KIA ANNUAL REPORT corrected

8/7/2019 KIA ANNUAL REPORT corrected

1/40

PROMOTING INVESTMENT IN KENYA

KENYA INVESTMENT AUTHORITY

PROMOTING INVESTMENT IN KENYA


2/40


3/40

ANNUAL REPORT 2006/2007 1

COntents

Notices of the 2006/2007 Board Meetings 2

Statement by Former Minister of Ministry of Trade Industry 3

Board of directors 6 - 7

Chairmans statement 8

Pictorial 9

Managing Directors statement 12 - 13

Corporate governance (Governance by the Board) 14 - 15

InvestmentCommittee

HumanResourceandAdministrationCommittee

FinanceCommittee

AuditCommittee

Attendance Schedule of Board Members 16

Corporate information 17 - 18

Composition of KenInvest 19-21

CorporateAffairs

InvestmentPromotion

ResearchandPolicy

InvestorServices

Statement of directors responsibilities 23

Independent auditors report 24 - 26

Annextures 27 35


4/40

KENYAINVESTMENTAUTHORITY2

noic of h 2006/2007 Board Mig

Da Moh Yar Locaio

3 January 2006Board Room on 8th Floor at National Bank Building,HarambeeAvenue

18 May 2006Board Room on 8th Floor at National Bank Building,HarambeeAvenue

16 June 2006Board Room on 8th Floor at National Bank Building,HarambeeAvenue

20 July 2006 Board Room on 8th Floor at National Bank Building,HarambeeAvenue

26 August 2006Board Room on 8th Floor at National Bank Building,HarambeeAvenue

25 January 2007Board Room on 8th Floor at National Bank Building,HarambeeAvenue

5 March 2007Board Room on 8th Floor at National Bank Building,HarambeeAvenue

31 May 2007 Board Room on 8th Floor at National Bank Building,HarambeeAvenue

26 July 2007Board Room on 8th Floor at National Bank Building,HarambeeAvenue



25 October 2007 Board Room on 8th Floor at National Bank Building,

HarambeeAvenue

12 November 2007Board Room on 8th Floor at National Bank Building,HarambeeAvenue


5/40


sam by formr Miir of Miiry oftrad & Idury

Kenya has had a long history of economic leadership in East Africaas one of the largest and most advanced economies in the region.Enhancing Kenyas competitiveness in attracting investmentsand ease the investment process, the Investment Promotion Act2004, Cap 485 of 1986 was passed. This transformed InvestmentPromotion Centre (IPC) to Kenya Investment Authority (KIA) withan expanded mandate in executing its role of investment promotion,investment facilitation and policy advocacy. This was one of thepriorities envisioned in the Economic Recovery Strategy for Wealthand Employment Creation (ERS) (2003-2007).

Kenya was recently recognized by the World Bank as one of the top

five countries that have implemented business reforms that supportmore private investment throughout Africa. Kenya launched anambitious licensing reform program. The program has eliminated110 business licenses and simplified eight others.

The Government targets to eliminate or simplify more than 900more of the countrys 1,300 licenses. The changes have streamlinedbusiness start-up and cut the time and cost of getting buildingpermits and licenses. This effort has provided confidence topotential investors in Kenya.

The Vision 2030 was developed by the government to take over

after ERS scheduled to end in 2007 and spur rapid and sustainablegrowth and development up to the year 2030. Six priority sectorsfor promotion were identified. They are Manufacturing, Agricultureand Agro processing, Tourism, Business process outsourcing,Finance, Wholesale and retail. The Authority will now transit fromits generalized approach to promotion and adopt a more tailor-made approach.

The Authority is in the process of setting up a One Stop Shop. Itwill be a place where an investor deals with one single entity toobtain all the necessary documentation in one streamlined andcoordinated process. The One Stop Shop will enable the institution

to execute its mandate more effectively and efficiently, and in linewith best practices around the world. In this regard the Authorityis under going a restructuring exercise for better service deliveryto the investors. This report will highlight the process, trials andsuccess of the Authority.

Hon.MukhisaKituyiFormer Minister of Trade and Industry

30th June 2008


6/40



7/40


Nairobi is the first choice destination whenlooking for investment opportunities in EastAfrica

Ivmopporuii

nairobi Ciy


8/40


Board ofDircor

Prof. Henry M. Bwisa

Chairman, Board of Directors

Mr. Allan Ngugi

Member

Wanjuhi Ndirangu

Mr. Michael Ndeda

Member (Private Sector)

Mr. Matanda Wabuyele

Chief Executive Export PromotionCouncil (EPC)

Amb. Green Josiah Member (Private Sector)

Mrs. Betty Khasakala MwenesiMember (Private Sector)

Mr. John O.B. Akara Ag C.E.O Export Processing

Zones Authority (EPZA


9/40


Mrs. E.A.M. Khaoya

Alternate Member/PS, Ministry ofTrade and Industry

Mr. Onesiphorus P. K.Ng ang a

Alternate Member/ PS, Ministry of Local Government

Mr. Ephantus MurageMundia

Alternate Member/ PS, Ministry of Lands

Mr. Mwambia Wanyambura

Alternate Member/PS, Ministry of Finance

Ms. Susan Kikwai

Managing Director andSecretary to the Board

Mr. Stephen Wainaina

Alternate Member/ PS, Ministry ofPlanning and National Development

Mr. William K. Mahinda

Alternate Member/ PS, Secretary tothe Cabinet & Head of Public Service,Office ofthe President

Mr. Wellington A. Lubira

Alternate Member/ PS, Ministry of Agriculture

Lenny Kivuti

Mr. Albert Gumo

C.E.O Export ProcessingZones Authority (EPZA)

*Directors photo not available


10/40


Iroducio

It gives me great pleasure to present to you the 2006/2007 AnnualReport. KenInvest strives on being a world class (IPA) in attracting andfacilitating investments and providing input towards improving the

countrys economic performance.

Ivm evirom

In the last financial year the recorded economic growth of 7% wasboosted due to past and current investments in all sectorsManufacturing, Tourism, Agriculture, Transport andTelecommunications were the main growth sectors in the economy.

Fiacial Rul

KenInvest received a clean bill of health in this years audit report by

KENAO. The organization received certification with no queries.

