9 catalysts for entering the Kenyan Market: An Investment & Business Guide
By ASV Client Relations
Kenya’s economy has remained resilient amid the COVID-19 pandemic. The country adopts a market-based economy that represents the largest and most advanced economy in East and Central Africa. Current estimates indicate that GDP growth is projected to peak at 5.2% – in 2021.
Kenya is recognised as a key logistical conduit into the East African Community’s (EAC) regional market, consisting: of Tanzania, Uganda, Rwanda, Burundi and South Sudan. In this view, the following are 9 catalysts for entering the Kenyan Market, targeted at investors and businesses, which shed more light as to why Kenya is one of the most favourable destinations for Foreign Direct Investment (FDI) – within the East and Central African region, respectively.
1. Tax Treaties and Investment Promotion and Protection Agreements
Kenya is a signatory to a large and growing number of tax treaties and investment promotion and protection agreements such as the Multilateral Trade System (MTS), ACP-EU Cotonou Partnership Agreement, and the African Growth and Opportunities Act (AGOA). This allows for exports from Kenya to enjoy preferential access to world markets, under a number of key special access and duty reduction programmes.
Since independence, Kenya has maintained remarkable stability, despite changes in its political system. Since the re-emergence of multiparty democracy and promulgation of a new constitution in 2011, the country has continued to attract substantial amounts of FDI.
3. Regulatory Reforms
Kenya is making efforts to lower the cost of doing business by continuously conducting extensive robust business regulatory reforms – intended to substantially reduce the number of licensing requirements. These vital interventions have contributed to licensing regimes being made more simple and transparent.
4. Access to a Large pool of Highly Educated and Skilled Work Force
Kenya prides itself on its large pool of highly educated, skilled and sought after workforce in Africa – trained from within the country, and from reputable internationally renowned institutions around the world.
5. Strategic Location
As the leading economy in East Africa, Kenya’s strategic location and its well-developed business infrastructure makes it a natural choice for investors and many international businesses to have made it their regional hub. This grants investors’ access to the larger East African Community (EAC) and regional markets – with access to over 450 million consumers. The country’s capital, Nairobi, is also a major transport hub in East Africa, with connections from Jomo Kenyatta International Airport – to major destinations around the world. All these are coupled with a convenient Time zone of (GMT +3).
6. Highly Developed Social and Physical Infrastructure
Kenya accords a pleasant and quality standard of living, with its spectacular and diverse natural resources. These impressive qualities range from its abundant wildlife and a mixture of scenic environments – that includes the world-famous Maasai Mara Game Reserve. The country also boasts of high-quality social amenities such as restaurants, hospitals and entertainment spots. Hence, these impressive qualities further justify the reason as to why the country attracts a high number of expatriates.
7. Fully Liberalised Economy
Kenya fully liberalised its economy by eliminating all obstacles that previously hampered the free flow of trade and investment. These include exchange controls, import and export licensing, as well as restrictions on remittances of profits and dividends.
8. Preferential Market Access
Kenya is a signatory to a number of multilateral and bilateral trade agreements as part of its trade and investment policy. It is a member of the World Trade Organisation (WTO), which provides the country’s products accessible to more than 90% of world markets – at Most Favoured Nation (MFN) treatment. Furthermore, the country holds noteworthy memberships to key trade and investment arrangements, and beneficiary to trade-enhancing schemes that include – the African Growth and Opportunity Act (AGOA), ACP-EU Trade Agreement and Common Market of Eastern and Southern Africa (COMESA).
9. Well Established and Influential Private Sector
Kenya endows a robust private sector, which has been considered to be one of the most resilient in the world. This key occurrence is further highlighted by the increased number of high-profile foreign investors entering the country. Kenya has always been a market-based economy. Key players in advocating for private-sector concerns include – The Kenya Private Sector Alliance (KEPSA), Federation of Kenya Employers (FKE), The Kenya Association of Manufacturers (KAM) and the Kenya National Chamber of Commerce and Industry (KNCCI). Of essence, the government frequently conducts regular policy dialogues with private-sector players – through various impactful stakeholder Round Table Forums.
Riding on progressive macroeconomic policies despite the COVID-19 pandemic, and bolstered with heightened economic growth and increased FDI – Kenya presents one of the most favourable business and investment marketplaces in East and Central Africa.
Source(s): ASV Client Relations, Kenya Investment Authority (KenInvest), The World Bank & African Development Bank.