NOVEMBER 2013 IN AMSTERDAM, NETHERLANDS … Kariuki.pdf · On Kenya’s economic performance,...
Transcript of NOVEMBER 2013 IN AMSTERDAM, NETHERLANDS … Kariuki.pdf · On Kenya’s economic performance,...
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REMARKS BY KEPSA CEO ON “ECONOMIC TRANSFORMATION OF KENYA THROUGH BUSINESS
TO CREATE WEALTH AND EMPLOYMENT” DURING THE AFRICA DAY ANNUAL EVENT ON 2ND
NOVEMBER 2013 IN AMSTERDAM, NETHERLANDS
BACKGROUND & OVERVIEW
Let me begin my speech by taking us down memory lane, much like the Minister did briefly.
Since the 1950s Africa has gone through major transitions both democratically and
economically; for many sub Saharan African countries these can be grouped into 3 distinct
transitions: independence, reforms and economic growth. Different countries have gone
through these at different times and in different ways. What is common is the independence
transition fell around the same time for most countries as the economic growth which is
currently sweeping the continent. Other transitions and sub transitions depend from country to
country.
For Kenya, the independence transition was shaped by the Nationalists who fought for political
independence from the British. After independence, the transition of reforms began
economically with nationalization of industries which saw many foreigners; especially of Asian
origin leave the country, indigenous Kenyans then begun to own businesses and Government
increase its share of businesses. This was then followed by political reforms shaped by the civil
society, calling for rule of law, human rights, changes in the constitution and other governance
issues. This period was most active in the 1980s and 1990s leading to the early 2000s. This led
to changes in sections of the constitution, continued clamor for a new constitution and revival
of governance and economic institutions.
Both the independence transition and reform transitions were very heavily characterized by
foreign Aid. The era of economic growth then started in early the 2000s and this was
characterized with business getting more organized, thriving, engaging in pro growth policies
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and strategies like the economic recovery strategy of 2003 and the vision 2030 of 2008, joining
forces with civil society in clamoring for a new constitution finally promulgated in 2010, rule of
law, security and continued political stability. This era though different in many countries led
and continues to shape Africa's economies. It is a transition focused on trade and investments
with many African countries including Kenya changing its foreign policy to economic diplomacy,
where engagement with the West is trade and investment. A time for building new economic
partners with the rise of Asian countries as well as Russia and Brazil
Africa’s economic pulse has quickened, infusing the continent with new commercial vibrancy.
Real GDP rose by 4.9 percent a year from 2000 through 2008, more than twice its pace in the
1980s and ’90s. Telecommunications, banking, and retail are flourishing. Construction is
booming. Private-investment inflows are surging.
Many of Africa’s 50-plus individual economies face some development challenges; yet Africa’s
collective GDP, at around $2.0 trillion in 2011, is now roughly equal to Brazil’s or Russia’s, and
the continent is among the world’s most rapidly growing economic regions. While Africa’s
increased economic momentum is widely recognized, its sources and likely staying power are
less understood. Soaring prices for oil, minerals, and other commodities have helped lift GDP
since the year 2000.
According to a report “Lions on the move: The progress and potential of African economies,” by
the McKinsey Global Institute (MGI), resources accounted for only about a third of the
newfound growth. The rest resulted from internal structural changes that have spurred the
broader domestic economy. Both the long term, internal and external trends indicate Africa’s
economic prospects are strong, but each African country is expected to follow its own path to
economic prosperity.
On Kenya’s economic performance, Kenya's macroeconomic indicators have shown a positive
trend on average over the last 10 years pointing to economic growth of Kenya. According to
figures from the Kenya National Bureau of Statistics (KNBS), Kenya’s GDP was about US$17.39
billion 8 years ago. Per capita GDP averaged approximately US$450 annually. Adjusted in
purchasing power parity (PPP) terms, per capita GDP was about US$1,200. The country’s real
GDP growth picked up to 2.3 percent in early 2004 and to nearly 6 percent in 2005 and 2006,
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compared with a sluggish 1.4 percent since (1997–2002). Kenya’s economy evidenced an
annual real GDP growth rate of 4.73 in 2012, as compared to an annual real GDP growth rate
of 4.4% in 2011 and 5.8% in 2010.Real GDP is expected to continue to improve, largely because
of expansions in tourism, telecommunications, transport, and construction and a recovery in
agriculture and now the new sector of oil and other minerals.