Corpora Govrac

The Board continued to ensure that proper standards of corporategovernance were maintained and continued to have oversight over themanagement of the company, not only through the board meetingsbut also through the various board committees. In this regard, theBoard met regularly and deliberated on a broad range of issues.These included strategic plan, logo, human resources and investmentpromotion activities.

Fuur Oulook

A key part in our growth strategy is through expansion of our servicesto other regions in the country. KenInvests has now operationalregional offices in Kisumu,Mombasa in addition to the Eldoret office.

Finally, I would like to extend my sincere thanks to my colleagues onthe board for their excellent performance and unwavering supportand to the entire staff of KenInvest for a job well done in the year2006/2007.

Profor Hry Bwia

Chairmasam


11/40


REGIONAL MEETING ONINVESTMENT PROMOTION,ARUSHAINTERNATIONAL

CONFERENCECENTREARUSHA,TANZANIA

13TH-15THMARCH2006

11th UNCTAD OIL & GASCONFERENCE

(23RD,24TH&25THMAY2007)

Picorial


12/40


Ivmopporuii

tourim

The Masai Maras annual Wild Beasts migrationwas voted one of the wonders of the world.Tourism is one of the lucrative investmentopportunities available in Kenya.


13/40



14/40


This is the third year of the implementation of the Economic RecoveryStrategy (ERS) for Wealth and Employment Creation, 2003-2007. Thestrategy identifies key policy actions necessary to spur the recoveryof the economy and is based on four pillars. First the governmentrecognizes that rapid economic growth will be required over the

next four years but in an environment of macro- economic stability.The second pillar is strengthening of institutions of governance. Itunderscores the centrality of the rule of law as opposed to the rule ofman in the creation of good governance. Rehabilitation and expansionof physical infrastructure is the third pillar. The final pillar is investmentin the human capital of the poor.

The macro economic objectives are:

Creationof500,000jobsperyear.Overtheperiod2003-2007,atotal of 2,636,130 jobs are expected to be created out of which12 per cent i.e. 316,335 will be from the formal sector and the

balance of 88 per centfrom small business enterprises. GrowthoftheEconomyat7% Increasingofficial foreign reserves fromUS$1.1billionor2.8

monthsofimportcoverin2002toUS$1.7billionor3.5monthsof import cover in 2007.

Reducingpovertylevelbyatleast5percentagepointsfromthecurrent 56.8 per cent

Containingtheaverageannualinflationratetobelow5% Containing the current account deficit in the balance of

payments to an average of 6.2% of GDP. Increasingdomesticsavings soas toenable higher levels of

investments for sustainable development.

This report falls within this period (3rd year of ERS) covering the year1st July 2006 to 30th June 2007. It provides an insight to the KenInvestsmain activities and performances including corporate governance. Weworked within the frame work of the ERS and as our main documentof reference and as a result, this report will cover investment enquiries,investment approvals, investment promotion, and investment policy.In 2006/2007, KenInvest identified with the first and fouth pillars ofERS and developed the following objectives:-

MaagigDircor

sam


15/40


M. sua Kikwai

1. To attract, facilitate and enhance retention of appropriateinvestments in Kenya.

2. To carry out Research Policy advocacy and Planningactivities.

3. Develop an investor targeting strategy for promotingKenya as a first choice investment destination.

4. Provide aftercare services to existing investment in thecountry.

5. Undertake activities that build, manage and project anexcellent image and corporate identity.

6. Strengthen and review internal control systems thatensure effective utilization of resources and promotegood corporate governance annually.

Despite the challenge of managing an organisation in transitionfrom Investment Promotion Centre (IPC) to Kenya Investment

Authority, we managed to keep our heads above water anddid very well for the year 2006/2007. The climax was the auditcertification with no queries from Kenya National Audit Office(KENAO) and the conception of the Ones Stop Shop.

It is our belief that we have a well planned and preparedstrategy to handle the next year. This year marks the beginningof KenInvest and the end of Investment Promotion Centre. Wehope that you will find this report interesting to read.

Karibu.

The report offers

insights in KenInvestsmain activities

and performancesincluding corporate

governance. Weworked within theframe work of the

ERS and as our maindocument of referenceand as a result, this

report will coverinvestment enquiries,investment approvals,investment promotion,and investment policy.


16/40


Kenya Investment Authority (KenInvest) was established by an Actof Parliament, The Investment Promotion Act, 2004 No. 6 of 2004.It became operational on 3rd October 2005 after legal notice in theKenya gazette Supplement No. 87. The Act in Part IV section 14 replacesthe Investment Promotion Centre but maintained the function ofpromoting and facilitating investment in Kenya. Section 31 repeals theInvestment Promotion Centre Act.

This Act automatically covers licensing in the categories listed inAnnexure 2 of this report. It also sets out the requirements/conditionsnecessary to any proposed investment and to which the holder of theInvestment Certificate would, on applications, be legally entitled. Any

conditions set out after issuance of investment certificate must befulfilled within twelve months and upon payment of applicable fee,if any.

The holder of an Investment Certificate is entitled to the followingentry permits under theimmigration Act:-

Three class A entry permits for management or technical staff;and

ThreeclassesH,IorJentrypermitsforowners,shareholdersorpartners. These includedependants pass and re-entry permits.

The Act in section 16(i) gives the Board of Directors the overallresponsibility of the Authority with the Chairman being a Presidentialappointee for a period of three years. Other members arerepresentatives of the Government in their various capacities and theManaging Director who is the Secretary to the Board.

In its governance, the Board has established four Committees as persection 4(1), of the Third Schedule of the Act, consisting of:-

1 Investments Committee2 Finance Committee3 Audit Committee

4 HumanResourceandAdministrationCommittee

The Full Board however is required to meet at least four times in everyfinancial year and not more than four months shall elapse betweenone meeting and the next meeting to discuss the overall performanceof KenInvest. All full board meetings are convened by the Secretary tothe Board upon instructions from the Chairman or upon the requisitionof at least five members of the Board. All decisions are passed by amajority of present members voting with the Chairperson havingthe decisive vote in the event of a tie. Board Members are requiredto enter into a Performance Contract every financial year with thegovernment to evaluate its Performance against set targets. Below is

the attendance matrix for the Board meetings of this financial year.

