Facts: Economy

Why Kenya? A new Kenyan startup helps entrepreneurs without internet access sell products online


SOKO allows artisans in the developing world to create online storefronts

“Emerging economies are really a hotbed of next-generation innovation.” – SOKO co-founder Gwendolyn Floyd

-  The company uses an automated SMS form to let vendors sell their goods worldwide.

- SOKO currently has about 250 artisans on its website and is adding more through a peer recruitment model.

- The startup has raised $200,000 in grants and awards and almost $1 million in seed funding.

Source: Upstart

Why Kenya? IBM Launches New Innovation Center in Nairobi


Kenya is attracting the attention of global technology and communications investors

“Technology is playing a critical role in building stronger Kenyan and East Africa companies” 

- Vision 2030 Delivery Board Director General Mugo Kibati 

  • IBM's new innovation center will provide Kenyan entrepreneurs, developers, and academics with resources and training.
  • The IT sector in Kenya has contributed up to 40 percent of the economic growth in East Africa in the past 10 years.
  • Kenya's IT industry is expected to grow 11 percent annually, increasing job opportunities for those with technological expertise and attracting outside investors.

Source: Captial FM

Honda Motor Co. created a subsidiary to produce and sell motorcycles in to meet local demand


Honda is building a new plant that is expected to open in September 2013.

“With its well-educated workforce and relatively strong tertiary education sector, the country is well positioned to create the right environment for advanced manufacturing and the high-wage high-skill jobs it brings with it.”

- Stepane Paquier, President, Dow Africa

  • The plant will have an initial production capacity of 25,000 units per year.
  • The Nairobi-based subsidiary is one of only three Honda has opened in Africa.
  • Honda expects local demand to increase as Kenya's economy continues to grow.

Sources: Japan Times, Business Daily Africa

Kenya just broke ground on Konza Technology City, the country’s future technology hub


The new city, which is being dubbed as “Africa’s Silicon Savannah,” is a $14.5 billion investment.

“[Konza] is expected to spur massive trade and investment as well as create thousands of employment opportunities for young Kenyans in the ICT [information communications technology] sector.”

- President Mwai Kibaki, January 23, 2013

  • 20,000 IT jobs are projected to be created in Konza by 2015, and more than 200,000 total jobs by 2030.
  • More than 250 foreign and local firms have already applied to invest in this project.
  • Konza is part of the government’s Vision 2030 initiaive to improve Kenya’s infrastructure over the next 18 years.

Source: Business Daily, BBC

Kenya ranked third among African countries for foreign direct investment last year


Foreign direct investment (FDI) projects in Kenya increased 77% in 2011.

Quote: “This attests to the ongoing institutional reforms in the country, development in infrastructure projects and the human resource capacity in the country,”

- Esther Koimett, Investment Secretary at the Ministry of Finance

  • In 2011, there were 55 FDI projects involving infrastructure, real estate, manufacturing and tourism – a 77% increase from the prior year.
  • The increase came from companies seeking to invest in recent discoveries of oil and minerals.
  • On the African continent, Kenya placed ahead of Nigeria and Egypt. In the East African region, Kenya was the number one destination for foreign direct investment.

Source: Daily Monitor

Kenyan economy forecasted to grow 5% in 2012 and 2013


Economic factors point towards investor confidence in Kenya.

“We believe with lower interest and inflation rates, macroeconomic stability and improved confidence, we think that 5 percent [economic growth] should be well within reach.” Domenico Fanizza, International Monetary Fund.

  • September marks downward trends in inflation for 10 straight months, as lower food prices offset upward pressure from a jump in retail fuel prices. The Kenyan shilling has also held steady against the U.S. dollar.
  • Kenya's central bank began an easing cycle in July after inflation slid continuously since December and after the shilling stabilized against the dollar, restoring a measure of confidence in the economy and policymaking.
  • Kenya's central bank has a high buffer of reserves to $5.2 billion, which also builds confidence in the economy.

Source: Reuters
Source: Reuters

Kenya invests $25 billion in infrastructure to transport oil


New port, pipeline and roads will open up export routes, attract oil and gas investors

Quote: “Right now our interest rates are extremely attractive in a global context to bring investors in.” –  Aly-Khan Satchu, CEO of Nairobi-based Rich Management Ltd.

• The Kenyan government has agreed with South Sudan to build a 1,243-mile pipeline to the northern Kenyan coastal town of Lamu, providing a critical secondary route for oil exports.

