INVESTMENT OPPORTUNITIES IN KENYA Dr. Moses Ikiara, PhD, MBS Managing Director Kenya Investment Authority (KenInvest)

INVESTMENT OPPORTUNITIES IN KENYA

Dr. Moses Ikiara, PhD, MBS

Managing Director

Kenya Investment Authority (KenInvest)

Presentation Structure

• Role of Investment in economic development

• Investment Opportunities in Kenya

• Procedures for Investing in Kenya

• Role of Financial Institutions in promoting investments

• Role and functions of KenInvest

ROLE OF INVESTMENT IN ECONOMIC DEVELOPMENT

• Kenya has envisaged to become a globally competitive and prosperous nation with a high quality of life by 2030.

• To achieve this, the country’s GDP should grow to more than 32% up from 20.6 % that was recorded between 2008 and 2012.

The growth target is to be achieved through the following 6 sectors: 1. Tourism2. Manufacturing3. Agriculture & Livestock4. ICT and Business Processing Outsourcing5. Financial Sector6. Wholesale and RetailEnabling sectors: Energy and Infrasture

INVESTMENT OPPORTUNITIES

● Opportunities exist in production and export of products such as:• Cut-flowers• French beans• Pineapples• Mangoes and other fruits• Cereals• Leather and leather products• Canned beef• Honey• Farm machinery equipment• Fertiliser and farm chemicals• Certified seeds

● Kenya is naturally endowed in:-• Wildlife• Pleasant climate• Beautiful scenery• Sandy beaches• Sportsmen & women

● There are enormous opportunities in :-1.Accommodation:Resort cities, 4 & 5 star hotels and High end lodges in parks2.Recreation and Entertainment:Amusement parks

3.Conference facilities

Tourism…

I.T. Enabled ServicesI.T. enabled services

– Call centers for both in-bound and outbound calls

– Wide range of business outsourcing services

– Mobile Software Development

– Education and Training– ICT Parks– Development of

Broadband infrastructure

Manufacturing for the Regional MarketKenya is a prime supplier of basic goods to the eastern and central African markets.

Opportunities exist in;Plastic productsPharmaceuticals Food ProcessingLeather and footwear industryPreserved and processed foodsCementSheet glassMotor VehiclesFertilizers and pesticideTextilesWood productsSalt worksTyresIron and steel

Wholesale & Retail …

Supply chain:

Drive efficiencies through

development of producer

business groups and large

wholesale hubs

Semi-formal retail:

Retail markets to locate

informal players and help

them grow

Formal retail: Attract and develop large formal retail chain through JVs & standalone ventures (domestic and international )

…established distribution channels

Financial Services…

• Kenya has a well developed financial sector.

These are:-• 49 Commercial banks• 4 NBFIS• 2 Mortgage finance

companies• 4 Building societies• 11 Insurance companies• 3 Reinsurance companies• 6 Development Finance

Institutions (DFIs)

Enabling Sectors (Infrastructure)

Lamu Port and Southern Sudan-Ethiopia Transport (LAPSSET)

Target of over 200,000 housing units per year – High demand particularly in the urban areas

across the countryNairobi Metropolitan Mass Rapid Transit Program

– Investments in infrastructure and busesRapid rail system

– provision of light rail to ease traffic congestion and improve efficiency of transportation between the Central Business District and other parts of the metropolitan

Parking system– Investment opportunities exist in the provision

of both space and technology that complements promotion of public transport.

Enabling Sectors cont’d…..ENERGY● Energy sector – Geothermal &

Alternatives sources-wind, solar, Bio fuel.

● Mining sector- exploration, mining and value addition through joint ventures.

● Building & construction-Low cost houses, Concessioning of roads.

Company Registration Companies are incorporated with Registrar of companies and the corporate tax is of 30%.

Complete Investment Application Form from Kenya Investment Authority for the issuance of an Investment Certificate to permit implementation and operation. The application will be submitted with copies of the Certificate of Incorporation, Memorandum and Articles of Association.

Identify location or project site and undertake an Environmental Impact Assessment for approval depending on the sector by the National Environmental Management Authority as a pre-condition to the issuance of an Investment License.

Land Acquisition An investor can acquire land by leasing and obtaining a lease grant or

by purchasing and obtaining a title of ownership. It will be necessary to contact the ministry of lands to ascertain the ownership of the land. The land is then registered in the Ministry of lands upon payment of stamp duty which is at a rate of 2-4% depending on the value.