CorporaGovrac


17/40


Ivm Commi

This Committee has the overall mandate to ensure that allinvestment issues and the core function of KenInvest aremaintained at all times. This includes the policy establishmentof activities, for example the One Stop Shop to facilitate smoothentry to investors and after-care services. The Committeesimportant task is to ensure the relevance of the strategic planand sustained achievements of the set goals.

Huma Rourc ad Admiiraio Commi

This Committee has the most difficult task of ensuring thatKenInvest maintains and attracts high caliber of humanresources. The Committee handles all rationale of recruitment,organizations practices, attitudes, and staff motivation. The neworganizational structure and recruitment of the new five GeneralMangers is a step by the Committee to achieving internationalstandards for KenInvest. The Committee has worked tirelesslyfor the past two years to ensure that the organization employeeand retain only high standard and professional staff.

Fiac Commi

This Committee has the overall mandate to ensure that thebudget is justified and adhered to, and that all expenditures areaccounted for. They also have the mandate that all quarterlyreports are presented in a timely fashion to the Board prior tothe same being submitted to the Parent Ministry. All financialpolicies are discussed in this Committee.

Audi Commi

The Audit Committee has the duty to ensure that audit queriesand issues are resolved and communicated to KENAO within the

stipulated period. The resent achievement of this Committeewas the clean bill of health given to KenInvest by KENAO after apast history of bad performances.

This Act

automaticallycovers licensingin the categories

listed in Annexure2 of this report. Italso sets out therequirements/

conditionsnecessary toany proposed

investment and towhich the holderof the InvestmentCertificate would,on applications,

be legally entitled.


18/40


Board Members 2006Dates 03/01/06 18/05/06 16/06/06 20/7/06 26/10/06 09/04/07 25/10/07

Prof. H. M. Bwisa

Amb. Green Josiah

Mr. Allan Ngugi

Mrs Betty A. Khasakhala-Mwenesi

Mr. Michael Ndeda


Mr. Albert Gumo

Mrs. E.A.M. Khaoya

Mr.Mwambia Wanyambura

Mr. Stephen WainainaMr. William Karari

Mr.Wellington Lubira

Mr.Onesiphorus P. K. Nganga

Mr. E. M. Murage

Board Members 2007

Dates 25/1/07 05/03/07 31/5/07 26/7/07 08/07/07 23/08/07 24/8/07 09/04/07 25/10/07 12/11/07

Prof. H. M. Bwisa

Amb. Green Josiah

Mr. Allan Ngugi

Mrs Betty A. Khasakhala-Mwenesi

Mr. Michael Ndeda


Mr.J.B.O.Akara

Mrs. E.A.M. Khaoya

Mr.Mwambia Wanyambura

Mr. Stephen Wainaina

Mr. William Karari

Mr.Wellington Lubira

Mr.Onesiphorus P. K. Nganga

Mr.G.K.Mwangi

Mr. Lenny Kivuti

Mr.Wanjohi Ndirangu

Mr. S.M. Indimuli

Ms.Theodora K. Gichana

Ms.Juliana Yiapan

Mr.Peter Bwombuna

Mr. A.O.Gumo

Mr.Julius O.Biginga

Mr.J.K.Mathenge

Ms.Ann Mburu

Mr. Kiburia O.F

Ms. Florence Wahome

Adacschdul

of BoardMmbr2006-2007


19/40


Kenya Investment Authority was established by an Act of Parliament. Itis charged with the responsibility of promoting and facilitating inwardinvestment in Kenya by issuing Investment Certificates, assistingin obtaining licenses and work permits among other functions. Inaddition, KenInvest contributes to improving Kenyas investmentclimate by analyzing and reviewing existing investment relatedpolicies, and advocating for continuous improvement of the same.KenInvest in reinventing itself, started by identifying with an acronymthat has a punch. KenInvest seeks to identify itself as a world-classinvestment promotion agency in the following ways:-

VIsIOn

To be a world class agency in marketing Kenya as the first choiceinvestment destination

MIssIOn

To provide exceptional services to attract, facilitate and retaininvestments in Kenya

As set out in the Performance Contract for the year 2006/2007,KenInvest processed and facilitated 90 projects, with a potential capitaloutlay of KShs. 92 billion, which surpassed our target. These projects

translated to direct employment of ten thousand two hundred andsixty five (10,265) Kenyans In addition, KenInvest has facilitated closeto 10 major market entrants including Africa Clean Energy WindflowLtd, Intex Construction Ltd, Broadband Telecom (K), Ltd Five StarIndustries Ltd, Gold Lida Ltd, Kenpor Ltd, General Electric, OshoGrain Millers Ltd, and Old Mutual Life Assurance Co. to name a fewin this financial year. Table 1 tries to provide an overview analysis ofinvestments (both domestic and International) processed by KenInvestwith an insight to cash inflow.

The above table depicts a decrease in numbers of inflow of investments;something KenInvest is addressing with the inception of the new Act.

Still on investment inflows, below is Chart 1, showing the trend ofinvestment from 2002 to date 2007.

TABLE 1: Investment Inflows Processed by KenInvest

YEAR NO. OF PROJECTS TOTAL NO. CAPITAL CAPITAL TOTAL

OF PROJECTS COST COST CAPITAL FOREIGN LOCAL COST

(Kshs)

Domestic International (KShs Billion) (KShs Billion)

2006 70 26 96 80.4 9 89.4

2007 57 10 67 10.8 7.18 17.98

Source: Investors Services Department

CorporaIformaio


20/40


Tourism took the cake in this financial year as it also contributed tothe raise in Gross Domestic Product (GDP) within this financial year.Services are a common sector that contributes to growth and improvedGDP especially in the telecommunication and finance sectors.However,inrelationtoInternationalinvestments,telecommunicationcontributed more in the services sector.

It is common Knowledge that information Communication technology(ICT) plays an important role in investors confidence. As a result,

KenInvest has been in the past challenged for lack thereof in thisarea. As a result, KenInvest in this financial year has successfullynetworked the entire office to enhance efficient communication andworkflow. The network is expected to grow therefore it is scalable toaccommodate more. A new faster and efficient internet connectivitysolution using Asynchronous Digital Service Line (ADSL) technologyhas been deployed to replace the dial-up solution in place before. Thehead office is in the process of upgrading the current wireless leasedline from 128 kbps to 256 kbps to accommodate the growing demandfor more internet bandwidth. KenInvest will in the next financialyear develop an ICT policy to encourage more usage of ICT in theorganization.