Many economic studies conducted in Kenya have attributed this improved performance to the
recent reforms in Kenya, the area of exchange rates is one, from fixed exchange rate regimes to
pegged and later floating regime through liberalization in the nineties. Kenya’s overall monthly
inflation has dropped to 7.76% in the month of October 2013 from 8.29% in the month of
September 2013. This is an indicator of the effectiveness of the inflation targeting policies the
Central Bank of Kenya has continued to implement.
In the next 20 years, an average annual growth of above 6% and 3% in productivity is
projected. Kenya is ideally situated as a regional export base catering for demand from
neighboring economies and is the 9th most attractive economy in Africa (Rand Merchant Bank,
2012); 10th in Africa on the Global Competitiveness Index; 9th in Africa on Ease of doing business
and 3rd on World Bank assessment of economy, reforms and governance covering 16 African
nations.
Kenya like many African countries has undergone economic transformation for the last several
decades to attain this growth. Various studies conducted have tried to explain the patterns and
forces in this process; they unanimously agree on the positive and immense role of the business
in o creating wealth and employment. Privatizations that have occurred over the last few
decades have had immense impact on business activities in Kenya leading to creation of wealth
and employment. This is now being re-thought the high speed privatization is now giving way
to Government run enterprises as more studies around the world reveal Government can still
do good business based on corporate governance and business principles while privatizing
those that need to be privatized.
The Kenya private sector has over the years contributed to social good like building of schools,
providing water and infrastructure to communities they operate in, it has remained the engine
of economy growth, creating wealth an employment for the country. Out of 510,000 new jobs
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created in 2011, the private sector was responsible for 96% of employment generated (only
21,000 were in the public sector) according to Kenya National Bureau of Statistics (KNBS)
statistics. It also contributes over 80% of Kenya’s GDP and is currently rated as the most vibrant
and dynamic. The sector has proofed its resilience despite various external and internal shocks
experienced during the 1980s and 90s, terrorism attacks in 1998, 2001, the post-election
violence in 2008and most recently 2013, engaging with different stakeholders to mitigate the
negative effects to the economy by these incidences . After the 2007 post-election violence the
private sector under the Kenya Private Sector Alliance (KEPSA) engaged the leaders and other
stakeholders to end the violence. In 2013, KEPSA spearheaded a spirited peaceful election
campaign (previous a preserve of the civil society) which inspired the first Presidential election
debates, a first in Kenya and Africa; the campaign contributed greatly to peaceful elections in
2013. Kenya’s private sector is currently rated as the most vibrant and dynamic in East Africa.
ECONOMIC RELATIONS
A. Terms of Trade
In terms of trade and Investments between Kenya and Netherlands, the main exports coming
from Kenya in order of magnitude include: Cut flowers and flower buds of a kind suitable for
bouquets or for ornamental purposes, fresh, dried, dyed, bleached, impregnated or otherwise
prepared; Vegetables, fresh or chilled; Other live plants (including their roots), cuttings and
slips; mushroom spawn; Feldspar; leucite, nepheline and nepheline syenite; fluorspar; Fruit,
nuts and other edible parts of plants, otherwise prepared or preserved, whether or not
containing added sugar or other sweetening matter or spirit, not elsewhere specified or
included; Fruit juices (including grape must) and vegetable juices, unfermented and not
containing added spirit, whether or not containing added sugar or other sweetening matter;
Fish fillets and other fish meat (whether or not minced), fresh, chilled or frozen; and Foliage,
branches and other parts of plants, without flowers or flower buds, and grasses, mosses and
lichens, being goods of a kind suitable for bouquets or for ornamental purposes, fresh, dried,
dyed, bleached, impregnated or otherwise prepared.
