Kenya

Kenya is located on the East Coast of Africa. The state occupies a strategically advantageous geographical position, being at the junction of the Great Lakes, the Horn of Africa and the Indian Ocean. As a gateway to the next 10 countries in the interior of the continent, the country provides ample trade and investment opportunities.

General information

The official name of the state — Republic of Kenya. The state occupies an area of 580,367 km² (50th in the world). The population is about 57,848,000 people (as of the beginning of 2023).

Kenya — multilingual country. The official languages of the country are English and Swahili, local languages are common. English is widely spoken in commerce, schooling and government.

According to the religious composition, the majority of the country's inhabitants are Christians — 84.8% Muslim — 9.7%, adherents of folk beliefs and cults — 1.7%, atheists — 2.5%.

The official currency of the country is the Kenyan shilling.

The capital of Kenya — the city of Nairobi, the largest city in East Africa. It is the economic center of Kenya. Nairobi is home to the Nairobi Stock Exchange (NSE). The NSE is ranked 4th in Africa in terms of trading volume and 5th in terms of market capitalization to GDP. Also here are the state bodies that manage the economy.

Nairobi hosts regional offices of several international companies and organizations (General Electric, Young & Rubicam, Google, Coca Cola, Zain and Cisco Systems have moved their African headquarters to Nairobi). In addition, the headquarters of many large African companies are located here. Nairobi produces goods such as clothing, textiles, building materials, food and beverages, and cigarettes. The city has factories of some international companies (Goodyear, General Motors, Toyota Motors, Coca Cola). 

Nairobi has a developed tourism sector (beach holidays, safaris, etc.).

Mombasa — a city in southern Kenya, the administrative center of the Coast Province and the second most populous in the country. The main seaport of Kenya and the largest port in East Africa, is also a large-scale commercial and industrial center. Port of Mombasa — an important center for the transportation of transit goods of neighboring countries; export including agricultural products (coffee, tea, sugar, etc.), metal ores, wood. Here is the headquarters and refinery (works on imported raw materials) of the company «Kenya Petroleum Refineries Ltd.».

Steel-rolling plants (with a total capacity of over 200 thousand tons of rolled steel per year) and cement plants operate in the city. Furniture, textiles, soft drinks and beer, tobacco products and other traditional crafts are also located.< /p>

The administrative-territorial structure of Kenya is 47 districts headed by governors and 290 primary administrative units.

History, geography, culture, mentality

Kenya can be called the "cradle of mankind" without exaggeration, since its territory is included in the area where, according to scientists, modern man was born and from where he began his settlement on the planet.

The first trading settlements existed on the coast of Kenya already in the 2nd century AD, and in the 10th century these places fell into the sphere of interests of Arab and Persian merchants, who built the first seaports there and subjugated almost the entire eastern part of the African continent. In 1498, during the expedition of Vasco da Gama, the Portuguese landed in Kenya, who began a struggle for power over this part of Africa with local Arab rulers.

The first European explorers began to penetrate the territory of Kenya by the middle of the 19th century, as a result of — the proclamation in 1885 of the protectorate of the German Empire over the east coast of Kenya — Vitu Sultanate. In 1890, Germany transferred these territories to the British Empire in exchange for control of the coast of Taganika, which caused outrage among the inhabitants of Vito, which grew into an open rebellion. It was suppressed with the help of a British punitive expedition, and Great Britain included these territories in its East African protectorate.

The key to further English dominance over Kenya was the construction of railways linking the largest cities of the area, which, in turn, caused a sharp influx of British settlers into these territories, who occupied the best fertile lands and built their settlements on them.

The modern capital of Kenya owes its appearance to the same factor — Nairobi has evolved from a railroad supply station built in an uninhabited swampy area to the largest city in East Africa.

In 1920, Kenya was declared a separate colony of Great Britain (by the way, the name of the country is given by the name of Mount Kenya, which in the language of the Kikuyu tribe living at its foot means “mountain of whiteness”, or “shining mountain”, which is connected with glaciers covering its slopes). In 1944, the Kenya African Union was established as an organization to combat colonial laws from the local population. In 1952, the so-called Mau Mau uprising broke out on this wave — the armed struggle of the indigenous people of Kenya for independence from the British colonialists, as a result of which a state of emergency was declared in the country, was canceled in 1960, and in 1963 Kenya became an independent state, and in December 1964, it was declared a republic.

Today, Kenya is one of the most dynamically developing countries in East Africa.