Chart 1: Investment Capital 2002-2007


KenInvest as a member of World Association of Investment Promotion Agencies (WAIPA) does business with othercountries. Below is Table 2, showing the countries and number of projects undertaken sector by sector between 2006

and 2007.

TABLE 2: Major country origins and main sectors

Year Number of Major Source Countries Main SectorsInternationalprojects

2006 70 UK=22%,India=13%,China=12%, Service, Manufacturing,Germany=10%,SA=8%,USA=7%, tourism, AgricultureOthers=28%

Jan- Sept, 57 UK=20%,China=15%,Canada=12%, Service, Manufacturing,(2007) India=10%, Italy=8%,Pakistan=6%, Tourism

Others=29%


90

80

70

60

50

40

30

20

10

0

2002 2003 2004 2005 2006 2007 (Jan-June)


21/40


The organization is comprised four departments namely:-1. Corporate Affairs2. Investment Promotions3. Research and Policy4. Investor Services

Corpora Affair

This department essentially handles the functions of a Finance andAdministration and mostly the outlook of the organization and alsoensures that KenInvest operates within the legal framewor of Kenya.This department facilitates membership to institutions with similarobjectives such as the World Association of Investment PromotionAgencies WAIPA and other Investment Promotion Agencies.

Currently, the Authority is undergoing a restructuring programmewhich is expected to be complete by the end of this financial yearas the internal recruitment has been completed KenInvest now has

a Managing Director since September 2006. General Managers havebeen interviewed, but have not come on board due to shortage offunds. Meanwhile, we continue to use volunteers and temporary staffto augment the few technical staff.

Ivm Promoio (Markig)

In 2006-2007, KenInvest launched massive campaigns to attractinvestors into the country. As a result, there was a marked improvementin enquiries vide email and telephones. An average of 100 enquirieswere received monthly. An average of two incoming missions permonth to Kenya from Europe, Asia and the Middle East. A numberof African countries particularly South Africa and the East AfricanCommunities partner states, came to Kenya.

This year, KenInvest made use of the Kenyan Embassies andConsulates abroad as key avenues for investment promotion. Notablecorrespondences came in from Egypt, China, Germany, South Africaand the UK. In return, KenInvest used these missions as selling pointsfor the country. Materials sent to each embassy included the Kenyaand EAC Investment Guides.

KenInvest staff forged a working relationship with the foreign missionsaccredited to Kenya principally that of South Africa, Germany, Franceand the UN and in particular UNDP which provided promotional/

financial support. The Chinese Embassy has over the last two years

Compoiioof Kya

IvmAuhoriy


22/40


also offered training familiarisation tours for over half of the seniorstaff of the Authority.

Rarch ad Policy

The department played a big role in drafting the Investment Act 2004that enabled the operationalisation of KenInvest which has greatlyimproved the investment climate in Kenya as evidenced by the numberof enquiries and project proposals to KenInvest. The departmentthrough the office of the Attorney General drafted the InvestmentRegulations which were enacted under the Investment Promotion(Investment Registration and Certificates) Regulations, 2005 on 13th

January, 2006 through Kenya Gazette Supplement No.1, Legal NoticeNo.1 of 2005.

As a Member of Growing Sustainable Business (GSB) under UNDP,KenInvest was involved in facilitating business-led enterprise solutionsto poverty in advancement of the Millennium Development Goals(MDG). These enterprise solutions accelerate and sustain access by thepoor to needed goods and services; and/or employment and livelihoodsopportunities. In this year, the organization has participated in groundbreaking research and publications. KenInvest worked with theUNCTAD to organize and prepare the Investment Policy Review (IPR)for Kenya that resulted in its publication. When it comes to Minerals

Potential towards Wealth Creation and Employment, KenInvest wasamong the leading facilitator institutions in the preparation of thefirst ever mining conference and the report in this area. KenInvesthas also participated in preparation of the Investment Promotion andProtection Agreements (IPPA), and Avoidance of Double TaxationAgreements (DTA)together with other relevant ministries includingthe following:-

1. France (DTA/IPPA) (Jan. 2006) signed & awaiting ratification2. Finland (DTA/IPPA) (Mar. 2006) signed & awaiting

ratification3. Switzerland (IPPA) (Mar. 2006) - ratified & signed in 20064. Thailand (DTA) (Dec.2006) signed & awaiting ratification5. India (DTA) (June 2006) renegotiation discussions6. South Africa (DTA) (October 2007) 2nd round negotiations

The institution is in the process of establishing a One-Stop- Shop(OSS), where all permits/ licences, payments and requirements tofacilitate smooth market entry in Kenya is done under one roof.

When it comes to Regional integration, this year the department hasbeen representing the organization in the Common Markets of EastAfrica (COMESA) and has been chairing the National Technical WorkingGroup for the implementation of COMESA COMMON INVESTMENTAREA AGREEMENT (CCIA). Not only did the organization represent

During the financial year2005/2006, KenInvest licensed

99 (ninety nine) projects with anestimated planned investmentof KShs. 16.9 billion, and with

potential employment of 11,972people. In 2006/2007, 111 projectswere processed with an estimatedcapital of KShs. 82.9 billion, andpotential employment of 13,175

people.

13,175people


23/40


the institution on matters on East Africa Community by assisting indrafting various documents, for example: The East African Investorsguide, the East African Model Investment Code, but also it participatedin the development of Lake Victoria Basin Initiative (Investment anddevelopment potentials in the Lake Victoria Basin Commission).

Ivor srvic

The institution through this department has played a big role incontributing to the economic growth rate which is now at 6.3 percent. This was through the institutions key role in attracting domesticand international investors. During the financial year 2005/2006,KenInvest licensed 99 (ninety nine) projects with an estimated plannedinvestment of KShs. 16.9 billion, and with potential employment of11,972 people. In 2006/2007, 111 projects were processed with anestimated capital of KShs. 82.9 billion, and potential employment of13,175 people. Below is Table 3 showing an analysis and comparisonof these years.

