KENYA is considered as the regional hub for trade and finance in East Africa. The political instability and its impact on key sectors like agriculture and tourism, had dampened the expectations of continuous growth in the country. But a diversified economy has helped East Africa’s largest economy, to experience a considerable growth in the past few years. The growth is driven by several key factors like reasonably well-educated labour force, a vital port that serves as an entry point for goods destined for countries in the East African and Central Africa interior, abundant wildlife and kilometres of attractive coastline and above all, a government that is committed to implementing business reforms. Kenya’s agricultural development remains the most important contributor to GDP.Kenya’s position as the economic, commercial and logistical hub in Eastern Central Africa, places the country as one of the best investment destinations globally.
Foreign Direct Investments (FDI) has been on the rise and is strongest in the East Africa region. Kenya is the dominant economy in the East Africa Community, contributing more than 40% of the region’s GDP. This is also uniquely distinguished from many countries by the fact that Kenya’s economy is one of the most diversified with no oil, nor gas exports. Kenya’s growth is projected to rise to 5.9% in 2016 and 6.1 % in 2017. India and Kenya are working on strengthening the ties shared by the two countries. To help bilateral cooperation attain new heights, the Prime Minister of India, Mr Narendra Modi, paid a State Visit to Kenya from 10 to 11 July 2016. The visit culminated in the signing of the following agreements to boost bilateral cooperation:
Fiscal Evasion with Respect to Taxes on Income
MoU between Bureau of Indian Standards and Kenya Bureau of Standards
Agreement on Exemption of Visa for holders of Diplomatic Passports
Line of Credit Agreement for US$ 15 million to IDB Capital Limited, for development of small and medium enterprises [SMEs]
Line of Credit Agreement for US$ 29.95 million to the Government of Kenya for upgrade of Rift Valley Textiles Factory [RIVATEX]
Private sector-led economic growth has since the early 2000s, been Kenya’s Priority. Kenya has a market-based economy and is generally considered the economic, commercial, and logistics hub of East Africa. With the strongest industrial base in East Africa, Kenya has been successful in attracting private equity capital. The Government’s business-friendly stance has helped set development benchmarks for a number of priority sectors. This has been complemented by the integration of the East African Community (EAC) and the establishment in 2005 of a customs union and a common market. Kenya is a member of COMESA (Common Market for Eastern and Southern Africa) with 19 countries, and 14 of which are in a Free Trade Area (FTA). Three regional economic blocks i.e EAC, COMESA and SADC (South African Development Community) with a combined population of over 600 million people are currently developing a joint framework and roadmap towards a Free Trade Area by 2015. With all these developments happening, the real GDP growth which was 5.3% in 2014, is estimated to be 6.4 % in 2017. Kenyan economy is on the path of expansion and offers opportunities for more cooperation in engineering, electronics, pharmaceuticals, textiles and information technology sectors.
| Currency | Kenyan shillings (KES) |
| Exchange Rate | Kenyan shillings (KES) per US dollar – 99.73 (2015 est.) |
| GDP Official Exchange Rate | US$ 61.41 billion (2015) |
| GDP Per Capita (PPP) | US$ 3, 200 (2015) |
| GDP – composition, by sector | Agriculture: 29.9% Industry: 19.5% Services: 50.6% (2015) |
| Industries | Small-Scale Consumer Goods (Plastic, Furniture, Batteries, Textiles, Clothing, Soap, Cigarettes, Flour), Agricultural Products, Horticulture, Oil Refining; Aluminum, Steel, Lead; Cement, Commercial Ship Repair, Tourism |
| Export | US$ 5.679 billion (2015) |
| Export commodities | Tea, Horticultural Products, Coffee, Petroleum Products, Fish, Cement |
| Export Partners | Uganda 11.3%, US 8.3%, Tanzania 8.1%, Netherlands 7.4%, UK 6%, Pakistan 4.2% (2015) |
| Import | US$ 16.2 billion (2015) |
| Import Commodities | Machinery And Transportation Equipment, Petroleum Products, Motor Vehicles, Iron And Steel, Resins And Plastics |
| Import Partners | China 30.1%, India 15.5%, UAE 5.7%, US 4.8%, Japan 4.7% (2015) |
| Ports and Terminals | Major Seaport: Kisumu, Mombasa |
| Rank on the Ease of doing Business Index, 2015 | 108 |
| Source: www.cia.gov | |
| Location | Southern Asia, island in the Indian Ocean, south Eastern Africa, bordering the Indian Ocean, between Somalia and Tanzania of India |
| Area | 580,367sq km |
| Climate | Varies From Tropical Along Coast To Arid In Interior |
| Time Difference | IST (India is 2 hours and 30 minutes ahead of Kenya) |
| Population | 45,925,301 |
| Population growth rate | 1.93 % |
| Literacy Rate | 98 % |
| Major Languages | English (official), Kiswahili (official) |
The market in Kenya is evolving and also shares good relations with its neighboring countries in the African continent. But a few challenges faced by the business community while doing business in Kenya are : physical infrastructure- though Kenya has a superior infrastructure as compared to its neighboring countries but still it remains underdeveloped and a key obstacle to economic development; low level of price competition in Kenya compared with many other fast-developing countries which is a challenge for traders as it affects market efficiency; insecure environment for business especially in urban settings and corrupt dealings are also prevalent in Kenya; Legal recourse in Kenya is slow and expensive. But the Kenyan government is trying its best to overcome these hindrances and build a strong market base.
