Investment opportunities for business in Kenya

Kenya boasts a fast-growing and dynamic economy that continually attracts the attention of global investors. The country is one of the region's major economic centers and has made significant progress in recent years, attracting international interest as a new investment destination.

Directions for investment in Kenya:

1. Agricultural sector

Agriculture is the basis of the country's economy. There is ample opportunity for diversification and growth in this sector, especially in accelerating food crop production and exploring non-traditional exports. There is also potential to improve technological infrastructure such as packaging, storage and transportation. Irrigation intensification and value-added processing are promising market areas for investment.

Investment opportunities include:

• Seed production
• Production of sprayers and pesticides
• Veterinary services 
• Construction of dams and wells
• Installation of irrigation systems, cold storage and refrigerated transport

Gardening

The horticulture sector is one of the fastest growing sectors of the economy and the second largest foreign exchange earner after tea. Opportunities exist for the production and export of products such as cut flowers, French beans, pineapples, mushrooms, asparagus, mangoes, macadamia nuts, avocados, passion fruit, melon and carrots.

Agroprocessing

There are numerous investment opportunities in this sector. Edible and other oils produced locally include butter, ghee and margarine, as well as sunflower, canola, cottonseed, sesame, coconut and corn oils. Large quantities of palm oil are imported, so investment in developing substitutes for imported palm oil is encouraged.

Kenya produces excellent beer using local barley. The country has recently developed papaya and grape wines that can be exported to regional and international markets. There are opportunities for coffee roasting and grinding, as well as further potential, for example, in the production of decaf coffee for export. 

Sugar production at 402,000 tons per year is below domestic demand, which is estimated at 600,000 tons per year. Molasses, a by-product of sugar production, is processed into energy alcohol, drinking alcohol and baker's yeast. There is also significant potential for expanding exports of chocolate and confectionery products. There are also investment opportunities in such areas as the production and processing of sugar, tea, meat and dairy products.

Poultry products

In the poultry sector, chicken incubators are currently underutilized, providing opportunities for growth and to meet both domestic and regional consumer demand.

Fishing

Kenya has rich fishing potential due to its water resources in the Indian Ocean, Lake Victoria, and the presence of numerous freshwater lakes in the country. Currently, deep-sea fishing, shrimp and trout farming are in their infancy but are growing rapidly. Opportunities also exist in fish processing (filleting and fishmeal production), as well as in fisheries support infrastructure (refrigerated transport, cold storage, etc.).

Leather and leather goods

Most leather and hides are processed to the primary stage for export, while investment opportunities exist in the production of finished leather, which opens up the potential for the production of footwear and other leather products. 

Livestock

There are prospects here in the field of raising livestock for the production of meat and dairy products. Non-traditional livestock farming is developing, such as breeding ostriches, crocodiles, beekeeping and honey processing.

2. Energy sector

Kenya's energy policy emphasizes the need for a sustainable supply of energy in adequate quantities at efficient prices to achieve national development goals. The policy also emphasizes the provision of quality energy services. This will ensure that Kenya continues to attract investment in economic activities where energy inputs are the basis for competitively priced production. The country depends mainly on three types of energy, namely wood fuel, oil and electricity. To a lesser extent, wind, solar energy and biogas are used as alternative energy sources.

Oil is the main source of commercial energy in Kenya, providing about 87% of the country's needs. The transport sector consumes more than half of the country's petroleum fuel. Industry consumes about 31% of petroleum fuel. Kenya has found oil after decades of exploration in various parts of the country.

Geothermal energy

Geothermal energy is generated using natural steam extracted from volcanic zones in the Rift Valley. It is estimated that Kenya can produce over 10,000 MW of geothermal energy. However, currently about 127 MW is supplied to the national grid from three power plants in Ol Karia. The Government of Kenya proposes to invest heavily in the construction of more geothermal power plants, including a 280 MW power plant, the expansion of the Ol Kariya power station with the construction of two 70 MW power units and the construction of a new power plant of two 70 MW power plants. 

Since a significant amount of electricity also comes from thermal sources, mainly power plants in Mombasa and Nairobi, there are numerous investment opportunities for private thermal energy producers.

Although Kenya has a variety of sources of electricity, the majority of its electricity comes from hydropower and geothermal energy. Hydropower accounts for almost 60% of electricity generated, mainly at five power plants in the Tana River basin — Kindaruma, Kamburu, Gitaru, Masinga and Kiambera, with an installed capacity of about 400 MW.

Other energy sources

Other investment opportunities in the energy sector include the development of wind farms in Ngong, Lake Turkana, Marsabit, Kinangopa and Malindi. Kenya's geographic location on the equator gives the country a unique opportunity to develop a vibrant solar energy market. The country receives 4-6 kWh per square meter of solar energy daily. However, only a small amount of this huge natural resource is used.

