GURACHA A. BIDU

HEAD, INVESTOR SERVICES

Kenya investment climate

Invest in Kenya

Kenya Investment Authority (KenInvest)

A Republic of Kenya State Agency under the Ministry of Industry, Trade & Cooperatives established under the Investment Promotion Act No. 6 of 2004, with the mandate of promoting & facilitating investment in Kenya

Key Functions

Invest in Kenya

Kenya is the fifth largest economy in Sub-Saharan Africa. It is the dominant economy in the East African Community (EAC), contributing more than 50% of the region’s GDP.

Overview of the Republic of Kenya

Invest in Kenya

5.4%

5.7% 5.8%

4.7% 5.1%

3.4%

1.4%

2.6%

3.6%

3.4% 3.2%

3.6%

2014 2015 2016 2017e

Kenya Sub-Saharan Africa World

For nine-months ended 30 September 2017

Agriculture; 31.5%

Mining and Quarrying; 0.8%

Manufacturing ; 8.4%

Construction; 5.8%

Electricity and Water Supply; 2.5%

Wholesale, Retail, Accommodation &

Restaurant; 8.4%

Finance, Insurance, Professional, Admin & Support and FISIM; 7.5%

Information, Communication; 1.4%

Real Estate; 7.4%

Taxes on products; 8.4%

Transport and Storage; 7.7%

Public Administration, Education, Health and Other Services; 10.0%

Primary Sector

Secondary Sector

Tertiary Sector

2017

Real GDP Growth (Year-on-Year, %) ¹

Kenya has Experienced Sustained & Resilient Economic Growth

Note: (1) Estimates. The real GDP growth data compares data from KNBS for Kenya and IMF World Economic Outlook (WEO) October 2017 data for Sub-Saharan Africa (SSA) and World.

Source: KNBS

A Well Diversified Economy Underpins Kenya’s Resilient Growth

Kenya GDP growth averaged

5.5% per year (2013 - 2017)

versus 4.5% per year (2008 -

2012) and 5.2% (2003 -2007).

The strong growth reflects

strong macroeconomic &

structural reforms

implemented during the last 5

years.

0.5 2.9

4.6 5.7 5.9

6.9

0.2 3.3

8.4

6.1 4.6

5.9 5.4 5.7 5.8 4.8

0.01.02.03.04.05.06.07.08.09.0

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17 E

st.

(%) 2002-2007 2008-2012 2013-2017

Real GDP Growth Rates (2002-2017)

Source: 2018 Budget Policy Statement. (19 January 2018)

Growth Remains Robust, Over the Last 5 Years, Supported by Strong Public & Private Sector Investment

Invest in Kenya

Over the next 4 years, The GoK aims to focus on the “Big Four” to further strengthen the economy, progress industrialization & create jobs, thereby contributing towards the realization of the country’s Vision 2030. The Big Four Agenda builds on achievements realized under the Economic Transformation Agenda implemented over the last 4.5 years.

Transforming

the nation

Transforming

lives

Transforming

societies 15% of GDP from the

MANUFACTURING SECTOR

100% FOOD AND NUTRITION

Security

500,000 AFFORDABLE NEW

HOUSES for Kenyan

families

100% UNIVERSAL HEALTH

COVERAGE (UHC)

Youth in jobs

through

vocational

training and

education

Targeted

Infrastructure

Investments

Competitive

cost of power

Governance Security Technology

innovation

Source: National Treasury, GoK, 2018 Budget Policy Statement. (19 January 2018)

The Big Four Plan: Policy priorities going forward for Public investments to unlock growth constraints

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Objective: Raise the share of the sector to GDP from the current 8.3% to 15% by 2022 by adding $2 - $3 billion to the economy.

SUB-SECTOR OBJECTIVE

Textile/Apparel/Cotton

Increase investment from $350m to $2bn

Create 500,000 cotton jobs; and 100,000 new

apparel jobs

Leather

Increase exports from $140m to $500m

Create 50,000 New jobs

Manufacture 20m pairs of shoes

Agro Processing

Increase amount of processed agricultural exports

from 16% to 50% growth.

