Investing in Kenya_Konza Investment 2012

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KONZA TECHNO CITY:

INVESTORS CONFERENCE

INVESTING IN KENYA

Presentation

From a Great Past to a Greater Future 1

ESTHER KOIMETT, CBS

INVESTMENT SECRETARY8th August, 2012


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Area: 583,000 sq. km

GDP : USD 35 Billion

Population : 40 million

GDP per Capita: USD 800 (USD 1700 in Purchasing

Power Parity terms)

Facts about Kenya


GDP % Growth(2011): 4.4%, 5.2% (Projected 2012)

Debt/GDP: 48%, B+ with stable outlook (Fitch Rating)

Gateway to:

East Africa Community 150 million people, among

the fasted growing regions in the world.Ethiopia, South Sudan, DRC 150 million people


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Real GDP growth of

4.4% (2011); 5.2%

(projected 2012);

Inflation for July

Kenyas Economy is on a Rebound After a Series of

Shocks: Domestic and External

5.1

5.9

6.3

7.0

5.8

4.45.0

6.0

7.0

8.0

(%)

Real GDP growth


2012 stands at 7.7%

The shilling

exchange rate stableat the range of KES

84-85 per US$

2.9

1.5

2.7

0.0

1.0

2.0

3.0

4.0

2003

2004

2005

2006

2007

2008

2009

2010

2011*

percen

tage


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Economic Prospects into the Medium Term and

Beyond

Projected growth of 5.2% for 2012 (rising gradually to 6% over themedium-term) is moderate given the obtaining economic

circumstances (both globally and domestically)

Overall, we expect this growth to be bolstered by continued

expansion in:

agriculture (with normal weather),

tourism (with improved security and marketing),


construction (with continued public infrastructure spending),

transport and communication (with expansion of ports), and

ICT (with increased investment in technology)

Exports expected to continue performing well given the relatively

strong growth in the sub region, and measures to promote Kenyas

exports globally.


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Flower Farming Using Geothermal Steam in Naivasha

(to boost Exports)



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Assessment of Kenyas Economic Management

by Independent Sources

Kenyas track record in sound economic management

has been validated through independent external

reviews by international financial institutions and rating

agencies.

The latest Country Policy and Institutional Assessment

(CPIA) Scores by World Bank released in June 2012


p ace Kenya at a score o . out o a max mum 5. T s s

well above the average for IDA countries (i.e. low income

countries) at 3.3.

The score is even higher for economic management and

structural policies which averaged a score of 4.1. The Standard and Poors rating for Kenya is B+ stable

Fitch rating is B+ positive.


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Tourism - Kenya



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Kenya Investment Authority (KenInvest) wasestablished under the Investment PromotionAct, 2004, as the one-stop shop to promote andfacilitate investments in Kenya for both domestic

and foreign investors.

Institutional Framework for Promoting and

Supporting Investment - KenInvest


This role has been brought into sharper focusunder Vision 2030, which has set investmenttargets for identified priority sectors that will help

make Kenya an industrialized, middle incomecountry by the Year 2030.


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PolicyAdvocacy

Investment

Promotion

After Care

Services

KenInvest delivers its mandate through:


InvestmentFacilitation

InvestorTracking


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Investment Promotion:

Facilitates investments through:

Issuance of Investment Certificates;

Assisting investors to obtain necessary


licenses and permits;

Assisting to obtain incentives or exemptions

under various Acts and other regulations;


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Facilitation and Advocacy Roles:

Provides Information on Investment

opportunities and sources of capital;

Promotes, both locally and internationally,

investment opportunities in Kenya ;


Reviews the investment environment and makes

policy recommendations for the promotion and

facilitation of investment


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Step by Step Guide To Investing in Kenya

Issue of the Investment Certificate

RegisterApply to

ApprovalCriteria:

security,

Approval

Investment


thebusiness

forApproval

health andenvironme

ntrequiremen

ts

within 21days

Certificateissued byKenInvest


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Legal Protection for Investment

Kenya Constitution protects against expropriation of privateproperty

Free Movement of Capital : no exchange controls exist inKenya: investors can freely repatriate capital, profits andinterest.