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On the other hand, exports from Netherlands to Kenya in order of magnitude include;
Automatic data processing machines and units thereof; magnetic or optical readers, machines
for transcribing data onto data media in coded form and machines for processing such data, not
elsewhere specified or included; Polyacetals, other polyethers and epoxide resins, in primary
forms; polycarbonates, alkyd resins, polyallyl esters and other polyesters, in primary forms;
Parts and accessories (other than covers, carrying cases and the like) suitable for use solely or
principally with machines of headings 84.69 to 84.72; Turbo-jets, turbo-propellers and other gas
turbines; Petroleum oils and oils obtained from bituminous minerals, other than crude;
preparations not elsewhere specified or included, containing by weight 70 % or more of
petroleum oils or of oils obtained from bituminous minerals; Bulbs, tubers, tuberous roots,
corms, crowns and rhizomes, dormant, in growth or in flower; chicory plants and roots other
than roots of heading 12.12; Self-propelled bulldozers, angledozers, graders, levellers, scrapers,
mechanical shovels, excavators, shovel loaders, tamping machines and road rollers; Parts
suitable for use solely or principally with the machinery; Prepared binders for foundry moulds
or cores; chemical products and preparations of the chemical or allied industries (including
those consisting of mixtures of natural products), not elsewhere specified or included; and
Mixed alkylbenzenes and mixed alkylnaphthalenes, other than those of heading 27.07 or 29.02.
B. Netherlands investments in Kenya and private sector support
In October 2010 the Kenya and Netherlands governments concluded negotiations on a double
taxation treaty, responding to growing demand from Dutch business. Netherland’s Ministry of
Economic Affairs, Agriculture & Innovation supports the many Dutch flower and vegetable
growers with businesses in Kenya. Dutch investments in Kenyan horticulture and agriculture
contribute substantially to employment. KLM and Kenya Airways (KQ) work closely together;
KLM has a 26% share in Kenya Airways. Martin air and Dutch charter airlines also fly regularly to
Nairobi and Mombasa. Other major Dutch companies with branches in Kenya include Helios
(which took over Shell’s activities in Kenya), Unilever, Nutricia/Danone, Nedlloyd, Heineken and
Philips.
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The Netherlands has continued to support Kenya’s economic development with its private
sector instruments. They include programs funded through the Netherlands Development
Finance Company (FMO) and, the Private Sector Investment Program (PSI), the Infrastructure
Development Facility (ORIO), the Netherlands Management Cooperation Program (PUM) and
the Centre for the Promotion of Imports from Developing Countries (CBI).
KENYA’S KEY STRENGHTS, INVESTMENT OPPORTUNITIES & INCENTIVES
A. Kenya’s key strengths
While there is trade between the two countries this can be enhanced but more importantly
have a greater focus on investing in Kenya. For this will grow employment and wealth badly
needed by a growing economy and population. Kenya offers a desirable investment and trade
destination due to a number of key strengths that include;
Excellent connectivity to major world-wide hubs and time zones that make it easy to
work with most continents. Nairobi is the undisputed transportation hub of Eastern and
Central Africa and the largest city between Cairo and Johannesburg. The Port of
Mombasa is the most important deep-water port in the region capable of
accommodating both small and large post-panama vessels, supplying the shipping needs
of more than a dozen countries.
A deep pool of educated and skilled manpower has made the country the
manufacturing, commercial and financial hub in eastern and central Africa. Kenya has
achieved almost universal free primary education with net enrollment rates of more
than 92% and 73.3% primary to secondary school transition rates. Presently about 200
thousand students are enrolled in Kenya’s public Universities. A significant number of
Kenyan student are also enrolled in local private universities and universities abroad.
The country enjoys extensive infrastructure, extraordinarily well educated, English
speaking, and multi-lingual population, with strong entrepreneurial tradition.
A leading tourism, wildlife and safari destination. The tourism industry, already one of
the most successful in the world, continues to expand. It’s worth noting Kenya,
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Rwanda and Uganda plan to introduce a joint East African visa from 1
January 2014.
Kenyan government has taken steps to enhance Kenya’s economic competitiveness. In
2010, Kenya promulgated Kenya Constitution 2010 and its implementation has greatly
improved governance, democracy is flourishing.
Large labor force; Population - 39.5 million and is projected to grow to 60 million people
in 2030.Kenya is a very young country with about 50% of Kenya’s population under the
age of 15.
A fully liberalized economy without exchange or price controls. There are no restrictions
on domestic and foreign borrowing by residents and non-residents.