Procedures for investing

Procedures Cont’d…….

Tax Pin /VAT Registration – Done online at www.kra.go.ke

Registration with the National Social Security Fund (NSSF)

Registration with the National Hospital Insurance Fund (NHIF)

Single Business Permit from relevant local Authority.

ROLE OF KENINVEST

MandateKenInvest mandate is to promote and facilitate investments in Kenya by both domestic and foreign investors.Vision“To make Kenya a country of choice for Investments”

Mission“To attract, facilitate, retain and expand both domestic and international Investments in Kenya through provision of quality services”

Our Services

Providing Information on Investment opportunities and sources of capital

Promote both locally and internationally the opportunities for investment in Kenya

Advocacy for a conducive Investment climate Facilitate investors in obtaining necessary

licenses and permits Assist investors obtain incentives or

exemptions under various Acts and other regulations

Summary of Role of KenInvest

Core Functions

Investment Promotion Providing information on investment opportunities or sources of

capital; Promoting the opportunities for investment available in Kenya

by organizing forums, workshops and other marketing initiatives;

Investment Facilitation Investor Tracking and After Care Services; Issuing Investment Certificates; Assisting in obtaining necessary licenses and permits; and Assisting in obtaining incentives or exemptions under various

Acts of Law and other regulations.

Core Functions cont’d.

Policy Advocacy Reviewing the investment environment and making

recommendations to Government and other stakeholders, with respect to changes that would promote and facilitate investment, including changes in licensing requirements.

Incentives

• (100% in major cities and 150% in satellite town investment allowance

• Capital goods are zero rated• Duty exemption and VAT waiver for machinery

and equipment• Export Processing Zones programme (Special

Economic Zones)10 year tax holiday

• Exempt from withholding tax and stamp duty

Guarantees…

Kenya Constitution guarantees against expropriation of private property exceptfor purposes of public use or security

No exchange controls guarantees repatriation of capital, profits and interests.

Member of the Multi-lateral Investment Guarantee Agency (MIGA), an affiliate ofthe World Bank that insures foreign investments against non-commercial risks

Member of the International Centre for Settlement of Investment Disputes (ICSID)which arbitrates cases between foreign investors and host governments

Member of the Africa Trade Insurance Agency (ATIA) which insures investors against political risks

Subcontracting and Partnership Exchange (SPX)

• SPX is a technical cooperation programme to link domestic enterprises in developing countries to supply chains of large companies (both domestic & international)

• The focus is to develop MSME capacity to meet buyer needs and thus identify profitable business opportunities for them

Why Sub-Contract?h

Knowledge Based Reasons; we do not have this know-how, too much specialization requires…

Capacity Based Reasons; insufficient capacity, temporarily increase in demand, too expensive to invest, labor rights, etc.

Cost Based Reasons; supplier’s price is cheaper than our production cost

Focus in core business; more value added activities, more profit with less manufacturing

Subcontracting and Partnership Exchange (SPX)

• SPX is a technical cooperation programme to link domestic enterprises in developing countries to supply chains of large companies (both domestic & international)

• The focus is to develop MSME capacity to meet buyer needs and thus identify profitable business opportunities for them

• The programme is being implemented by UNIDO(United Nations Industrial Development Programme) with KenInvest and other stakeholders both private & public.

Benefits of Sub-contracting

Benefits to MSMEs:Increased visibility of MSMEs to local and international marketsGeneration of new business opportunities through matchmaking and linkage with buyersTechnical assistance to meet buyer needsImproved quality through advanced processes (efficiency in production, technology upgrade, specialization)Cost reduction – better processes, better capacity utilization, less marketing costs due to direct contact with buyersSkills upgradingInnovation arising from improved productivity and competitiveness

Benefits Continued…..

Benefits to Buyers:• Assist buyers to focus on core areas• Cost reduction, less resource allocation• Assured of reliable supply• Improved quality

Benefits to Overall economy:• Job creation – both MSMEs and buyers• Increased productivity and competitiveness• Promotes import substitution by increasing local content• Promotion of exports and new investments• Inward transfer of technology – from UNIDO, large TNCs• Contributes to realization of vision 2030• Ultimately growth of the economy

Useful contacts

KENYA INVESTMENT AUTHORITYP. O. Box 55704 00200,NairobiTel: +254 20 2221401-4Mobile: +254 0722205 424 +254 0733601184Fax: +254 20 243862Email: [email protected] Website: www.investmentkenya.com