• It has opened a tender for the design and construction of the first three berths at Lamu, to be financed by the annual sale of 154.4 million of infrastructure bonds over five years.

• The Lamu project is part of the Lamu Port-Southern Sudan-Ethiopia Transport (LAPSSET) corridor project aimed at furnishing northern Kenya with roads, airports and a refinery, and help spur economic growth of at least 10 percent by 2030.

Appointment of developers marks major step forward for Konza Technology City


HR&A Advisors appointed to initiate the $7 billion development plan to build Konza into the “Silicon Savannah,” complete with technology companies, thousands of residential homes, a central business district and even a university.

Quote: “The implementation plan will recommend the appropriate strategies for attracting developers and private investment to the site. The construction of roads, utilities and buildings will follow subsequently.” – Shuprotim Bhaumik, partner at HR&A Advisors

  • The first part of the four-phase development plan includes the construction of an IT business park, residential and hospitality facilities as well as a science park.
  • Dr. Bitange Ndemo, Permenant Secretary of Information and Communications, says that the project has drawn interest from a number of foreign investors already.
  • A high-speed rail and World Bank-funded 60km motorway will connect Konza to Nairobi airport, while a dam for irrigation and electricity generation funded by the African Development Bank will be ready in 2013.

Source: Financial Times

If Kenya was in the Euro-zone, it would have the third lowest debt ratio

  • Based on the IMF fiscal monitor, if Kenya was a member of the Euro-zone, its debt-to-GDP ratio would rank only behind Estonia and Luxemburg.
  • Kenya's macroeconomic success is home-made. Through prudent fiscal policies—particularly strong revenue mobilization—and economic growth, Kenya has gradually brought its debt burden down 20 percent in five years.
  • Kenya understands that what matters is not the absolute amount of debt, but its proportion to the overall economy, and has therefore been praised for its wise fiscal policies and sound budget management. Through its economic reforms, especially in the service sectors, it has managed to open up the economy and create a growth momentum that has benefited the country over the last decade.

Source: World Bank (blog)

Kenyan CEO James Mwangi was named Ernst & Young's World Entrepreneur of the Year

  • In a ceremony held in Monte Carlo on June 9, CEO and Managing Director of Kenya’s Equity Bank, Dr. James Mwangi, was named the Ernst & Young World Entrepreneur of the Year 2012. He was picked from among 59 finalists from 51 countries vying for the world’s most prestigious business award for entrepreneurs.
  • Dr. Mwangi joined Equity Bank as finance director in 1994 when only 4 percent of the population had bank accounts. Now, 26 percent of Kenyans have one, and the bank manages more than 7 million bank accounts – over half of all bank accounts in Kenya. He became the bank's chief executive in 2004 and he listed the bank on the Nairobi Stock Exchange in 2006.
  • Dr. Mwangi's sees Equity Bank as transforming the economy of the East African region with its focus on providing services to the “unbanked” poor. Meanwhile, through the bank's foundation, it now funds several philanthropic initiatives including providing healthcare to 1.8 million Kenyans, 10,000 scholarships to educate orphaned and children in need, and 1,300 university scholarships.

Source: Financial Times
Source: Ernst & Young

World Bank says Kenya “is on track to reach middle-income status.”


The World Bank's economic update on Kenya forecasts 5 percent growth in 2012, and found actions by the government successfully stabilized the economy.

Quote:  “Kenyans have an opportunity to enjoy better standards of living as the economy progresses towards middle-income status in the coming years.” Johannes Zutt, World Bank Country Director for Kenya

  • The World Bank report projects that inflation will remain below 10 percent during the second half of 2012.
  • Interest rates are expected to fall and the exchange rate to return to “more competitive levels” that will spur economic activity.
  • Strong growth of the East African Community has created opportunities for Kenya to reduce its vulnerability from external shocks.

Source: World Bank

Nairobi continues its growth as a regional hub

  • FirstRand is the fourth bank to open offices in Nairobi in the past four years, along with companies like Samsung and Nestle
  • The World Bank points to Kenya's expanding working-age population, access to the sea, developing education system, and improving macroeconomic policies as qualities that make it perfectly situated for companies bent on regional expansion.
  • The financial sector grew 8.8 percent in 2011

“We believe there's a gateway, a pipeline of business that exists between India and Africa coming through Kenya,” – Jabu Khethe, head of Africa at FirstRand

Sources:  Financial Times

Kenya leads its East African neighbors in judicial reforms

  • The Doing Business in EAC (East Africa Community) Report compiled by World Bank and the International Finance Corporation cites the “case track” system introduced by the Judiciary in 2011 as one of the outstanding improvements in the region.
  • The “case track” system categorizes cases into three groups depending on their complexity, allowing for the strategic allocation of resources to avoid delays in commercial disputes.
  • In a bid to reduce congestion in courts and ensure speedy trials, the Chief Justice increased the limit of jurisdiction in certain courts to $6,000, to reduce the pressure on courts and reduce litigation and transportation costs. The inspection of serving judges and magistrates and the recruitment of new ones has also been put in place, to improve the legitimacy of the verdicts.