The objective of aftercare services is a core function of this department;to enhance retention and expansion of investments in Kenya. KenInvestvisited the actual project sites to verify the information contained inproject files, collected actual information on performance of projects,and collected information on investor concerns and to adviceinvestors on other opportunities for re-investment such as expansionand diversification. A total of 87 projects were visited in this financial

year. Over 260 applications were forwarded by the department to theImmigration Department for approval.

Apart from the JKIA Liaison Office, we have a regional office in Eldoretthat covers the Western, Nyanza and the North Rift area.

TABLE 3: Comparison of Projects Details (Number of Projects, Capital Costs,Employment Levels)

FINANCIAL NUMBER OF TOTAL CAPITAL COST TOTAL CAPITAL EMPLOYMENT YEAR PROJECTS NUMBER (IN BILLIONS) COSTS CREATED

OF PROJECTS (IN BILLIONS)

LOCAL FOREIGN LOCAL FOREIGN LOCAL FOREIGN

2005/2006 41 58 99 7.3 9.6 16.9 11,621 351 11,972

2006/2007 31 80 111 15.6 67.3 82.9 10,520 2,655 13,175

TOTALS 72 138 210 22.9 76.9 99.8 22,141 3,006 25,147


24/40


Investors are encouraged to utilise availableopportunities in the construction sector

Ivmopporuii

Corucio


25/40


The Public Audit Act 2003 requires the Board to preparefinancial statement for each financial year, which includes abalance sheet showing in details the assets and liabilities ofthe Authority, a statement of income and expenditure, andsuch other statements that the Board may deem necessary.The State Corporation Act (Cap 446) requires the Board to

ensure that proper books are kept recording all the property,undertakings, funds, activities, contracts, transactions andother business of the Board. The Board is also responsible forsafeguarding the assets of the Authority.

The Board members accept the responsibility for the annualfinancial statements, which have been prepared usingappropriate accounting policies supported by reasonableand prudent judgments and estimates, in conformity withgenerally accepted accounting practice and in the mannerrequired by the State Corporations Act. The Board membersare of the opinion that the financial statements give a true

and fair view of the state of financial affairs of the Authorityand of its operating results, the Board members furtheraccepts responsibility for the maintenance of accounting

samof Board

MmbrRpoibiliy

The Public AuditAct 2003 requires

the Board to preparefinancial statementfor each financial

year, which includes abalance sheet showing

in details the assetsand liabilities of the

Authority, a statementof income and

expenditure, and suchother statements thatthe Board may deem

necessary.


26/40


Audior Rpor ad Fiacial sam

Report of the Controller and Auditor General on the Financial Statements ofKenya Investment Authority for the Year ended 30th June 2007.

I have audited the financial statements of Kenya Investment Authority for the year ended 30th June, 2007set out on pages 4 to 10 which comprise the balance sheet as at 30th June, 2007, the income statement,statement of changes in equity and cash flow statement for the year then ended, and a summary ofsignificant accounting policies and other explanatory notes in accordance with the provisions of Section 14of the Public Audit Act, 2003. I have obtained all the information and explanation which, to the best of myknowledge and belief, were necessary for the purpose of the audit.

th Board Rpoibiliy for h Fiacial sam

The Board is responsible for the preparation of financial statements which give a true and fair view of theAuthoritys state of affairs and its operating results in accordance with International Financial ReportingStandards. This responsibility includes: Designing, implementing and maintaining internal controls relevantto the preparation and fair presentation of financial statements that are free from material misstatement,whether due to fraud or error; selecting and applying appropriate accounting policies; and makingaccounting estimates that are reasonable in the circumstances.

Rpoibiliy of h Corollr ad Audior Gral

My responsibility is to express an independent opinion on the financial statements based on the audit. The

audit was conducted in accordance with the International Standards on Auditing. Those standards requirecompliance with ethical requirements and that the audit be planned and performed with a view to obtainingreasonable assurance that the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in thefinancial statements. The procedures selected depend on the auditors judgments, whether due to fraudor error. In making those risk assessments, the auditor considers internal controls relevant to the entityspreparation and fair presentation of the financial statements in order to design audit procedures that areappropriate in the circumstances, but not for the purpose of expressing an opinion on the effectivenessof the Authoritys internal controls. An audit also includes evaluating the appropriateness of accountingpolicies used and the reasonableness of accounting estimates made by the Board, as well as evaluatingthe overall presentation of the financial statements. I believe the audit provides a reasonable basis for my

opinion.

Opiio

In my opinion, proper books of account have been kept and the accompanying financial statements give atrue and fair view of the state of the financial affairs of the Authority as at 30th June, 2007 and of its surplusand cash flows for the year then ended in accordance with the International Financial Reporting Standardsand comply with the Investment Promotion Act, 2004.

sigd by P.n.KOMORA, CBsCOntROLLeR AnD AUDItOR GeneRALo h 31 March, 2008 a nairobi


27/40


no 2006/2007 2005/2006

InCOMe KsHs KsHs

GOK GRANTS 1 93,062,198 86,500,000

COMMISSIONS 2 23,464 21,258

MISCELLANEOUS RECEIPTS 508,000 228,000

tOtAL InCOMe 93,593,662 86,749,258

ReCURRent eXPenDItURe

HOSPITALITYSUPPLIES&SERVICES 3 1,204,267 917,944

BOARD EXPENSES 4 4,721,690 5,136,934

STAFF SALARIES, BENEFITS & TRAINING 5 58,971,977 55,098,356

OFFICE & GENERAL EXPENSES 6 1,228,640 1,619,856

COMMUNICATION SUPPLIES & SERVICES 7 4,200,915 5,215,441

PRINTING ADVERTISING & INFORMATION 8 1,267,400 954,798

TRANSPORT & TRAVEL EXPENSES 9 6,113,783 9,810,494

RENTAL OF PRODUCED ASSETS 10 3,626,131 3,737,790

INSURANCE COSTS 11 71,770 197,239

OTHEROPERATINGEXPENSES 12 1,321,523 1,290,982

ROUTINE MAINTAINANCE OF ASSETS 13 475,188 498,074

DEVELOPMENT EXPENSES 14 2,119,608 -

DEPRECIATIONCHARGES 15 1,984,717 1,227,589ACCRUED PENSION INTEREST 16 4,728,814 -

tOtAL eXPenDItURe 92,136,422 85,705,497

sURPLUs/(DeFICIt) FOR tHe YeAR 1,457,240 1,043,761

Icom & expdiur sam for h priod dig 30h Ju 2007


28/40


no 2006/2007 2005/2006

KsHs KsHs

nOn CURRent Assets

ReCeIVABLes & PRePAYMents

Sundry Debtors and Prepayments 17 1,318,005 1,390,082

Deposits 18 40,000 25,000

Bank Balances 19 9,016,762 23,782

Cash at hand 20 5,849 58,230

10,390,616 1,497,094

net tOtAL Assets 19,200,402 12,264,335

GeneRAL FUnD 23

SURPLUS/(DEFICIT)FORTHEYEAR 1,457,240 1,043,761

BALANCE B/F 1,835,474 791,713

3,292,714 1,835,474

PAYABLes & ACCRUALs

Bank overdraft 21 - (261,350)