MARKET ENTRY STRATEGY A common strategy followed in Kenya is to first appoint an agent or distributor, and then to enter and register. Kenya is one of the key logistical conduits into the East Africa Community (EAC) regional market consisting of South Sudan, Kenya, Tanzania, Uganda, Rwanda, and Burundi. Many foreign companies operating here do business under their own name to manage penetration into the larger, regional market. Companies that create jobs and implement strong Corporate Social Responsibility (CSR), education and training programs are appreciated. Capacity building to create employment is needed to support Kenya’s economic development goals. India-Kenya bilateral trade India and Kenyan government have cordial relations and good cooperation dating back to several centuries. The Indian Diaspora in Kenya has contributed to Kenya’s progress. The migration of Indians to Kenya took place in the late 19th century and the early 20th century to help build Mombasa-Kampala railway line. Also many of the Indian have set up businesses in Kenya. Both the countries share common views on regional; and global interests and cooperated closely in regional and multi lateral fora. The bilateral engagements between the two countries have been strengthening with regular high level visits, growing trade and commerce as well as extensive people to people contacts and business opportunities. Kenya is an important trade and investment partner for India. Bilateral trade was US$ 4.235 billion during 2014-15. There has been a growing trade (US$ 3.15 billion in 2015-16) and investment partnership. Indian firms have invested in telecommunications, petrochemicals and chemicals, etc. and have executed engineering contracts in the power and other sectors. Kenya is a founder-member in the Indian Ocean Rim Association. India’s exports were worth nearly US$ 4.12 billion. Principal Indian exports to Kenya include pharmaceuticals, steel products, machinery, yarn, vehicles and power transmission equipment. Main Kenyan exports to India include soda ash, vegetables, tea, leather and metal scrap.Despite the many challenges that Kenya presents, there are a good number of opportunities locally and regionally. Kenya offers potential investment opportunities in sectors like infrastructure, environment & natural resources, Building and construction, manufacturing, agribusiness engineering services like : power generation equipment and power transmission infrastructure, household appliances.
INDIA KENYA TRADE IN ENGINEERNING GOODS India and Kenya have maintained strong trade ties over the years. India is the third largest exporter to the country for engineering goods.| Table : 2 India-Kenya engineering trade trend | |||||
| Year | 2011-12 | 2012-13 | 2013-14 | 2014-15 | 2015-16 |
| EXPORT | 644.01 | 701.12 | 741.23 | 630.07 | 661.17 |
| IMPORT | 13.91 | 7.89 | 6.07 | 13.55 | 6.12 |
| TOTAL TRADE | 657.92 | 709.01 | 747.3 | 643.62 | 667.29 |
Kenya has the chance to develop a great infrastructure for the investors. The country is attempted a number of projects that help to develop their infrastructure to present developed opportunities for the investors.
The plans the government adopt to develop their infrastructure are as follows:
1. Redevelopment of the Northern Corridor,
2. Development of a commuter railways system around Nairobi
3. Building of a standard gauge line to replace the current Kenya-Uganda railway
4. Design and Construction of a new terminal at Jomo Kenyatta International Airport
5. Development of a new corridor from Lamu to South Sudan and Ethiopia (LAPSET)
The building & construction industry is developing on a continuous mode in Kenya. There is a large number of quality engineering, building and architectural designs are available. The industry is now on an upward trend. As the population of the country is growing in number, the demand of the housings, residents are also increasing. Now it is a great chance for investors to invest their money in Kenya as there is a huge chance of profit.
Many well established company in the ICT market have showed their interest to expand their business in this country. Kenya has a large opportunities for highly educated and innovative talents.
