• July 27th, 2014
  • Posted by athanne

Kenya Business Review: Investment Climate in Kenya

The Investment Climate in Kenya is very lucrative since Kenya’s attractiveness as an investment destination is very catchy. Kenya and its Investment Climate are supported by various factors that favor both local and foreign investment. They include;

  • Political stability,
  • Stable economic policy environment,
  • Competitive investment incentives,
  • Guarantees to investors,
  • Strategic location and preferential access to regional and international markets,
  • Business friendly tax system
  • Abundant natural resources

The Kenyan Government encourages both local and foreign direct investment. Infact multinational companies make up a large percentage of Kenya’s industrial sector. It is the Government policy wish to encourage investment that will produce foreign exchange and provide employment. The Government has undertaken several measures to create an enabling environment. They also include;

  • Abolishing exchange controls,
  • Removing price controls,
  • Abolishing import licensing,
  • Opening up of the capital markets to foreign participation

Opportunities for investments in Kenya’s agricultural, industrial, and commercial sectors are an attractive way to improve the Investment Climate in Kenya. The investment opportunities are in horticulture, agro-processing, textiles and plastics, and pharmaceuticals, tourism, ICT operations and financial services.

Major Investors in Kenya who Affect Investment Climate in Kenya

 Kenya Business Review: Investment Climate in KenyaThe major investors in Kenya who affect Investment Climate in Kenya are very crucial for the growth of the Investment Climate in Kenya. Kenya is host to a number of Transnational Corporations and other

international investors. Virtually all the sectors of the economy are covered by the international investors, majority of whom are from Britain.

.Investment Policies, Laws and Regulations in Relation to Investment Climate in Kenya

The investment policies, laws and regulations in relation to Investment Climate in Kenya are also crucial for the growth of the Investment Climate in Kenya. The stabilization policies and broad economic reform being pursued by the Government are aimed primarily at strengthening investor confidence in the Kenyan

economy, and also to accelerate the private-sector growth through attracting new foreign and domestic investment.

The role for the private sector in the Investment Climate in Kenya which today contributes more than seventy five percent of Kenya’s total Gross Domestic Product represents the main thrust of Kenya’s ongoing market-based reforms. To this end, the range of incentives on offer to foreign and local investors alike has been progressively widened over recent years, in the interests of encouraging private investors to take advantage of diverse business opportunities in Kenya. The Investment Promotion Center continues to serve as the principal contact-point for companies and entrepreneurs wishing to explore investment opportunities in Kenya. The Center’s resource-base has been expanded and developed over the years to meet the information needs of potential investors.

The Kenyan Government has proposed to adopt new investment rules in the Investment Climate in Kenya that will cover local and foreign investment and govern the Investment Promotion Center. The code is expected to set clear guidelines for processing investment applications and will incorporate the means to ensure transparency and accountability. It will also provide information on various incentives to investors, including procedures for obtaining such information and how the incentives are implemented.

Investment Opportunities in the Investment Climate in Kenya

Investment Opportunities in the Investment Climate in Kenya presents various investment opportunities in Kenya both in existing projects such as road construction where the government is exploring ways of having private sector participation to virgin projects.

The following are some of the investment opportunities that the government has put forward, but investors are at liberty to invest in projects of their choice provided they get approval from the relevant authority/government department. They include;

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  • Telecommunication and Transport Projects,
  • The Energy sector,
  • The Manufacturing sector,
  • Agribusiness,
  • Commercial Dairy Farming

Telecommunication and Transport Projects

  Telecommunication and Transport Projects are some of the ways to improve Investment Climate in Kenya. The different projects that the Kenyan Government is undertaking to secure Investment Climate in Kenya are as follows;

Telecommunication and ICTInvestment Climate in Kenya is bound to improve with the ongoing liberalization and privatization present enormous investment opportunities to private investors particularly in the information technology and telecommunication sectors. Investment opportunities exist in Information Technology, particularly software development due, in part, to Kenya’s large pool of educated English speakers. Most Kenyans have the requisite basic education for software development.

Road Sub-sectorThis is one of the projects the government is undertaking to boost Investment Climate in Kenya. With a view to ensuring that the future road network effectively supports the national socio-economic development, it is proposed that the network be improved after undertaking projects which may be of interest to a private investor. The roads are heavily trafficked and levying of toll charges may justify the investment.

The Energy sector

 The energy sector is also one of the areas that will definitely boost Investment Climate in Kenya. It is showing improvement in the following areas.