The state is located on the equator and borders Tanzania in the south, Uganda in the west, South Sudan in the northwest, Ethiopia in the north and Somalia in the northeast. From the southeast it is washed by the waters of the Indian Ocean, in the west — Lake Victoria. The equator runs almost through the center of the country.

Mount Kenya — the highest peak in the country (5,199 m) and the second highest mountain on the continent (after Mount Kilimanjaro). Glaciers covering the top — an important source of drinking water for much of the country. Many tribes consider the mountain sacred and build their houses in front of it.

The largest river — Tana (length about 750 km), stretching along the eastern edge of the East African Rift, forms a series of waterfalls. About 10% of all lakes of the African continent are located on the territory of the country. Eight of which are located in the Rift Valley.

In Kenya, there are deposits of precious metals and stones. Natural soda and table salt are mined, geological exploration is underway.

The country is famous for its safaris and a variety of game reserves and national parks, such as East and West Tsavo National Park, Masai Mara, Nakuru National Park and Aberdaers National Park. Kenya is home to several World Heritage Sites (such as Lamu Island) and world famous beaches. The Great Wildebeest Migration is considered one of the natural wonders of the world.

About 40 peoples live in Kenya, so the local cultural palette looks colorful. The central regions are strongly Europeanized and urbanized, while on the northern outskirts one can still meet shepherds unaffected by civilization — nilots and kushites into white "desert" robes. The same applies to the Maasai living in the far south of the country. The Masai are one of the most famous tribes in East Africa

Another distinctive — this is the coast of Kenya, where the traditions of Arab antiquity are strong, people live in stone castle houses and go to sea on sharp-nosed dhows under triangular sails.

Power

Kenya is a presidential-parliamentary republic. Head of State — The President is also the Commander-in-Chief of the Armed Forces. Elected for a period of 5 years.

The Legislature of the Republic of Kenya — unicameral National Assembly (until 2010). With the adoption of the new Constitution in 2010, Parliament became bicameral, consisting of the upper house of the Senate and the lower National Assembly.

The judiciary consists of two higher judicial instances - the Supreme Court and the Court of Appeal. The court of first instance is the high court, and the lower level — magistrate courts and Muslim qadi courts.

Economy

Kenya — Africa's regional center for trade and finance.

By the end of 2022, Kenya's GDP growth is estimated at 6%. There is growth in the hotel sector, catering, manufacturing.

Kenya — agricultural country with a relatively high level of development of diversified agriculture. Agriculture and horticulture — the two largest sectors of the Kenyan economy. Agriculture forms 34.1% of GDP, the share of employed is 53.8%. Tea, coffee, corn, cereals, sugar cane, fruits and vegetables are among the main crops produced. Meat and dairy production, fish farming and poultry farming are developed.

Kenya is the 3rd largest tea producer and the 1st exporter (by volume) in the world, 9th legume producer, 14th oilseed producer, 3rd flower exporter and one of the top 20 coffee exporters.

Industry contributes 17.4% of GDP. Consumer goods are produced in small quantities (plastic products, furniture, batteries, textiles, clothing, soap, cigarettes, flour). The main manufacturing industries: food, textile, printing, clothing, car assembly, oil refining, chemical, mechanical engineering, production of alcoholic beverages, automotive spare parts, cement, paper and metal products. The main industrial centers — Nairobi and Mombasa.

The country is rapidly developing the field of information technology and communications. In 2017, Kenya became the first country to sell government bonds through mobile phones.

The key sector of the service sector is tourism, which provides a significant part of the country's foreign exchange earnings. High rates of development are demonstrated by transport, medicine, education and financial services, making Kenya a regional leader in these areas.

The mining industry is underdeveloped and plays a minor role in the economy. Soda is being mined (near Lake Magadi), fluorite, common salt, gold and rubies. The country has deposits of rare minerals, such as titanium. In addition, Kenya may become an oil and gas producer in the coming years, as new oil fields (with a potential of 750 million barrels) have been discovered in the Turkana district (North West). 

As of 2020, exports amounted to $11.5 billion, imports — $20.4 billion Main export commodities: tea, coffee, flowers, fruits, vegetables, tobacco and other agricultural products, as well as petroleum products, fluorite, soda, cement. 

Main buyers: Uganda — 11.1%, Pakistan — 8.5%, UK — 7.8%, USA — 7.7%, Netherlands — 7.6%. From economically developed countries, Kenya imports oil and oil products, industrial equipment, agricultural machinery and vehicles, ferrous metals, as well as synthetic resins, and medicines. Main suppliers: China — 22%, India — 11.4%, UAE — 5.6%, Japan — 5.3%, Saudi Arabia — 4.2%, Indonesia — 3.8%. 