Create 1000 SME’s

Create 200,000 jobs

Fish Processing Attract and facilitate $ 20m fish feed Mill

investment

Create 20,000 jobs

Construction Materials

Upscale investment from $ 470m to $1bn

Create 10,000 New jobs

Oil Mining and Gas Attract 1 global scale player in Mining value add

Iron and Steel $1bn in new investment

ICT

Manufacture of Phone, laptop, TV assembly plants

Attract 5 BPO players

Create 10,000 jobs

Investment opportunities

1. Textile & Apparel production: 90% of the fabric used in Kenya’s Apparel sector is imported. There is therefore a great opportunity for import substitution through local production.

2. Leather processing: Processing of finished leather and leather goods; substituting approximately USD 86 million in shoe imports yearly.

3. Manufacture of Construction materials and equipment for use in the ongoing development of airports, malls, hotels, railways (SGR) and pipelines

4. Agro-processing opportunities along the agricultural value chains; sugar

processing, mango processing, beef processing, fish processing.

5. Auto components manufacture (CKD, SKD): Finance Act, 2017: Corporate tax has been reduced to 15% to local assemblers for the first 5 years from the year they commence operations with an extended five 5 if the company achieves a local content equivalent to 50% of the ex-factory value of the motor vehicles.

More information on: https://eopportunities.org/

Manufacturing

Invest in Kenya

Objective: To develop innovative affordable housing (about 1 million houses) and increase Real estate & construction sector GDP contribution from 7% to 14% by 2022.

22% of Kenyans live in cities and the urban population is growing at the rate of 4.2% every year; nearly 56% of these urban households live in slums.

Kenya has a deficit of 250,000 housing units annually. The low cost housing agenda seeks to plug in on the acute shortage of habitable housing units nationally through;

Cutting the cost of construction through the use of innovative technologies

Reducing the cost of mortgages;

Raising low-cost funds from private and public sector for investment in large-scale housing construction.

Investment Opportunities

1. Development of affordable housing to cater for the needs of low income Kenyans

2. Setting up factories for Industrial Building Systems (IBS) for timely delivery of construction inputs

3. Engage in joint ventures with county governments towards delivery of affordable housing

Incentive: 15% corporate tax for developers of 100 low cost residential units and above.

Affordable Housing

Invest in Kenya

Food and nutrition is strongly linked to vibrancy in the Agricultural sector, which is the mainstay of Kenya’s economy and contributes about 51% to GDP: 26% directly & 25% indirectly. A high proportion of the population have no access to food in the right amounts and quality, a majority of whom live on food relief due to poverty and frequent droughts in most parts of the country. Available opportunities; 1) Enhance largescale production through advanced post-harvest technologies; The government will place additional 700,000 acres through PPP under

maize, potato, rice, cotton, aquaculture & feeds production.

2) Establish commercialized feed systems for livestock, fish, poultry. The government will drive small holder productivity through Improved access to credit/input for farmers;

3) Irrigation for increased food production.

Food Security

Invest in Kenya

Current health coverage: 16.5Million

Target: 35Million

Population covered by 2022: 51Million

Objective: Ensure 100% Universal coverage

Opportunities & Initiatives

Enhance private insurance coverage

Provision of medical commodities and equipment

Digitization of healthcare e.g. Supply chain telemedicine

Provision and implementation of alternative financing

100% Universal Health Care

Invest in Kenya

Kenya’s business environment has continued to improve thus making the country a destination of choice for investors..

Source: World Bank Logistics Performance Index 2016, World Bank Doing Business 2016, World Bank Databank 2016, UN Human Development Index 2016

Year Rank Sub-Sahara

Africa Rank

2018 61

2 2015 129

Logistics Outperformance Cementing Kenya’s

Status as East Africa’s Trade Hub

Year Rank Change

2016 42

32 2014 74

Kenya Steps Up in Ease of Doing Business (Now No 61

(2018) out of 190 – 19 places up No. 2 in SSA

74.4

81.3

Mobile cellular subscriptions (per 100 people- 2016)

Sub-Saharan Africa (excluding high income) Kenya

79% Total adult literacy

(age 15+ years)

Large Young & Educated Population

Leading ICT Innovation Hub in Africa

High Level of Mobile Penetration

Well-adopted mobile money eco-

system

Domestic government debt

securities traded on mobile

platform

25.5Mn Population aged 15-64 years as at 2015

(total population estimate of 51 Mn as of

2018)

(Out of 190 countries, rank 1 is the highest)

(Out of 160 countries, rank 1 is the highest)

Invest in Kenya

• No foreign exchange control, allowing for full repatriation of profits, capital or

interests

• Foreign Investments Protection Act (FIPA)- FIPA guarantees against

expropriation of investment by the government ensuring investments by

foreigners is protected

• Member of the International Centre For Settlement Of Investment Dispute

(ICSID).