Accruals 22 15,907,688 690,212

15,907688 10,428,862

tOtAL FUnDs & LIABILItIes 19,200,402 12,264,335

Balac h for h priod dig 30h Ju 2007


29/40


Axur

1) InVestMent PROMOtIOn ACtIVItIes

(a) Missions

1. Participated in the Mission to France - Kenya Days in Paris- Building Bridges in Tourism, Tradeand Investments between Kenya and France, 18th - 20th October 2006.

2. Attended Climate Change Conference organized by United Nation bodies in conjunction with theMinistry of Environment and Natural Resources in Nairobi

3. Kenyas Trade Mission to Egypt. The objective of the mission was to explore mechanisms for

enhancing bilateral trade between the two countries and enhancing cooperation and networkingbetween respective business organizations/associations, the national standards bodies and theexport administration authorities. 11th -15th February, 2007

4. United Nations Centre for Regional Development (UNCRD) mission in Ethiopia

5. There has been facilitation of delegations from various countries which include : China, JapanTaiwan, U.S.A, Italy, Lybia, Germany, Europe, U.K, Malaysia, Iran and Australia,

6. UNIDO ITPO Exchange program in Tokyo was attended by one of staff and has resulted in 6

delegations coming to Kenya.

(b) Workshops

1. All stakeholders seminar in Vihiga District . The seminar was bring together various stakeholdersin the district to deliberate on issues affecting investment facilitation, opportunities and sourcesof investment capital

2. Local Authority seminar for Kimilili Municipal Council. The seminar was on Policy Advocacy:Local Authorities to create an enabling business environment - July, 2006.

3. Bishop Eddy Longs Investment Workshop. The one day workshop was to encourage Americansto partner with Kenyan counterparts and to invest in the country. 31st July, 2006.

4. Institute of Public Analysis and Research (IPAR) /Foundation for Advanced Studies on InternationalDevelopment (FASID) Workshop in Nairobi. August, 2006

5. Workshop on the launch of Lenovo ICT products and business presentation at the Grand RegencyHotel

6. Regional Workshop on World Trade Organisation issues. August, 2006.

7. The African Business Process Outsourcing and call centre conference. The theme of theconference was Business Process Outsourcing Employment creating for the new millenniumatPanariHotel,Nairobi.

8. ProInvest-WAIPAWorkshoponHowcanIPAsinACPworktogethertopoolresources,efforts

and present a stronger regional Business case to an investor? , 25-26 September 2006, Yaounde,Cameroon. Participants were trained on how to apply the technique of location benchmarking


30/40


to understand the competitive position of each sub-region identified, and how the region can bemarketed more powerfully to inward investors)

9. Stakeholders Workshop on Review of Immigration Laws at Nakuru Waterbuck Hotel. Thefunctions of the Department of Immigration are governed by the Kenyan Constitution, KenyaCitizens Act, Cap 170; Immigration Act, Cap 172; Aliens Restriction Act, Cap 173. The departmentis also guided by the Visa Regulations and other relevant international conventions that Kenyais a signatory to. The Immigration department has come up with a draft bill Kenya Immigrationand Nationality Service Bill 2006 which has consolidated all the operational laws. KenInvestwas identified as a stakeholder and participated in the workshop to review the immigrationsoperational laws on 29th October 4th November, 2006

10. The LVEMP II (Lake Victoria Environmental Management Programme preparation Workshop Kisumu on 23rd November, 2006.

11. WAIPA Regional Investment Conference 17th 18th November, 2006. The conference wasorganized with the COMESA Regional Investment Agency in collaboration of the Arab Republicof Egypt. The theme of Conference theme was IPA Capacity Building & Investment PromotionStrategy in Africa and the Middle East in Cairo Egypt

12. AdHocMeetingonInvestmentPoliciesorganizedbyUNCTADinGeneva23-24November,2006.The meeting was aimed at discussing issues of policy advocacy through investment promotionagencies to influence policy change

13. Seminar on the implication of the expected COMESA Customs Union to exporters in Kenya and

howitwillrelatewithEACon29thNovember,2006attheGrandRegencyHotel.

14. Workshop on Licensing in Local Authorities. The objective was to develop procedure to be used inintroducing licenses in local authority and to reduce the number of licenses the local authoritiesare levying. - 8th December2006.

15. Stakeholders Workshop on Complaint handling and Electrical Installation work rules at the KenyaSchool of Monetary Studies 14th December, 2006.

16. HorticultureexportstrategyseminarheldatSirikwaHotelinEldoret.Theobjectiveoftheseminarwas to build capacity /institutional support to stakeholders, promote national compliance/awareness to World Trade Organisation (WTO) issues and also to identify critical interventionareas. 30th November 1st December, 2006

17. Business Seminar on Investor Tracking. The objective was to build capacity for Small ScaleEnterprise (SMEs) and assess growth of new investments as a follow up on policy advocacy/sensitization campaigns by Kenya Investment Authority - Kisii-Nyamira (South Rift Region). 14th-15th Dec,2006

18. Oikocredit 12th Anniversary celebrations. Oikocredit is worldwide cooperative society thatpromotes global justice by challenging people, churches and others to share their resourcesthrough socially responsible investments and by empowering disadvantaged people with credit.19th December, 2006.

19. Workshop on Development cluster dedicated session and the 10th Regional Negotiation Forum

for Economic Partnership Agreements Bujumbura, Burundi form 18th -24th February, 2007.