3. Manufacturing sector

This sector offers clothing manufacturing, automotive component assembly, electronics manufacturing, plastics, paper, tires, chemicals, pharmaceuticals, glass, ceramics and wood products, as well as metal products and mechanical engineering.

Paper products

Kenya has an integrated pulp and paper mill, producing paper and board from renewable forest products. However, the country imports coated bleached particleboard and other packaging boards, newsprint, printing paper and other types of paper. Investment opportunities exist in the production of paper from other raw materials such as bagasse, sisal waste, straw and waste paper.

Textiles and clothing

The textile, apparel and apparel industry in Kenya has very high potential. Basic raw materials such as dyes and chemicals are imported, as are all textile machinery and most spare parts. Investment opportunities exist within the framework of the "Bond Production" scheme. and in export processing zones for the production of goods such as yarn and clothing.

Metalworking and machine-building plants

Kenya has a basic steel sector producing a variety of processed products from local and imported scrap steel, steel billets and hot-rolled coils. The country imports steel billets, coils, wire rods and wires, steel plates, sheets, scrap steel and cast iron. The country has a large metal products sector with various independent engineering, foundry and metalworking shops. Opportunities exist in developing foundries that produce precision castings that are then processed into precision components.

Car parts and assembly

The automotive components industry is developing rapidly. Opportunities exist to produce vehicle components for use by local assemblers for the domestic market, as well as for export to regional markets.

Electrical equipment

Investment potential exists for the production of motors, circuit breakers, transformers, switchgears, irrigation pumps, capacitors, resistors, insulating tapes, electrical equipment and integrated circuit boards for both domestic and export markets.

Electronics

Although the electronics industry in Kenya is still in its infancy, a number of firms involved in the assembly, testing, repair and servicing of electronic products are operating and rapidly expanding their scope of activities to meet the growing needs of the industry.

Key opportunities for direct investment, joint ventures and subcontracting exist in the assembly of a wide range of electronic goods in Kenya, especially under the Bonded Manufacturing scheme. and export processing zone programs.

These include:

• Manufacture of consumer electronics such as color televisions, VCRs, printers, floppy disk drives and compact discs
• Telecommunications equipment such as printed circuit boards and transmission equipment 
• Ancillary products such as cables, cords, injection moldings and metal covering

With a workforce that is well equipped to meet the industry's labor skill requirements, and a relatively large domestic and export market for electronics in the region, Kenya offers enormous potential for the manufacturing and assembly of electronic products.

Plastics, chemistry and pharmaceuticals

The plastics industry in Kenya is well developed and produces products from polyvinyl chloride (PVC), polyethylene, polystyrene and polypropylene. All materials are imported in the form of granules.

A large number of pharmaceuticals are produced locally in the form of tablets, syrups, capsules and injectables, but the bulk of pharmaceuticals are imported. There are opportunities for additional investment in the pharmaceutical industry.

Many attractive investment opportunities in the chemical, pharmaceutical and fertilizer industries remain untapped. These include:

• Production of PVC granules from ethyl alcohol
• Formaldehyde from methanol
• Melanin and urea
• Mixing and granulating fertilizers
• Copper oxychloride for coffee bean disease
• Products based on caustic soda and chlorine
• Activated carbon
• Precipitated calcium carbonate
• Textile dyes
• Ink for ballpoint pens and gelatin capsules.

Mining and mineral products

Opportunities exist in glass production as the country is not self-sufficient. Some enterprises produce ceramic tableware and tiles, but significant volumes of ceramic tableware, tiles, sanitary ware and insulating materials are imported.

Investment potential exists in the exploration and production of other minerals such as gold, gemstones and oil.

Wood and wood products

Using renewable resources, investment opportunities exist to produce high quality handcrafted furniture for export, high density sawdust boards for the domestic market, high quality veneers, wooden toys, sporting goods such as cricket bats and rackets, and other specialty items. Recognizing the importance of preserving the environment, the government is implementing active reforestation programs.

4. Construction sector

Kenya has a well-developed construction industry. Quality design, construction and architectural design services are readily available. The industry is currently booming following the rehabilitation and reconstruction of roads and bridges under the El Niño Emergency Funds and the Kenya Urban Transport Infrastructure Program. As the population grows, opportunities for the construction of residential, commercial and industrial buildings, including prefabricated low-cost houses, open up.

Development of rail links with Ethiopia with a branch to South Sudan and development of a second port at Lamu (and other related projects under the LAPSET project):

• Road construction
• Rehabilitation of Kenyan airports
• Expansion of the Kenya-Uganda oil pipeline
• Construction of an oil refinery after the recent discovery of oil in Kenya
• Construction or modernization of oil storage, distribution and processing facilities
• Solar/wind energy installations
• Development of urban housing by the private and public sector

Wide opportunities for investment exist, in particular, in the areas of slum and informal settlement upgrading, urban renewal, construction of housing for middle and low income citizens, production and supply of construction materials and components. Rural roads, especially feeder roads serving major agricultural and industrial areas of the country, are also a priority for job creation and investment.

