A Comprehensive Look on why Kenya is the Most Promising Investment Destination

Kenya is the largest and the most advanced economy in East and Central Africa; with strong growth prospects supported by an emerging, urban middle class and an increasing appetite for high-value goods and services.

Kenya is the dominant economy in the East Africa Community, contributing to more than 50 per cent of the region’s GDP.

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.

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 headquartered 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.

In 2013, Kenya was the top destination for international investors in the Eastern Africa Region after attracting 12 private equity deals valued at over USD 110.5 million; and in 2015, PwC ranked Nairobi as the most attractive African city for FDI.

The geographical location makes the country ideal for strategic partnerships aimed at improving regional and global market share. Kenyan infrastructure, including the Ports of Mombasa and the KE-UG railway, is the gateway to the vibrant East and Central Africa region.Jomo Kenyatta International Airport functions as an effective air hub between Africa, Europe and Asia.

Kenya’s membership of regional economic blocs, coupled with its strategic geographic position, make the country the gateway to the huge EAC and COMESA regional markets and a beneficiary of several preferential trade arrangements.

Kenya is a member of several trade arrangements and beneficiary of trade promotion schemes that include the Africa Growth and Opportunity Act (AGOA), World Trade Organization and EAC-EU Trade Agreement.

There will soon be Tripartite Free Trade Area (FTA) cooperation, a regional bloc of the EAC, COMESA & SADC nations – creating a potential market of over 600 million.

Empowered by a new constitution and administration, the national and county Governments are approaching the private sector as a central partner in the development and growth of the Kenyan economy.

The new Jubilee Administration regards the private sector as a key center of economic and social development. It has signaled this shift in the Government’s orientation through the divestment of its majority shareholding in state commercial companies through the Nairobi Securities Exchange.

Kenya is making efforts to lower the cost of doing business by conducting extensive business regulatory reforms intended to substantially reduce the number of licensing requirements and to make the licensing regimes more transparent and focused on legitimate regulatory purposes.

It has fully liberalized its economy and removed all obstacles that previously hampered the free flow of trade and private investment, such as exchange controls, import and export licensing, as well as restrictions on remittances of profits and dividends.

Empowered by the new constitution, devolution offers an opportunity for investment through localized innovation and through collaboration, by building commercial ecosystems that expand employment opportunities and empower local communities.

INVESTOR GUARANTEES

• The Kenya Constitution guarantees against expropriation of private property

• No exchange controls guarantee repatriation of capital, profits and interests

• A Member of the Multilateral Investment Guarantee Agency (MIGA) and the Africa Trade Insurance Agency (ATIA), which both insure foreign investments against non-commercial risks

• A member of the International Centre for Settlement of Investment Disputes (ICSID), which arbitrates cases between foreign investors and host Governments.

Kenya’s infrastructure landscape is also undergoing significant transformation as evidenced by commitment of over USD 20 billion towards infrastructure development through public-private partnerships.

The country 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.

The private sector is substantial and includes a number of foreign investors. Key players in voicing private sector concerns include: Kenya Private Sector Alliance (KEPSA), Federation of Kenya Employers (FKE) and the Kenya Association of Manufacturers (KAM).

Kenya prides itself on its large, highly educated and skilled work force – with 55 per cent of the population aged 15-64.Foreign participation in NSE: 54.1 per cent of total equity turnover (January-June 2014)