Kenya is a member of the WTO and the East African Community (Burundi, Rwanda, Tanzania and Uganda (EAC). Customs tariffs and import restrictions are unified within the EAC. Kenya applies a single customs tariff of the EAC. VAT is fixed — 16%.

Kenya is a member of the African Continental Free Trade Area.

Business climate

In recent years, Kenya has changed the law and has become much more attractive to foreign investors. Foreigners are given the opportunity to open a local company or register in the Special Economic Zone (SEZ), receive an investor certificate and be exempt from taxes.

Kenya has a territorial principle of taxation, which means that income received outside Kenya is not subject to income taxes. Officially, there is no financial control in the country, however, all transactions over $10,000 must be reported to the Central Bank.

In Kenya, you can register a company, partnership, limited partnership, trust and manage assets on the basis of a Trust Deed. The most convenient corporate structure in Kenya is the Limited Liability Partnership — LLP. Participants can be both individuals and legal entities. Partnership registration takes up to 14 days. It is possible to open a bank account within 1.5 months.

To reduce taxes, you need to register a company in the FEZ. There are several throughout the country. The task of the SEZ — develop industry and infrastructure within the country, attract investment in various activities. Non-residents can use the FEZ and get favorable tax conditions, reduce the number of bureaucratic procedures and provide additional protection of their rights. 

Companies that operate in the SEZ are subject to a 10% tax on profits received in Kenya. Profits earned outside of Kenya are not taxed. Since January 1, 2018, the tax on dividends in favor of non-residents has been abolished. No VAT. The stamp duty on share transfer is 1% and capital gains tax — 5%.

When registering a company, you must go through the following steps:

• Give 3 name options; 
• Submit documents for partnership registration (list below);
• Get a business permit, pay fees;
• Register with social funds (if you have employees).

Investment climate

The investment climate in Kenya is the most favorable among the countries of East Africa.

The country is an important financial, communications and transport hub for East and Central Africa. With a large number of English-speaking professionals, a high level of computer literacy, especially among young people, and a favorable investment climate, Kenya is an alternative to the Republic of South Africa for large corporations wishing to enter the African market. There has been a significant increase in cash flow from abroad due to Kenyans working in the US, the Middle East, Europe, Asia and Antarctica. Compared to neighboring countries, Kenya's physical and social infrastructure is well developed.

Kenya provides the following guarantees to local and foreign investors:

1. Guarantees against Expropriation.

The Constitution of Kenya provides safeguards against expropriation of private property that may arise for reasons of security or public interest. In this case, fair and prompt remuneration is guaranteed.

2. Repatriation of Capital and Profit.

Repatriation of capital, dividends and interest is guaranteed to foreign investors under the Foreign Investment Protection Act (FIPA) (Cap-518). Investors can repatriate:

•  After-tax profits, including retained earnings that have not been capitalized;
•  Revenue from investments after applicable taxes;
•  Principal profit and interest associated with any loan.

3. Other Warranties.

Kenya is a member of the World Bank's Multilateral Investment Guarantee Agency (MIGA), which issues non-commercial risk guarantees for businesses that invest in member countries.

In addition, Kenya is a member of the International Center for Investment Dispute Resolution (ICSID), and the African Deposit Insurance Trade Agency (ATIA).

Government policy aims to expand assistance measures in favor of investment in the private sector.

The investment allowance is an incentive for investment in the manufacturing and hospitality sectors at a rate of 100% nationwide. For manufacturers with duty-free production, the rate is 100%. In addition, capital expenditure eligibility has been expanded to include certain infrastructure and equipment to protect the environment from harm associated with industrial activities.

4. Export Promotion Program.

Materials imported for use in production for export, production of raw materials for export, or production of duty-free goods for domestic sale are eligible for duty exemption. The request for receipt must be submitted to the Export Office (TREO) under the Ministry of Finance.

In order to encourage production in Kenya for export to the global market, the government has established duty-free production standards, a program open to both local and foreign investors. Enterprises operating under the program are provided with the following benefits:

• Exemption from duties and VAT on imported raw materials, materials and other imported factors of production, as well as a 100% investment allowance for the plant, machinery, equipment and buildings.

Such businesses can obtain a license to operate within a radius of 30 km from customs. This program is administered by the Kenya Investment Authority.