Opportunities also exist through participation in the Build, Own and Transfer program. (BoT) and the expansion of the Mombasa-Malaba-Busia Highway to become a dual carriageway under the Northern Corridor programme. Transport links will be established with Kenya's northern neighbors — South Sudan and Ethiopia.

5. Infrastructure Development Sector

Telecommunications

Continuing liberalization and privatization are opening up important investment opportunities for private investors, especially in the information technology and telecommunications sectors. Investors with the necessary skills in these sectors can form joint ventures, especially to provide cellular and Internet services. Development of broadband infrastructure. Software and hardware development. Supply of equipment, technical and consulting services.

Business Process Outsourcing (BPO)

This is a new but promising sector for Kenyan youth. It involves providing business services via the Internet to companies and organizations in developed countries. The emergence of improved international connectivity between Kenya through the installation of three submarine fiber optic cables — East Africa Marine Systems (TEAMS), SEACOM and EASSy — led to the creation of cheaper and more capacious communication lines. Fiber optic lines are expected to lower the price per megabyte of satellite communications. This will lead to greater investment opportunities and cheaper access to communications for more users.

There are therefore opportunities for investment in new industries, including BPO firms, software and hardware development, and other application development.

Kenya's Vision 2030 for Business Process Outsourcing is for Kenya to “rapidly become the leading BPO destination in Africa.” Kenya is committed to developing large BPO parks with world-class infrastructure to offer competitive incentive packages to international IT companies. With fiber optic connectivity, Kenya is well positioned to gain a share of the international offshore outsourcing business.

Roads and transport

In order for the future road network to effectively support the socio-economic development of the country, it is proposed to improve the network through the implementation of several projects. In fact, there is a proposal to build an underground transport system, like in European cities. 

Investment in the following areas is welcome:

• Supply of equipment to ensure road safety
• Road safety training
• Development of high-performance urban transport
• Supply of equipment
• Technical and consulting services
• Tires (Currently there is only one tire manufacturing company in the country, namely Firestone (EA) Limited)

Port facilities

There are investment opportunities in the rehabilitation of berths to give them a new lease of life for efficient and cost-effective operations.

Investment opportunities are available in converting berths at the Port of Mombasa into container berths to service the growing container traffic.

There is also potential to study and install modern information technology at the Mombasa Container Terminal to improve the smooth movement of containers.

The Likoni ferry in Mombasa poses a major transport obstacle. ICDC intends to approach investors with the necessary technical know-how and finance to build a bypass road to replace the Likoni ferry.

Investment opportunities in port services management:

• Capacity building of the Kenya Maritime Authority
• Supply of equipment
• Technical and advisory services for marine technology

Civil aviation

Potential opportunities exist in the following areas:

• Development of airports to serve constantly growing passenger flows and growing air traffic
• Reconstruction of airports
• Airport management
• Supply of equipment, technical and consulting services
• Transport facilities for transporting horticulture and fish from the newly built Kisumu International Airport

6. Natural Resources Sector

The country has unique natural resources. Some of these include drilling and extraction of clean drinking and agricultural water, oil, gold, precious stones and many other natural resources.

Investment in forestry

Achieving sustainable forest management requires targeted investments in the following areas:

• Capacity building in resource assessment, planning and management, impact assessment
• Geographic information systems, monitoring and evaluation
• Development of credit support for private forest investments
• Improving data and information for management planning through regular surveys and forest inventories
• Development and improvement of marketing of forest products
• Modernization of the forest industry to increase efficiency
• Dryland farming

7. Finance sector

There are various investment opportunities in the banking and finance sector such as:

• Financial technologies
• Investment banking
• Microfinance services 
• Insurance services 
• Business consulting services

8. Education sector

The government of the country encourages the education sector as one of the most important in the development of the state. There are numerous opportunities for publishers, school management system providers, and investments in primary, secondary and higher education institutions. In addition, there are investment opportunities in the areas of digital content, technical training and research.

9. Real estate sector

The Kenyan middle and upper class is rapidly developing and creating numerous opportunities in the real estate sector. They include:

• Construction of residential and commercial buildings
• Mini shopping centers
• Shopping complexes
• Office buildings
• Entertainment centers

10. Health sector

Kenya's growing population necessitates increased investment in the health sector to ensure a high level of health care in the country. Investment prospects exist in the construction of inpatient, outpatient, maternity and diagnostic centers. 

Opportunities for investment also include the distribution of medicines, consumables for hospitals and the production of medical equipment. 

11. Tourism sector

Kenya has unique tourism attractions such as beautiful beaches, rich and varied wildlife, numerous national parks and reserves. The country is also the owner of the eighth wonder of the world — migration of wild animals.

Investment opportunities in this area exist in the maintenance of tourist routes, as well as in the construction of hotel chains, amusement parks, clubs, casinos, specialty restaurants, conference centers, golf clubs and much more.