The government has established a Business Regulatory Reform Unit to identify
unnecessary business licenses. Under the unit, the government is strengthening the
legislative framework to create predictable and enabling business environment such as
improving electronic filing of documents at the Lands Registry, the Companies Registry
and other key agencies involved in business registration. All these efforts are aimed at
reducing the cost of doing business and improve Kenya’s Rating on Doing Business
index, thus positioning our country as a referred investment destination
The government has established an Electronic e-registry which lists information on all
businesses. Under e-government, services such as tax returns and payment of custom
duties can be done online.
The government has implemented results based management and performance
contracting for all ministries and departments. This has enabled the public sector to be
able to more effectively support private sector business and investment.
The most developed stock market in the Eastern and Central African region i.e. the
Nairobi Stock Exchange (NSE) with market capitalization of about Kshs. 1.2 trillion
(approximately USD 14.6 Billion)
An attractive and comprehensive package of incentives offered to investors.
A strong and cooperative relationship between the government, the private sector and
development partners make it conducive to attracting investments.
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Membership to regional trading blocs of COMESA and the EAC, as well as a beneficiary
country under the preferential trade enhancing schemes offered by the AGOA
legislation of the USA and the ACP-EU Cooperation and various bilateral Cooperation
agreements. The EAC market has a total population of 133 million and the 20 member
countries of COMESA has a total population of 406 million US$ and a combined GDP of
735 billion US$ which offer important opportunities for business and joint ventures
using Kenya as a spring board to access the larger region market.
Proximity to Eastern Africa and Central African market. These two have a land mass
larger than China and a population larger than the U.S.
A relatively well developed manufacturing base in the Eastern African region.
Potential for exploration and exploitation of mineral resources. Kenya’s mineral
resources though limited, are attractive and a potential source of valuable materials
such as titanium. Kenya has recently discovered oil and other rare minerals in the
country.
Favorable weather/Climate as well as attractive and diverse social/cultural environment.
A relatively well developed infrastructure.
Kenya is currently connected to the world by 4 submarine optical fiber cables greatly
reducing data transfer costs while also increasing internet access.
Kenyan businesses encourage the use of mobile (cell) phones for doing business and
telemarketing. Kenya is the world’s market leader in mobile money where more than 80
percent of those with a cell phone use “mobile money” or “M-PESA”.
Fixed lines and wireless mobile lines are relatively inexpensive.
The electrical current in Kenya is 240 volts, 50 hertz (cycles per second)
A. Investment opportunities
Kenya has various investments opportunities available in the following areas/sectors; Energy,
information and communication, manufacturing, tourism, national heritage and culture,
transport and infrastructure, Nairobi metropolitan region development, agriculture, livestock,
fisheries, trade, watering and irrigation, education, environment and mineral resources,
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building and construction, integrated regional development programs, cooperative
development, land, and health.
(A detailed analysis is attached as Annex 1)
B. Incentives
The Government of Kenya provides a number of incentives to persons who choose to invest in
Kenya:-
INCOME TAX: Corporation tax on the taxable income of a resident company is levied at 30%
while that on non-resident companies is levied at 37.5%. It is also worth noting in Kenya there
is no time limit on the carrying forward of tax losses against future profits from an identical
source of income.
CAPITAL INVESTMENT ALLOWANCES: These are offered on a reducing balance basis and
include;
a. Industrial Building Allowance (I.B.A): IBA is granted on capital expenditure incurred on the
construction of an industrial building and at a rate of 2.5% per annum to the qualifying cost
of the construction of an industrial building and 10% per annum on the qualifying cost of a
hotel building. These rates may however be varied upon formal application to the Kenya
Revenue Authority detailing the inadequacy of the rate provided.
b. Investment Deduction Allowance: This incentive is granted to encourage development in
manufacturing industries as well as the construction of a hotel certified to be an industrial
building and machinery (water pumps, electricity transformers, generators, machinery for
disposal of effluent and enhancing cleanliness of the environment).
c. Farm Works Deduction: This is granted at the rate of 33.33% per annum for three years to
the owner or tenant of any agricultural land who incurs capital expenditure on the
construction of farm works
d. Shipping Investment Deduction: This is granted at the rate of 40% on capital expenditure
and only one such deduction can be allowed in respect of the same ship.
e. Mining Allowance: This is granted at the rate of 40% in the first year and 10% from the
second to the seventh year. (More details are contained in the Mining Act)
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EXPORT PROMOTION INCENTIVES: These are tax incentives geared towards encouraging
exports with the basic idea being to allow exporters to get access to inputs at world prices. The
3 main schemes are the Export Processing Zones (EPZ’s), Manufacture under Bond (MuB) and
the Tax Remissions Export Office (TREO).