31/40


20. Fresh Produce Exporters Association (FPEAK) Organised horticultural exhibition on 9th -10thMarch, 2007 at the Mwea Rice Mills Go downs, Wanguru.

21. Kenya Business Meeting Midrand Johannesburg. The purpose of the event was to promote trade,tourism and investment opportunities available in Kenya. Organised by the Steadman SouthAfrica and Turning Point Networks. 27th March, 2007.

22. Kenyans in the Diaspora conference in London, UK. December 2006 and United States of AmericaandCanada,22nd-30thMarch2007,KenyandelegationledbytheMinisterofFinance,HonorableAmos Kimunya.

23. UNIDO/ African Union Expert Group Meeting from 11th 14th March, 2007 in Addis Ababa,Ethiopia. The meeting was on building an information platform for Investment in Africa in AfricanProductive Capacity. Round table discussions on information and capacity building requirementsto assist African governments in attracting new foreign direct investment (FDI) inflows andexpand their beneficial impact on local economies. The meeting was jointly organized by UNIDOand the African Union. East African Investment Conference 11th April, 2007. The ManagingDirector represented all EAC and IPAS.

24. East African Investment Conference 11th April, 2007. The Managing Director represented allEAC and IPAS.

25. Nyeri Investment Forum on 15th May, 2007. The theme of the forum was Wealth CreationTowards Vision 2030. The seminar was organised in liaison with the Provincial Commissionersoffice.

26. Rumuruti Investment Forum ( Laikipia West District) on 17th May, 2007. The slogan of theforum was Kenyas Livestock Capital and the theme Value addition in livestock and medicinalplants 2030. The forum was organised in liaison with the Ujuzi and Biashara Community BasedOrganisation.

27. Naro Moru, Nyeri and South district Investment Opportunities Forum 19th May, 2007. Thetheme of the seminar was Where Nature Blends with Entrepreneurial Talent. The seminar wasorganised in liaison with the Provincial Commissioners Office in Nyeri environs.

28. Laikipia East Investment Forum 21 May, 2007. The theme of the seminar was Gem of Conservancy& Investment. The seminar was organised in liaison with the Provincial Commissioners Office inNyeri environs.

29. Investment Promotion and Senzitisation Workshop for Taita Taveta District on 25th May, 2007 inVoi at the Coast Institute of Technology.

30. Workshop for the in-coming Trade, Investment and Tourism Mission from Dallas, Texas halfday workshop. The theme of the workshop was Building Business to Business Linkages betweenKenya and U.S.A. 30th July, 2007.

31. Investing in Renewable Energies in East Africa. 6-7 September, 2007 KfW Bank/Main, Germany.This regional conference was co-organised by the East Africa Business Council, Pro-Investand Africa-Verein. KenInvest coordinated and also participated in the conference. Frankfurt,Germany.


32/40


32. Attended COMESA UNCTAD FDI/TNC Statistical Workshop. The Workshop brought together30 participants from national agencies involved in compilation of statistics and analysis of FDIstatistics and activities of TNCs in COMESA region. - Zambia on 5th 7th September, 2007.

c) Training

Members of staff have benefited in various trainings both locally and internationally.

These include:1. Workshop Training on Multilateral Trade Negotiations, Nairobi 10th -14th July, 2006

2. Capacity Building Program on Intellectual Property Rights in practice: How to protect andenforce intellectual property rights organised by IDLO in conjunction with Ministry of Justiceand Constitutional Affairs in Naivasha 2nd 6th October, 2006.

3. World Trade Conformity Assessment and Quality Infrastructure Development. The programmewas sponsored by SIDA and was divided into three phases. The first phase took place in Sweden.The second phase was via e-learning and the third phase was finalized and completed in Chinain November, 2006.

4. Economic Management Training Course in China. The focus of the seminar was to develop anunderstanding of the Chinas economic reforms and interaction with the rest of the world in

November, 2006.

5. Intellectual Property Rules and Protection for Developing Countries Course Beijing ChinaNovember, 2006.

6. Distance Learning Seminar on Procurement Contracting & Regulating Public InfrastructureDevelopment Projects organized by Organised by IDLO. The objective of the seminar was toenhance capacity of legal officers, procurement officers to implement speedy, transparent andfair acquisition of goods and services through competitive means, and to recommend actions onhow to strengthen public procurement system.

7. Training of Link Persons on Management of Wealth Declaration Forms -26th to 29th November,2006 in Embu

8. Sensitization Training Workshop for Procurement Officers on the Public Procurement andDisposalAct, 2005 and the Public Procurement Regulations, 2006 on 13th -14 February, 2007. Theworkshop was to help the officers understand the standard Procurement documents.

9. Sixth Commonwealth India Small Business Competitiveness Development Programme India,Kochi, 25 30 March, 2007. The training was to help understand the constraints faced by smalland medium enterprises and suggest way of intervening in their growth and development for thecountrys economic development

10. Pro invest Trinnex Workshop - The PROINVEST programme, in collaboration with the UgandaInvestment Authority, the World Association of Investment Promotion Agencies (WAIPA) andUNCTAD, organised the East Africa EU Economic Partnership Agreements. The purpose of theworkshop was assist Investment Promotion Agencies in unlocking the investment potential in


33/40


tourism. 25 -26 June 2007 in Kampala, Uganda.11. PROFIT 2007 Investment Conference on Tourism, 27 29 June 2007 At Speke Resort, Kampala

Uganda . The purpose of the meeting was to facilitate business contacts and to stimulateinvestment and cooperation agreements in the East Africa and Indian Ocean Region by bringingtogether African, European and Third countries players and decision makers active in thissector.

12. Intellectual Property Impact Program as a result of a successful in country training in Kenyain October, 2006. Also Training of Trainers. Conducted by IDLO in Rome, Italy June 9- July 4,2007

13. Training on Intellectual Property Rights organized by the Republic of China in Beijing, China.

16th June 15th July, 2007


34/40


Investors are encouraged to invest ininfrastructure projects in Kenya

Ivmopporuii

Ifrarucur


35/40


2. All h Licc ha h Ivm Crifica Covr

seRIAL DesCRIPtIOn CAPnO.

