Foreign Direct Investment

Kenya is one of the economic leaders in sub-Saharan Africa. Like many African countries, it is dependent on Foreign Direct Investment (FDI) for capital and employment. Remittances are Kenya’s single largest source of foreign exchange. According to the Central Bank of Kenya, remittance totaled $611.2 in 2008.

Kenya also serves as the East African business hub for many international companies. General Motors, Proctor & Gamble, Microsoft, Ogilvy and Mather, Coca-Cola and Citibank are a few examples of international companies with a presence in Kenya. A third of Kenyan banks are foreign owned, controlling 51% of total banking assets in the country. Safaricom for example, is 40 percent owned by Vodafone of the U.K. and Celtel Kenya is 60 percent owned by Celtel of Netherlands.

Why Kenya?

Kenya is a prime choice for foreign investors seeking to establish a presence in Eastern and Southern Africa.

According to Snapshot Africa, a World Bank study benchmarking FDI competitiveness:

[Kenya] is reported by foreign investors to have a well-developed port system with cold storage facilities and computerized port procedures, and a motivated work force.

It is also a member of the East African Community (EAC) of 93 million people, where trade is envisaged to flow freely across Uganda, Tanzania and Kenya by 2013. Add to this Kenya’s membership in the Common Market for Eastern and Southern Africa (COMESA), with nearly 385 million people, and it is easy to see why a number of international companies have chosen the country as a regional business hub.”

Kenya is a desirable investment destination due to a number of key strengths:

  • Excellent connectivity to major world-wide hubs that make it easy to work with most continents. Nairobi is the transportation hub of Eastern and Central Africa and the Port of Mombasa supplies the shipping needs of more than a dozen countries.
  • An educated and skilled workforcehas made the country the manufacturing, commercial and financial hub in Eastern and Central Africa.
  • A liberalized economy without exchange or price controls, and no restrictions on domestic and foreign borrowing by residents and non-residents.
  • The Nairobi Stock Exchange is the leading stock market in the Eastern and Central African region.
  • A strong infrastructure, in fact Arica Investor voted Kenya as the regions best infrastructure regulator.
  • Membership to regional trading blocs, COMESA and (EAC). A preferential trading country under the U.S. legislation, African Growth and Opportunity Act (AGOA)., the ACP-EU Cooperation and various other bilateral cooperation agreements.
  • Potential for exploration of mineral resources. Kenya is a potential source of valuable materials such as titanium and there is current exploration of oil off the Indian Ocean Coast and other parts of the country.

Good Reasons to Invest in Kenya

Kenya has a number of tax treaties and investment promotion and protection Agreements to encourage foreign direct investment. Exporters from Kenya enjoy preferential access to world markets under a number of special access and duty reduction programs.

ACP/Cotonou Partnership Agreement

Exports from Kenya entering the European Union are entitled to duty reductions and freedom from all quota restrictions. Trade preferences include duty-free entry of all industrial products as well as a wide range of agricultural products including beef, fish, dairy, cereals, fresh and processed fruits and vegetables.

African Growth and Opportunity Act (AGOA)

Kenya qualifies for duty free access to the United States market under the African Growth and Opportunity Act. Kenya’s major products that qualify for export include textiles, apparels and handicrafts.

Generalized System of Preferences (GSP)

Under the Generalized System of Preferences, a wide range of Kenya’s manufactured products are entitled to preferential duty treatment in the United States, Japan, Canada, New Zealand, Australia, Switzerland, Norway, Sweden, Finland, Austria, and other European countries. In addition, no quantitative restrictions are applicable to Kenyan exports on any of the 3,000-plus items currently eligible for GSP treatment.

Investment Protection Guarantee

Kenya is a signatory to and member of the Multilateral Investment Guarantee Agency (MIGA), an affiliate of the World Bank, which guarantees investors against loss of Investment to political problems in host countries. Additionally, Kenya is signatory to International Centre for Settlement of Investment Disputes, which is a channel for settling disputes between foreign investors and host governments

Bilateral Trade Agreements

Kenya has signed bilateral trade agreements with more than 20 countries around the world, including Argentina, China, Egypt, India, the Netherlands, Poland, Thiland, Tanzania, South Korea and Pakistan. Kenya is currently negiotiating agreements with nine additional countries including Belarus, the Czech Republic, Mozambique and South Africa.