EXPORT PROCESSING ZONES (EPZS): Tax incentives are offered to investors that locate their
operations in Export Processing Zones under the Export Processing Zones Act (Chapter 517,
Laws of Kenya) and subsequent amendments thereto as follows: -
a. An initial 10-year corporate income tax holiday and a 25% corporation tax rate for a
further 10 years thereafter (except for EPZ commercial enterprises
b. 10-year withholding tax holiday on dividends and other remittances to non-resident parties
(except for EPZ commercial license enterprises)
c. Perpetual exemption from VAT and customs import duty on inputs VAT exemption also
applies on local purchases of goods and services supplied by companies in the Kenyan
customs territory or domestic market. As well as from payment of stamp duty on legal
instruments.
d. 100% investment deduction on new investment in EPZ buildings and machinery, applicable
over 20 years.
e. Exemption from any quotas or other restrictions or prohibitions on imports or exports with
the exception of trade in firearms and military equipment.
Procedural incentives are also offered to persons investing within the EPZ area together with
exemption from having to take out a number of licenses.
TAX REMISSION FOR EXPORTS: For investors operating outside an EPZ, the government
provides incentives through the remission of taxes incurred in respect of exports of taxable
Goods prior to attaining a security bond. This applies where a person incurs VAT on goods
imported under bond for manufacture of exports. This bond is cancelled after the exporter
satisfies the commissioner for VAT goods have been duly exported. VAT remission will also be
allowed in respect of capital goods (excluding motor vehicles) imported or purchased for
investment in industries such as oil exploration or prospecting for minerals.
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DOUBLE TAXATION TREATIES: Kenya has entered into such treaties with countries such as:
Canada, Denmark, Norway, Sweden, India, Zambia, United Kingdom and Germany. A double
tax agreement for the East African Region (Kenya, Uganda and Tanzania) has not been ratified.
However, Income Tax legislation allowing for unilateral relief operates in Uganda and Tanzania.
In Kenya, the benefit of such unilateral relief is restricted to the employment income of Kenyan
citizens.
INVESTMENT INCENTIVES SPECIFIC TO TOURISM
a. Import duty and VAT exemption: The Government, upon application, exempts import duty
and VAT on the following items and equipment for hotel construction and refurbishment:
washing machines, kitchen ware, cookers, fridges and freezers, air conditioning systems,
cutlery, televisions, carpets, furniture and linen and curtains. All other items and equipment
required by hoteliers is only VAT exempt upon application for construction and
refurbishment.
b. Exemption from VAT: All materials and equipment, excluding vehicles and goods for regular
repair and maintenance, the purchase or importation of which is approved by the Principal
Secretary to the National Treasury, for use in the construction or refurbishment of tourist
hotels, subject to the production of such evidence as the Commissioner may require as to
the quantity, quality and type of good required from the project.
GUARANTEES TO INVESTORS:-
a. Guarantee against Expropriation: The Constitution of Kenya provides guarantee against
expropriation of private property, which may occur for reasons of security or public interest.
In such a case, a fair and prompt compensation is guaranteed.
b. Repatriation of Capital and Profits: Capital repatriation, remittance of dividends and
interest are guaranteed to foreign investors under the Foreign Investment Protection Act
(FIPA) - Cap 518. Investors can repatriate: After tax profits, including retained profits which
have not been capitalized, the proceeds of the investment after payment of the relevant
taxes; and Principal.
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ROLE OF KEPSA
KEPSA is the National apex body of the private sector in Kenya founded in 2003, and that
provides a unified voice of its more than 100,000 members (BMO & corporate representation).
The primary objective of KEPSA is to influence the development of an environment conducive
to business thus, making Kenya more regionally and globally competitive as a source and
destination of investment. KEPSA engages the Executive, Judiciary and Legislature and is
constantly involved in public private dialogue to enhance the doing business environment,
which is a complement for businesses to grow.
CONCLUDING REMARKS
Africa’s economic pulse has quickened, infusing the continent with new commercial vibrancy.