Reasons to invest in this sector:
Kenya is full of environmental and natural resources. There are many scopes to invest money for investors. Some of the sources are:
Mining: Kenya is gifted with an unnumbered range of minerals which is yet to be exploited. Investors have a great opportunities to endow money through direct and joint ventures.
Carbon offset schemes: This is another sector that gives ample opportunities for the investors.
This agro based sector has also enough opportunities for investors. To satisfy the rising demand of manufactured goods, the markets are in need of global ventures. This demand opens the door of investment of the investors.
In the banking sector of Kenya, more than 40 banks are being dominated by five major banks. The remaining banks are very small and have very small outreach. For this reason, there is high cost of credit. There is a large number of population is yet unbanked in the country. So it is a profitable sector to invest in.
Agriculture is a major source of livelihood. The sector includes crop production (industrial & food crops), horticulture, livestock, fisheries and forestry. There are ample chances for foreign investors to invest in joint venture in this sector. The advantages an investor would get include:
Availability of a well-established export market for agricultural products
Availability of multinationals in the sector
Availability of affordable labor and agricultural land
Bilateral agreements that favor local production.
This is another field of interest for the investors. The reasons to invest here are:
Investors find this helpful yet not exploited sector to invest in to be profitable. It is one of the leading foreign exchange earner of Kenya. It is fast growing sector. Investors can take advantage of Kenya is gifted with unique and vast combination of tourist attractions such as beautiful coastal beaches, coral reefs, caves and river deltas, abundant wildlife, national parks and game reserves. It has good climate, beautiful geographical landscapes, savannah grasslands, forests, salt and fresh water lakes. It also includes hot springs, mountains, botany and zoology, world heritage sites, and rich cultural history. Investors will find it highly profitable to venture with the country.
The country is facing an ongoing liberalization and privatization. This progress opens up enormous opportunities to invest in private sectors especially in the information technology and telecommunication sectors. This sector includes the distribution of cellular phones and internet services. The country is very much potential in this sector.
At recent times, Kenyan oil market is spread through all major countries. Many major oil markets are being facilitated by the production of this country. It is a very profitable sector for the investors to invest their money. Investors can invest money individually or they can work in joint venture. Both will be profitable.
Kenya experienced a huge development in the industrial and commercial sectors. The country is now in need of establishing a commercial bank. This is an excellent chance for the investors to expend their money in this sector as there is a huge requirement of money.
Kenya has a huge scope in textile industry. There is chance and potentiality of investment in synthetic fibers and dyes. Investors can spend money up on the sectors of making garments for European and American markets. There are also chances in cotton growing, ginning, spinning and weaving.
Kenya has a huge water resource from Indian Ocean and Victoria Lake. This opens up the chance of vast fishery potential for the country. At recent times, deep sea fishing, prawn and trout farming are growing rapidly. The sectors need more investments for more supports. It is a great chance for business dealers to spend money in this sector.
Kenya is the largest economy in East Africa in terms of GDP. Kenya’s GDP was valued at US$ 61.1 billion in 2014, and is increasing annually at an impressive rate primarily because of policy changes. It is also because of improvement in economic scenarios and developmental steps taken by the Kenyan government leading to recent up gradation of Kenya to a lower middle income country from a least developed country by the World Bank. Positive expansions have taken place in the key sector of tourism, in electricity, which benefitted from improvements in power supply.
Kenya is an emerging economy with huge scope for bilateral trade and investment. Kenya offers investment in mostly all the sectors majorly in agro based industries, machinery and building materials, furniture, textiles machinery, food processing, pharmaceuticals, electronic goods, solar technology products, roads, ports, railways and energy sector.
Kenya is a part of three major regional economic communities of the African continent. These include EAC (East African Community) which consists of six eastern African countries and having a combined GDP of US$ 169.5 billion (2015); COMESA (Common Market for East and Southern African countries) which comprise of nineteen countries; and SADC (Southern Africa Development Community).
Kenya’s membership in these regional integration provides an expanded market of approximately 300 million people.
There is a huge potential for the Indian companies in Kenya in various sectors.
Kenya and the wider East African region offer a huge amount of potential which is why the organisers of INDO AFRICA B2B TRADE IIAMSTX 2020 decided to run such a large scale event. There are so many different events around the world but below are a few facts about Kenya and the region to help show you what a great opportunity there is for companies to enter, develop and grow in the region:
So, this is the right time to capitalize on the flourishing and rewarding trade propositions on Kenyan soil with IIATE Initiative.