Source: Business Daily

Kenya has a sizeable and growing middle class

  • A recent African Development Bank report found that “Strong economic growth in the past two decades has helped reduce poverty significantly and lift previously poor households into the middle class,” in Kenya and in other African nations.
  • With East African economies among the fastest growing in the world, and Kenya's own GDP growing at a 5% clip, the Kenyan middle class is expected to continue rising, bringing Kenya ever closer to its goal of becoming a middle-income nation by 2030.
  • A burgeoning middle class has boosted Kenyans' purchasing power, giving rise to a thriving mall culture and booming housing market, and a double-digit boost in domestic tourism.

Source: AFP
Source: CIA World Factbook
Source: IMF

Kenyan animators are using technology to reach a global audience

  • Kenyan animators are now able to collaborate with production companies and other artists from around the world thanks to the arrival of fiber-optic cable in East Africa along with other technological advances.
  • Nairobi-based “Homeboyz Animation” offers the most recent success story. The company worked with a U.K. production company and the BBC to produce the popular children's cartoon “Tinga Tinga Tales” (pictured above).
  • The future for Kenyan animators is bright. New opportunities for international collaboration, as well as rising demand for content from Kenya's own broadcasters, means that entrepreneurs like Pete Mute, who launched  the animation company “African Sci-Fi Factory,” will be able to share their work with larger and larger audiences.

Source: Variety

Kenya has just announced the construction of a state-of-the-art geothermal power plant

  • Kenya Electricity Generating Company (KenGen) will work with an international consortium to build a 280 megawatt geothermal plant named Olkaria IV, which is expected to be operational in 2014.
  • The project, which enjoys international investment from the likes of The World Bank, Germany’s Development Bank KfW and the European Investment Bank, will help diversify Kenya's energy base and reduce the country's reliance on hydroelectric dams, whose output can drop during droughts.
  • Already the first African country to drill for geothermal power, Kenya has set a goal of producing at least 5,000 megawatts of geothermal power by 2030.

Source: Reuters

Kenya now has its own YouTube domain, YouTube Kenya.

  • YouTube announced the launch of YouTube Kenya (http://www.youtube.co.ke) in October 2011.
  • The designated domain will  make it easier for Kenyan users to find and view the most informative and entertaining video content from around the world through a local interface that promotes the content most relevant to Kenyans.
  • Speaking at the Nairobi launch event, Permanent Secretary of  Information and Communications Dr. Bitange Ndemo said, “Accessing relevant information and sharing helpful stories on the Internet is enabling people to learn, train and partner with each other to help better their lives.”

Source: IT News Africa

Kenya developers are creating innovative mobile applications.

  • Simba Technologies has created an app called MedKenya, which delivers heath information to Kenyans via mobile phone. The company plans to launch an expanded version, called MedAfrica, to bring similar content to other countries on the continent.
  • Since 2007, Kenyans have used the mobile banking platform M-Pesa to transfer funds via text messaging. (“M” stands for mobile and “pesa” is Swahili for money).
  • In partnership with the World Bank and Nokia, Kenya recently created an “m-lab” to incubate more mobile application startups. According to Dr. Bitange Ndemo, the country's permanent secretary of the Ministry of Information and Communications, thousands of young Kenyans are involved in app development.

Source: Mercury News

Google is partnering with Safaricom and Equity Bank to bring Kenya's small businesses online.

  • The Getting Kenyan Businesses Online (GKBO) project provides information and an online template for small and medium scale enterprise businesses (SMEs) to create their own websites for free.
  • With 10.2 million Internet users in Kenya, Google Kenya Country Manager Olga Arara-Kimani said the initiative will transform the online SME business landscape and make a positive impact on the economy.
  • The GKBO website is mobile and desktop compatible, allowing SMEs to personally manage their sites and update business information in real time.

Source: IT News Africa

Kenyan women are some of Africa's most successful entrepreneurs.


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