Africa is the next frontier and I would on behalf of the Kenyan business fraternity and Kenyan
people wish to invite you to consider investing in Africa and in Particular Kenya. The role of the
private sector has been and continues being very instrumental in driving the necessary
economic, social and political reforms and thus creating wealth and employment.
ANNEX 1: INVESTMENT OPPORTUNITIES AVAILABLE IN KENYA
Kenya has various investments opportunities that are available in the areas/sectors
enumerated below:
I. Energy sector:
Kenya’s electrical power supply falls far below the demand which is driven by an accelerated
consumer connection policy calling for private sector investment in power generation for sale
to national grid. The recent discovery of oil in northwestern Kenya as well as coal in Kitui
County has opened up investment opportunities for export-led growth as well as in the area of
upstream and downstream, logistics, refining, coal exploration and exploitation. Geothermal
power provides a clean, renewable and affordable fuel of economic growth and Kenya is
Africa’s largest producer of geothermal power. By 2014, geothermal energy is expected to
surpass hydro power as top contributor to the grid. To achieve Vision 2030, Kenya will need
15,000 MW by 2030 and currently unexploited geothermal resources range between 7,000 and
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10,000 MW, which will require $30 billion to exploit. Transmission and distribution of electricity
also needs upgrading and expansion
The priority projects which present immediate opportunities for private sector include:
Transformer manufacturing.
Geothermal development.
Establishment of a 300 MW coal fired plant by the government.
Coal exploration and exploitation.
Small hydropower development.
Renewable energy which will promote use of environmental friendly technologies such
as solar electricity generators and wind power generation.
Bio-fuel production.
Exploration of hydrocarbons and petroleum.
Establishment of Mombasa petroleum trading hub.
II. Information Communication and Technology sector:
Kenya’s ICT sector plays a crucial role in social-economic development of the country and hence
the government is currently offering opportunities to the private sector for investment in it. The
investment opportunities include:
Establishing a data centre and disaster recovery centre.
Deploying of digital broadcast network.
Rolling out E-government services.
Establishing Multimedia Technology Parks (MTPs).
Software and hardware development
Establishing Business Processing Outsourcing Park (BPO).
Development of Konza technology city.
Development of international teleport (exchange point) in Mombasa-co-location facility.
III. Manufacturing sector:
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In recognition of the role of private sector in spear heading industrialization, the government of
Kenya has designed suitable incentive packages and export promotion programs to attract
investment in manufacturing industry. The investment opportunities available in Kenya’s
Manufacturing sector include:
Development of industrial and manufacturing zone.
Development of Small and Medium Enterprises (SMEs).
Establishing of Micro and Small Enterprises (MSE)
Establishment of tire manufacturing plant.
In the agro-processing industry there is processing of white refined sugar and fruit
concentrates.
Other opportunities are in horticulture, development of tanneries, textile and clothing
sector.
Chemicals industry, manufacture of cement and sheet glass production.
Production of salt, sulphur, lime, cement, plastics and rubber products.
Motor vehicle components manufacturing, iron and steel industry and manufacture of
aluminum cans.
The sector also allows for component manufacturing, manufacture of ductile iron rolls
and production of high strength reinforcement bars.
Production of casting sand or molding as well as machine tool industry.
Development and manufacture of medical equipment.
IV. Tourism sector:
Tourism is a main economic activity in Kenya which is seen as one of the pillars to drive the
economy towards vision 2030 targets. In 2012, there were 1.7million international visitor
arrivals and the tourism sector earned Kenya 96 Billion in revenue. Investments that present
opportunities for the private sector are therefore planned to improve its facilities and raise
quality of hospitality services. These investments include:
Development of Isiolo Resort city.
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Development of a Marina at Shimoni, Mombasa that will provide berthing for over 50
vessels and be built to recognized international specifications & safety standards.
Development of various projects including: Bomas of Kenya Tourist project, Bomas of
Kenya Amusement Park project, Health spas project and cruise-ship project on Lake
Victoria.
Other projects are Mombasa port cruise-ship, Tana River primate, Kora, Sibiloi and Kerio
Valley lodge projects.
Development of a water sport and a business and conference tourism initiative.