1 Registration under the Industrial Registration Act 118

2 Licence including conditional licence under the Trade Licensing Act 497

3 Import/Export Licence under the Imports, Exports Essential Supplies Act 502

4 Registration of premises as a Factory under the Factory Act 514

5 Approval of Plans under section 69G of the Factories Act 514

6 All Licences under the Local Government Act including any by-lawsmade under the Act 265

7 Authority or consent under the Local Government Act, including under

anyby-lawsmadeunderthatact,orunderthepublicHealthact,to

undertake construction of works or premises 242

8 Development permission under section 33 of the Physical Planning Act,

1996 and certificate of Compliance required in section 30(7) of that Act N0.6 of 1996

9 Registration(Conditional) under the Industrial Training 237

10 Private carriers license under the Transport Licensing Act 404

11 Permit to use a standardization mark under the Standards Act 49612 Permit required under section 25 of the Water Act 2002 No. 8 of

2002

13 Licence for a steam vessel under the Lakes and Rivers Act 409

14 Environmental impact licence under the Environmental Management No. 8 of

and Co-ordination act, 1999 1999

15 HotellicenceundertheHotelsandRestaurantsAct(Conditional) 494

16 HotelManagerslicenceundertheHotelsandRestaurantActforthe

person specified in the investment certificate 494

17 General retail liquor licence and hotel liquor licence under the Liquor

licensing Act 121

18 RestaurantlicenceundertheHotelsandRestaurantsAct(Condition) 494

19 RestaurantmanagerslicenceundertheHotelsandRestaurantAct

for the person specified in the investment certificate 494

20 Restaurant liquor licence under the Liquor licensing Act 121

21 Licence under Food, Drug and Chemical Substances Act to use premises

to sell, prepare, store or display for sale, any food 254

22 Registration under section 22(6) of the Agriculture Act 318


36/40


23 Licence to grow pyrethrum under the Pyrethrum Act 340

24 Registration as a grower under the sisal Act (Conditional) 341

25 Licence for a factory under the Sisal Act 341

26 Millers licence under the National Cereals and Produce Board Act 338

27 Manufacturing licence under the Tea Act 343

28 Licence to operate a sugar mill or a jaggery mill under the Sugar No.10 of

Act, 2001 2001

29 Licence to buy, sell, mill, warehouse, export or otherwise deal in or No. 9 of

transact business in coffee under the Coffee Act, 2001 2001

30 Movement permit under the Coffee Act, 2001 No. 9 of2001

31 Registration under Part V of the Dairy Industry Act (Condition) 336

32 Dairy manager licence under the Dairy Industrial Act for persons

specified in the investment certificate 336

33 Retail Licence under the Dairy Industry Act 336

34 RegistrationofpremisesasadairyunderthePublicHealth

(MilkandDairies)RulesunderthePublicHealthAct(Condition) 242

35 LicenseasapurveyorofmilkunderthePublicHealth(Milkand

Dairies)RulesunderthePublicHealthAct. 24236 BuyerslicenceundertheHide,SkinandLeatherTradeAct 359

37 ExporterslicenceorimporterslicenceundertheHide,Skinand

Leather Trade Act 359

38 RegistrationcertificateforpremisesundertheHide,SkinandLeather

Trade Act 359

39 Bacon factory licence under the Pig Industry Act

40 Licence to slaughter pigs under the Pig Industry Act

41 Licence to Keep pigs under the Animal Diseases (Control of Pigs

Diseases) Rules under the Animal Diseases Act 36442 Licence to operate a slaughter under the Meat Control

(Local Slaughterhouses) Regulations under the Meat Control Act 356

43 Licence under section 8(10)(a) of the Kenya Meat Commission Act 363

44 Licence to slaughter pigs under the Pig Industry Act 361

45 Licence to keep pigs under the Animal Diseases (Control of Pigs

Diseases) Rules under the Animal Diseases Act 364

46 Licence for a sterilizing plant under the Fertilizers and Animal

Foodstuffs Act 345

47 Licence under section 8(1)(b) of the Kenya Meat Commission Act 363


37/40


48 Stock traders licence under the Stock Traders Licensing Act 498

50 Certificate of registration of a vessel under the Fisheries Act 378

51 Licence to catch fish under the Fisheries Act 378

52 Licence for a foreign fishing vessel under the Fisheries Act 378

53 Manufacturing licence under the Pharmacy and Poisons Act 244

54 Registration of premises under the Pharmacy and Poisons Act 244

55 Licence for premises under the Pest Control Products Act 346

56 Licence to deal in motor vehicle components or accessories

under the Motor Vehicle Components and Accessories Act 520

57 Licence to carry on business of buying or selling second-hand motorvehiclesundertheSecond-HandMotorVehiclesAct 484

58 Licence under the Scrap Metal Act 503

59 Public carriers licence under the Transport Licensing Act(Condition) 404

60 Prospecting right under the Mining Act 306

61 Exclusive prospecting licence under the Mining Act for specific lands 306

62 Lease under the Mining Act for specified lands 306

63 Consent under section 10 of the Wildlife (Conservation and

Management) act for specified lands in a National Park 376

64 Licence to Trade in unwrought precious metals under the trading inunwrought Precious Metals Act 309

65 Diamond dealers licence under the Diamond Industry Protection Act 310

66 Cinema licence under the Films and Stage Plays Act 222

67 Filming licence under the Films and Stage Plays Act 222

68 Authorization to make a film in a National Park under the Wildlife

(Conservation and Management) Act 376

69 Licencetocarryonahire-purchasebusinessundertheHire-PurchaseAct507

70 Licence under the Auctioneers Acts, 1996 5 of 19996


38/40


The agricultural industry has great growthpotential through use of technology and farmingtechniques that can make Kenya self sufficient infood production

Ivmopporuii

Agriculur


39/40

Had OfficKya Railway Hadquarr, Block D, 3rd Floor, Off Hail salai

Avu, Workhop Rd.,P.O. Box 55704-00200,

nairobi, Kyatlpho: +254 20 222 1401-4

Mobil: +254 722 205 424, 722 209 902, 0733 601 184Fax: +254 20 224 3862

email: [email protected]: www.ivmkya.com

Rpraiv Offic: Jomo Kyaa Iraioal Airpor (JKIA),eldor, Kiumu ad Mombaa, Moi Iraioal Airpor.


40/40

KIA ANNUAL REPORT corrected

Documents