Member of the Multi-lateral Investment Guarantee AgencyMIGA an affiliate of the World Bank insures forei n


investments against non-commercial risks

Member of the International Centre for Settlement of

Investment Disputes (ICSID) which arbitrates cases between

foreign investors and host governments

Member of the Africa Trade Insurance Agency (ATIA) which

insures investors against political risks


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Financial Sector Reforms

A financial infrastructure fully aligned to

international best practice

Review of banking, capital

Reforms to Improve Investment Climate


mar ets, insurance, an pension egis ations

Deepening and developing the financial

market

Working on an MOU with theCityUK to supportestablishment of International Financial Centre


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Business Regulatory Reforms

Reforms in the

Land registry


,

companies registry

The Single Business Permit


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Business Regulatory Reforms cont

Modernization of private sector laws

aimed at simplifying business

registration, dispute resolution and winding-

up procedures.


Bills before Parliament include:

New Companies Bill;

The Insolvency Bill;

Limited Liability Partnership Bill; andThe Partnerships Bill.


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Market Access/Integrationopportunities

Kenya is the gateway to the East


African Community (EAC) and isactively positioning herself to reapthe benefits from regional

integration in the EAC and the widerCOMESA market.


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Mombasa Port: Gateway to East Africa



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Trade Facilitation

Kenya is implementing an Electronic Single

Window System to serve as a single entry

point, for parties involved in trade and

transport, to lodge documents


e ec ron ca y, or process ng an approva

and make payments electronically for

fees, levies, duties and taxes due to the

Government, on goods imported or

exported.


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Existing taxation incentives are

favorable

100% investment allowance for manufacturing projects;

VAT remission on capital goods including machinery;

Export processing zones (10 year tax holiday, exemption on

duty and VAT on machinery, equipment and raw

materials, exemption from stamp duty and withholding tax


Duty remission on inputs for production of exported

goods; and

We are in the process of preparing a legislation on Special

Economic Zone (SEZ) to attract investment inmanufacturing


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Kenya is providing the right environment for implementation of PPPs

by:

1. Provision of Supportive Policy and Legal Environment

Issuing a PPP Policy by Government in December, 2011

A PPP Bill is currently in Parliament2. Placin the PPP initiative within the reform a enda

Creating an Enabling Environment for

PPPs


3. Establishing a PPP Secretariat at Treasury, as well as PPP

Nodes in Contracting Authorities

4. Adoption and localisation of internationally successful PPP

models

5. Preparation of Bankable PPP Transactions: A PPP Pipeline finalized in June 2012

World Bank financial support sought to prepare the priority

projects


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What The PPP Law Provides To Investors

Risk mitigation - Letters of Support, Guarantees

(Demand/Traffic Guarantee), subsidies

Inflation and interest rate indexation

Performance monitoring mechanisms

Direct Agreement and step-in rights to Lenders


Compensation for termination/ extra-ordinary events/ direct

impact of change of Laws/political event

Establishment of a Viability Gap Fund to support

economically viable projects which may not be financially

viable without Govt support


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A clear, transparent, fair and competitive process for

PPPs, covering Project

identification, selection, prioritization, preparation, appraisal,

procurement, approvals and procurement of project

Advisors;

A clear institutional framework for develo ment and a roval

What the PPP Law Provides To Investors

contdPPP Law Provides To Investors


of PPP projects Cabinet, PPP Committee, PPP

Secretariat, Contracting Authorities and the role of Treasury

in fiscal risk management and Contingent Liabilities

Government will prepare bankable projects before going to

the market; and Use of Privately Initiated Investment Proposals (unsolicited

bids) method of procurement when there is urgent need for

continuity and where there is intellectual /innovation.


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The PPP Process

1. Feasibility/RFP2. PPP Comm.

Approval

3. Pre-q/Competitive

Dialogue/Bidding

4. Evaluation/Negotiations: by

5. A roval b

6. A roval b

From a Great Past to a Greater Future25

ec .

& Commercial

PPP Committee

.Cabinet

7. Notify Successful

Bidder 8. Financial Close.

9. Formalize

ConcessionAgreement


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PPP Framework/Legal

Kenyas legal system is based on Common Law which isconducive for PPP development

Kenya has a New Constitution (2010) that provide

democratic and governance institutions (stability)

There is existence of conducive regulatory framework in

the utility sectors to facilitate PPPs (energy, ICT, Transport) Judiciar is under oin structural reforms to im rove


business climate

There is a strong Contract law (contracts will be honoured)

Government, as a first step, issued PPP Regulations,

March 2009


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Menengai Geothermal



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Concluding Remarks.

Our overriding objective is to create and sustain a

stable and predictable macroeconomic

environment that is supportive of private

investment.

In this way, we can grow our economy, reduce


poverty and ultimately attain our Vision 2030

objectives.

In short, Kenya is open for business and you are

all welcome.


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Nairobi Welcomes You to Invest in Konza



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Investing in Kenya_Konza Investment 2012

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