V. National heritage and culture sector:
Kenya being a multi-cultural society endowed with a rich diverse cultural heritage, there exists
investment opportunities in the heritage and cultural area. The investment opportunities to
promote the sector include:
Development of international culture and art centre which promotes education, skills
and talents development, research and cultural enjoyment to Kenyans thus marketing
the country.
Building new exhibition galleries for Nairobi National Museums where by holding the
block buster exhibition events, having innovative and creative events around the
exhibition, return to investment will be positive.
Sports facilities and stadia which generate income to investors and create employment
opportunities for Kenyan youth.
VI. Transport and infrastructure sector:
Since infrastructure investments require enormous financial resources that cannot be
adequately met from public sector, the government is seeking private capital support for
investment thus creating opportunities in the following areas:
Development of duty free ports or special economic zone at Dongo Kundu.
Development of cruise ship facilities.
Development of airport infrastructure and services.
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Development of a dry dock port and a car bazaar.
Construction of a second port at Lamu and a new port corridor which offers a good
opportunity for investment.
Development and construction of Malindi jetty, proposed Ngomeni jetty and sea wall.
Construction of the standard gauge railway line from Mombasa to Malaba.
There exists also opportunities in Nairobi metropolitan mass transport program, modern
commuter rail service for Nairobi city and road sub-sector which can concession for
Nairobi urban toll road and privatization of weighbridges.
VII. Nairobi metropolitan region development:
Nairobi being a national regional and international strategic centre for education, commerce,
transport, regional cooperation and economic development and that it connects Eastern,
Central and Southern Africa countries it provides several areas of investment. These areas
include:
Disaster management which involves improving the fire fighting, ambulance services
and street lighting.
Nairobi Metropolitan mass rapid transit program.
Development of a modern financial services hub.
Development of a regional trade and business services hub.
Provision of non-motorized transportation.
Development of Closed Circuit Television (CCTV).
Geographical Information Systems (GIS) planning and mapping.
VIII. Agricultural sector:
This is the mainstay of Kenya economy with a great potential for growth. Its vision- to be
innovative commercially oriented and modern, it offers several investment opportunities.
These include:
Production infrastructure which involves development of multi-purpose dams and
irrigation infrastructure.
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Market infrastructure dealing with harvest management facilities, grain storage and
warehouse receipting.
Value addition which involves setting up small scale industries.
Investment opportunities in this sector can also be figured out in terms of specific crops:
Sugarcane development, processing and cogeneration,
Branding tea into various types, decaffeinated, flavouring and packaging it.
Establishing a national coffee roasting and branding plant for Kenya coffee and
marketing cooperatives
Research on cotton, seed production, ginning and value addition.
Capacity building and infrastructure development and expanding land under rice.
IX. Livestock sector:
It contributes 10% of the GDP with its potential is far below due to a number of challenges, key
interventions will be needed creating investment opportunities with the main key areas being
in abattoirs and beef processing units. The various opportunities include
Development of disease free zones to promote milk and meat production and
processing and marketing of products.
Development of meat industry by poultry and pig processing as well as deep-sea fishing.
Development of animal feeds and mineral supplements.
Development of the dairy industry by processing milk into milk powder for local and
export markets and also goat milk processing.
Improved breeding programs which involves breeding materials in poultry productions
and superior livestock breeding services.
X. Fisheries sector:
It is an important social-economic activity and major source of livelihood which promotes other
auxiliary industries for example boat building and repair, transport, sports and recreation
investment opportunities. The opportunities provided by this sector include;
Development of marine capture fisheries.
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Development of inland capture fisheries.
Development of aquaculture through fish feed and leather industries and value addition
in fisheries products.
XI. Trade sector:
Wholesale and retail trade being a key sub-sector in economic development, there is high
potential and vibrant wholesale and retail business in Kenya providing for both formal and
informal employment. Investment opportunities in this sector are:
Wholesale hubs and producer markets in major towns in Kenya which increase
wholesale business activities in the towns and its environs and promote activities like
banking, recycling facilities. It also involves building wholesale markets, operating cold
storage, ripening equipment and waste disposal facilities.
Construction of a model tier one retail market in Athi-river near Nairobi which is
expected to stimulate business activities within the region, with the investors once the
projects are completed, expected to run them through Build Operate and Transfer (BOT)
scheme.
