regional market. Approximately 1.2 million tones of cement are consumed locally each year. Opportunities exist in the production of glass, as the country is not self-sufficient. A few manufacturing units produce ceramic pottery and tiles, however, substantial quantities of ceramic pottery, tiles, sanitary-ware, and insulators are imported. Investment potential exists in prospecting and mining of other minerals such as gold, precious stones and petroleum.
  • Fisheries
    Kenya’s water resources of the Indian Ocean and Lake Victoria provide vast fishing potential. At present, deep sea fishing, prawn and trout farming are in their infancy but growing rapidly. Opportunity also exists in fish processing (filleting and fish meal production), as well as fisheries-support infrastructure (refrigerated transport, cold storage, etc.
  • Investment in Forestry
    Opportunities for investment exist in the following areas;

    • Forest valuation,
    • Capacity building in resource assessment, planning and management,
    • impact assessment,
    • geographical information systems, monitoring and evaluation,
    • Research in non-wood tree products to enhance their economic potential,
    • Development of credit support to private forest investments,
    • Improving data and information for management planning through regular surveys and forest inventories,
    • Developing and improving marketing of forest products,
    • Modernisation of forest industries to improve efficiency,
    • Dry land sylviculture.