Oil- Presently, the Kenyan oil market whose total product sales volume is around 2.5 million cubic meters per annum is served by eight major private companies and a host of other small players. The sector has potential for more players. The annual demand for Liquefied Petroleum Gas is approximately 28,000 metric tons. It is expected that potential demand is likely to be twice this quantity in the near future. However, supply and distribution of the oil has been constrained by a number of factors including limitation of production from the Kenya Petroleum Refineries Limited, lack of adequate rail transport wagons, and lack of import handling and loading facilities. This will boost the Investment Climate in Kenya.

Electricity sector- Kenya National Power Development Plan recommends that during the next 10 years geothermal generation should increase to 280 MW. This is because of the success of Olkaria geothermal project and the predicted abundance of geothermal energy resources in the country. It is anticipated that the implementation of the program will be financed by both public and private sectors. In this regard, the Government encourages private sector participation in power generation. The Investment Climate in Kenya as a first step, both Kipevu and Olkaria III have been set aside for promotion by private sector and tenders for the two projects have been received and are in the process of being evaluated.

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Transformers- Kenya’s current requirements for transformers are brought into the country. Joint venture partnership with the local power company in this venture is welcome for the manufacture of Electrical Distribution Transformers in the power range of 25KVA to 1600KVA.Transformers currently used in  Kenya are all imported from Tanzania, Denmark, Germany, India and Japan. The ongoing programmed on rural electrification within the country has increasing demand for distribution of transformers.

 The Manufacturing sector

Investment Climate in Kenya is also bound to improve through the manufacturing sector. This is made possible through the following areas;

Pharmaceutical industry- This will help boost the Investment Climate in Kenya through possible areas for investment in this sub-sector, which still require further studies to determine viability. They include; multipurpose chemical plant for bulk production of intermediate inputs such as paracetamol, aspirin, etc.

Chemical plant should be built to manufacture the anti tuberculosis, anti-leprosy, antibiotic rifampicin from the penultimate state.

Tyres- The country currently has only one tyre manufacturing facility which is Firestone Limited. All other tyres are imported, and since there is market for non-Firestone tyres, another tyre manufacturing facility would be a feasible proposition to improve Investment Climate in Kenya.

Manufacture of aluminum cans- In Kenya and East Africa region, all cans for use in packaging of canned beers and soft drinks are imported. Consumption of canned beverages is becoming very popular. Export of Kenyan beers in bottles is being hampered by the limitations of glass, which include bulkiness and breakages. The production of beers and carbonated beverages in Kenya has grown tremendously over the years. Investors are advised to put up an aluminum canning plant, which can also cater for the needs of Uganda, Tanzania, Rwanda and Burundi thus boost the Investment Climate in Kenya.

Machine tool industry- There is a big market if Investment Climate in Kenya is to be upgraded for the production of the following products; industrial machinery and spares for agriculture, transport industry and workshop, pumps for irrigation, domestic waste handling purposes and equipment and hand tools for building sector metal and wood working machine tools.

Agribusiness

Agribusiness is one of the ways the government of Kenya will be able to boost the Investment Climate in Kenya. It can do so through the following ways;

Fertilizer sub sector- There is potential for the following projects to be undertaken. Establishment of a fertilizer plant in Mombasa to manufacture DAP, CAN, NPK using imported intermediate inputs.

Establishment of a bio-fertilizer plant in western Kenya to utilize bagasse and wastes from timber industries. – Production of nitrogen fixing microorganisms such as Rhizobium which can be used in leguminous plants to increase crop yields. This will definitely help boost Investment Climate in Kenya.

Pesticide sub sector- Kenya produces a lot of pyrethrum, which is exported in semi-processed form or as dried flowers, which fetch little money in the world market. This can be processed into the final product and in addition to imported ingredients. These can also be formulated into insecticides locally and exported as finished products.

There is also opportunities for the manufacture of fungicides using some imported ingredients and mixing with locally available filler materials such as soapstone, limestone, clay etc.

Commercial Dairy Farming

Commercial dairy farming also has a hand in boosting Investment Climate in Kenya. It does so in the following ways.

Artificial Insemination services- Artificial Insemination plays an important role in development of the dairy sub-sector and also in Investment Climate in Kenya. The Government is in the process of privatizing these services, thus providing an opportunity for investment by the private sector.

Dipping services- Dipping services are important in control of tick-borne diseases that hinder the development of high quality beef and dairy products. In the past the Government has been providing the services, which are now being privatized.

Clinical services- Like dipping services, the Government is also privatizing clinical services. This area requires large capital investment and is thus encouraged for private sector participation.

Business Training in Kenya has more.

 Conclusion on Investment Climate in Kenya

 The Investment Climate in Kenya ought to be a number one priority for the Government of Kenya. The Government should boost it by mostly privatizing most of its governmental organizations. This will definitely upgrade the Investment Climate in Kenya.

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