5. Export Processing Zone Program.

The Export Processing Zones (EPZ) Program coordinates the activities of the Export Processing Zones (EPZs). The government encourages the development of private SEZs, and a number of them have already been established. Businesses operating in such zones in Kenya enjoy the following benefits:

• 10 year no tax, after that —25% tax for 10 years;
• Exemption from all taxes on dividends and other payments to non-residents for the first 10 years;
• Exemption from payment of import duties on raw materials and semi-finished products;
• No restrictions on management or technical activities;
• Exemption from collection;
• VAT exemption;
• Work under one license.

Investment opportunities in key sectors

Agriculture:

• Fertilizers, chemicals
• High yielding seeds and plant materials
• Irrigation systems; water pumps, steel pipes, irrigation hoses
• Pesticides
• Storage, including cold stores
• Refrigerated transport
• Agricultural tools and equipment
• Air Freight
• Tractor assembly, generators, electric motors
• Organic farming
• Parts and accessories

Services:

• Veterinary services
• Training farmers — improvement of production methods, quality control and modernization
• Transport services (from farm to markets)
• Farms —plowing, harrowing, sowing
• Storage and drying of agricultural products.
• Tourism

Kenya has a wide range of potential tourist attractions that are underutilized. Now the tourism industry is mainly concentrated in the coastal zone and national parks and reserves. The Kenyan government is firmly committed to regional diversification.

Similarly, the potential of the domestic market has not been fully exploited. There is also a need to identify other tourist attractions besides existing national parks, game reserves and beaches. To extend the stay of the "safari" tourists in Kenya, the emphasis will be on the development of inland "resorts", close to national parks and reserves.

The main limiting factor in the development of such resorts was the lack of investment capital. Therefore, the Government of Kenya highly welcomes participation in investment ventures in order to use the tourism potential of these territories. 

Extractive industry:

Exploration and development of minerals is currently carried out under the auspices of the Law on Mining Activities and is under the jurisdiction of the Department of Geology and Mines of the Ministry of Ecology and Natural Resources.

Kenya has a high mineral resource potential, for example, gold in the greenstone belts of Western Kenya, Central and Southern Kenya. Several exploration companies have been licensed to explore for gold and non-ferrous metals in these areas. Some of the above mineral-rich areas have been assigned to both local and foreign companies. Investors can enter into joint ventures with companies that have already completed exploration.

Housing:

• The need for cheap technologies and materials;
• Financing the construction of affordable housing.

Business and investment support structures

Doing business with Kenya is facilitated by the establishment of industry-specific technical and service institutions. These bodies are well developed, updated and restructured as necessary to meet new emerging requirements. They help with difficult legal issues and bureaucracy that can get in the way of doing business or investing in Kenya. The government has established these key, professionally managed institutions to assist stakeholders in their respective sectors. Organizations are aimed at transparent relationships between the consumer of Kenyan products and their producers; tourists highlight places and attractions, and help investors identify opportunities for creating projects. 

1. Kenya Investment Authority (KIA)

This body was established by the Government of Kenya as a result of an investment act passed in 2004. Mandate — attracting private investment to Kenya for both local and foreign investors.

2. Kenya Business Information Center

Associated with the Export Promotion Council, the Center aims to provide potential importers and exporters with timely, reliable and up-to-date business information at all levels of the enterprise. It acts as the center of a national network of various sources of business information.

3. Investment Promotion Agency (IPA)

The Agency is a legislative body originally established in 1986 as an Investment Promotion Center to encourage private investment in Kenya. As part of its new mandate, which it acquired in 2005, the IPA has become a one-step guide for investors planning to operate in Kenya. The IPA helps facilitate the licensing of new investment projects and organizes investment promotion activities both locally and internationally.

When approving investment projects, the IPA works together with the relevant government agencies to facilitate obtaining the necessary approvals, licenses and permits. Once the project is approved, the IPA issues a general certificate that allows investors to proceed with the immediate implementation of their project upon receipt of the necessary licenses within six months.

The Agency is an important point of assistance for investors in Kenya in any sector of the economy. There is a list of project proposals that can easily be accepted by any interested foreign or local investor. The database and website of the IPA lists all investment opportunities in Kenya.

4. Kenya National Chamber of Commerce

This is a major lobbying body for the business community in Kenya. He advises the government and the business community on domestic and international trade trends. Chamber membership is voluntary. Headquartered in Nairobi and branches in major cities throughout the country.

5. Private Sector Alliance (KEPSA)

Brings together all organizations in the private sector in Kenya. This association covers almost all areas, it is contacted in case of need to contact any product or service or individual companies in Kenya. Any organization not listed on this site can be tracked by any investor, trader and consumer service professional or any sector through KEPSA.