• Member to the Multilateral Investments Guarantee Agency (MIGA), providing

political risk insurance guarantees to private sector investors and lenders in

member countries.

• A member country of the Africa Trade Insurance Agency (ATIA)-provides

export credit, political risk insurance and investment insurance lowering the

risk and cost of doing business.

• Explicit Constitutional protection of private property.

• Track record of Kenya Government since independence.

The safety of your investment is guaranteed in Kenya…

Invest in Kenya

1. Capital goods and raw materials are zero-rated (Plant, Machinery and equipment)

2. SOME of the plant, machinery and equipment are exempt from VAT;

3. Investment allowance: -100% Nairobi, Mombasa and Kisumu cities; and

-150% for those in other parts of the country (must have invested over KES 200 Million) 4. Market access in COMESA & EAC markets with no taxes

General Incentives

A number of incentives have therefore been put in place to facilitate entry & expansion of investment..

Invest in Kenya

2 15% corporate tax for another 10 years; 30% from the 21st year;

3 10 years withholding tax holiday on remittances to non-

residents

4 Stamp duty exemption

5 Import duty and VAT exemption on raw materials, machinery and

other inputs

6 100% investment deduction over 20 years on building and

machinery

1 10% corporate tax for the first 10 years

EPZs

2 25% corporate tax for another 10 years; 30% from the 21st year;

3 10 years withholding tax holiday on remittances to non-

residents

4 Stamp duty exemption

5 Import duty and VAT exemption on raw materials, machinery

and other inputs

6 100% investment deduction over 20 years on building and

machinery

1 10 years corporate tax holiday

SEZs

1 Full operation under one single license

2 Project approval and licensing within 30 days

3 Foreign currency accounts and offshore borrowing

allowed – no exchange controls

4 Unrestricted investment by foreigners

5 One-stop shop service for facilitation and after-

care

6 Ready-made factory building and office premises

7 Readily available services – water, sewerage, electricity,

landscaping etc.

8 High security standards – 24 hours security, illuminated

perimeter fences.

9 On-site customs documentation

Other benefits in the designated Zones

Incentives in the EPZs & SEZs…

Invest in kenya |

Investor journey

Post establishment

Inquiry and account manager

OSC

setup

Tracking & Aftercare

The journey to setting up your investment is not lonely, KenInvest is your dependable partner to support you along the way through pre and post investment facilitation

Visit www.investmentkenya.com & fill

in the investment application form

Register your business.

All company/business registrations are

done via www.ecitizen.go.ke except for

Limited Liability Partnerships which

are done at the Registrar of companies

or through a lawyer. A BRS officer is stationed at KenInv

est to fast track your business/ company registration req

uirements

Apply for statutory requirements:

Tax PIN/VAT registration

visit www.kra.go.ke

Register with the National Social

Security Fund (NSSF)

Register with the National Hospital

Insurance Fund (NHIF)

Acquire a Single/Unified Business Permit

from the relevant local Authority.

A KRA officer is available at KenInvest to handle all you

r tax obligation concerns

Submit to KenInvest your

Application form with copies of;

Certificate of Incorporation (for local company)

Certificate of compliance (for foreign company)

Memorandum and Articles of Association

(CR2, CR8, CR12)

Issuance of Investment Certificate

from KenInvest upon compliance

with Health, Environment & Security requirements

Once a company begins operation,

KenInvest undertakes

tracking services to ensure

smooth project implementation

KenInvest also undertakes

After-care services to

pick out investor concerns

Establishing a company in Kenya has been made easy especially with the setting up of a

One Stop Center at KenInvest

Step by step

guide

https://www.eregulations.invest.go.ke

Business registration service Kenya Revenue Authority

Federation of Kenya Employers

NEMA EPZA

Institutions in Kenya Government ONE-STOP-CENTRE (OSC) at

KenInvest

Invest in Kenya

State of the Art Government of Kenya One Stop Centre (OSC) at KenInvest

Invest in Kenya

Kenya Investment Authority

www.invest.go.ke

Email: info@investmentkenya.com

www.industrialization.go.ke

Email: ps@industry.go.ke

Export Processing Zone Authority

www.epzakenya.com

Email: info@epzakenya.com

Key Contacts

Welcome & be part of the success!

Invest in Kenya