Investing anywhere in the world requires one’s due diligence, but thankfully Kenya has made such an opportunity for foreigners a streamlined and user-friendly process, for those that plan on applying for the Business Permit and Visa in Kenya.
Nonetheless, an investment plan should be made while considering the many factors that make Kenya a brilliant investment opportunity.
Economic Outlook
Kenya’s population is the second largest in the EAC and is growing at a rate of 2.7 percent per annum. The trend towards urbanisation is forecasted to continue, with the size of Kenya’s middle class having increased at a compound annual growth rate of 2 percent over the past 10 years.
Investment Opportunities
The world bank has projected Kenya’s economic growth to reach 5 percent in 2023 following the pandemic’s low infection rates and gradual relaxation of travel restrictions.
The education, hotels and accommodation, and transport sectors are all set to see considerable growth over the next few years.
Market Research
Kenya has a market-based economy and is considered the economic, commercial, financial, and logistics hub of Eastern Africa.
Agriculture is still the most essential sector and the backbone of Kenya’s outgoing trade and central economy.
Legal and Regulatory Environment
There is a fair list of appropriate laws and regulations supporting and incentivising foreign investment in Kenya, some of which are mentioned below.
In 2021, The Business Laws (Amendment) Act came into force to support business activities in Kenya.
Besides the abovementioned amendment act, there is also the Foreign Investments Protection Act, which aims to protect the interests of foreign investors by providing protection to certain approved investments.
And finally, the Investment Promotion Act, that gives way to the promotion and facilitation of investment licences to foreign investors.
Political Stability and Security
Kenya’s political stability is remarkable, and the country has made significant political and economic reforms contributing to growth and development across all forums.
Kenya operates in a Multiparty Democracy, providing not only freedom for citizens and foreign nationals but for national and foreign investors as well. Their policies mean that investors are free to retrieve profits from investments without fear of security or financial risks.
Infrastructure and Logistics
Kenya has made considerable progress in its plans over the years to develop its internal infrastructure and boasts the best business infrastructure in the EAC. Kenya also has one of the highest access to the internet on the continent, with over 70 percent of its population having access to high-speed internet.
The focus on investment in infrastructure has vastly improved the economic stability of the country, and there are a number of long-term PPP-approved projects set to continue to improve the state of the nation’s infrastructure.
Access to Skilled Labour
Kenya has one of the best-educated workforces in the world, boasting an extremely versatile, majority-English-speaking collection of qualified professionals in all fields and sectors.
Kenya also has the highest literacy rate in the region, sitting at over 90 percent.
Financial Considerations
In order to invest in Kenya, one has to apply for a Kenyan Business/Investment Visa (KIP) and be able to show both capability and willingness to invest.
A minimum amount of USD100,000 must be produced, otherwise, the application for the visa will be denied.
The growing middle class in Kenya showcases a rise in profitability through real estate investments; The potential ROIs are also attractive, ranging from 8 percent to 30%. As long-term asset classes, both real estate and agribusiness investments are among the best.
Risk Assessment
Kenya has an overall political and economic risk rating of B, termed an acceptable investment risk.
There is always a risk of corruption and deficiencies in governance, but thanks to the various laws and regulations, one is often protected against government interference.
Mitigating such risks is possible by ensuring investments in the correct sectors, such as agriculture and real estate. The challenges of investing are also minimal thanks to the business culture that has developed over the decades of development.
Government Incentives and Support
The Kenya Investment Mechanism (KIM) is a USAID program facilitating over 5 years of USD520 million investment for various sectors of the Kenyan economy. Naturally, the program aims to incentivise private investment and looks to mobilise and accelerate economic development.
It aims to rectify previously recognised issues present in the economy, one of which is quality consulting services. It brings forward better financial institutions and business advisory service providers through a level of technical training and assistance.
Local Partnerships and Networks
Kenya’s longstanding tradition of entrepreneurialism brings with it an idea of helpfulness within the investment community.
Local networks are always looking to assist in accordance with the SDG Partnership Program, prioritising the development of stakeholders both local and foreign.
Sustainability and Corporate Social Responsibility
The Kenya Bureau of Standards (KEBS) CSR programs have been designed to support the mandate of standardisation, working within to support community projects of different kinds. The aim is to positively impact Kenyan society, reflecting the expectations of the society and its stakeholders.
The main goal of the Kenya Bureau of Standards is to maximise its contribution to sustainable development within Kenya.
Entry and Exit Strategies
All investments require contingency plans, and Kenya’s government compliance mandates ensure that any investor’s plan to liquidate or dispose of assets is met with preferential treatment towards the investor.
Kenya’s macroeconomic policies provide a secure treatment for the procurement of an investor’s capital and profits.
Tax Considerations
Several tax treaties exist for foreign investors, as well as protective laws and agreements that provide a safety net both for new and longstanding investors.
For newly listed companies, there are preferential corporate tax rates depending on the share listings, and there are several tax exemptions for those wishing to invest in real estate agriculture.
Conclusion
Developing an investment plan takes time and effort and is an important elementary step in ensuring a stable and effective investment experience in Kenya.
Consult a financial advisor and read up on more specifics of the world of investing in Kenya.
Written by Simon Carletti, PR and Creative Supervisor