XII. Water and irrigation sector:
As the Kenya’s economy expands, all sectors require huge supply and efficient use of water
offering good investment opportunities. These includes,
Water storage and building which involves capacity building of national water
conservation and Pipeline Corporation.
Mzima II pipeline project which provides opportunities for turnkey arrangement
involving provision of finance, engineering design, construction services and joint
ventures.
Tana delta irrigation, rehabilitation and expansion where investors team up and
actualize the project.
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Maragua dam for Nairobi water supply. Its development and advertisement is done
internationally for interested and suitable engineering firms to submit proposals for
design, implementation and transfer.
XIII. Education sector
The government of Kenya is committed to provision of quality education, training and research
for all Kenyans. The sector has therefore undergone accelerated reforms which require heavy
investment in construction of educational infrastructure, modern machines and technical
training needs. The opportunities available are;
Construction of new schools and universities thus production of school learning
materials and laboratory equipment and long term concessional loans and grants to
local entrepreneurs carrying out investments in education.
Establishment of Technical Industrial Vocational Education Training (TIVET) centers of
excellence which provides opportunities for training equipment and infrastructure
manufacturing and also employment.
Skills for Business Process Outsourcing (BPO) through manufacture of software to supply
the industry and train human resources for skills in the industry.
Establishment of science and technology parks.
Construction and rehabilitation of facilities of TIVET.
Opportunities in higher education which involves construction of private universities,
supply of equipment and teaching facilities and construction facilities.
Research where partnerships are involved in research and development.
Establishment of the computer supply program which involve partnerships that target a
diversity of areas in the broad sector of ICT integration in education.
XIV. Environment and mineral resources:
Sustainable management of environment and natural resources is critical for economic growth
and development of any nation. The Kenyan economy provides a wide range of priority
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investment areas under the environment and mineral resources for instance climate change
prediction and forest catchment protection. These investment opportunities include;
Mining sector; there are opportunities in mining exploration and exploitation, value
addition through direct and joint venture partnerships and ecotourism by rehabilitation
of disused mines.
Carbon trading schemes for investment in carbon markets to promote conservation and
compensation for environmental services, energy based investment and agricultural
based.
Climate change programs. Involves construction works for dams, drilling boreholes,
establishing a center of excellence in climate change issues, promotion of education
training and public awareness relating to climate change.
Integrated waste management where there are activities like waste disaggregation,
sanitary landfills, supply of wheeler bins and supplying and operating of waste
compactors.
Resources assessments which involves environmental resource assessment through
appropriate state of their development technologies and data and information sharing
for planning objects.
Space technology for ICT and resource management through mineral surveys and
disaster predictions.
Meteorological services which include modern laboratory, e-learning system
establishment, climate data recovery and modernization and human capacity building.
XV. Building and construction industry:
There is a very high unmet demand across the Kenya for housing development which is largely
expected to be met by private sector thus creating opportunities. These include;
Construction of low cost houses where investors can partner with National Housing
Corporation to put up houses on their parcels of land.
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Other opportunities are, building walk up flats, town houses, commercial centers and
open recreational facilities through; Kibera, Pangani, Starehe, Park road and Shauri
Moyo Housing schemes.
Police housing where the government is involving investors to construct 48,000 housing
units.
XVI. Integrated regional development programs:
Due to abundance and variety of unexploited resources in Kenya, the Kenyan government has
seen the need for integrated programs that yield both social and economic benefits and offer
an opportunity for public private partnership. This is being done through electricity sales, water
sale, fishery and tourism investments, hotel businesses and agro-processing products. The
areas for investment opportunities include;
Gum Arabic and Gum resins development programs.
High grand falls multipurpose reservoir project in Eastern province.
Munyu multipurpose reservoir and Kibwezi irrigation project.
Kiambere solar integrated firm.
Magwagwa multipurpose project.
Nandi hydro power integrated development program.
Webuye Teremi multi-purpose project.
Ewaso Ng’iro North integrated natural resource conservation and development.
Integrated Mau catchment’s conservation and development.
Integrated Greater Mara Tourism development.
Coast development area investment.
XVII. Cooperative development:
Given the strategic role played by commodities and services dealt with by cooperatives in
overall economic growth and development of Kenyan economy and society, there are great
opportunities to partner with cooperatives in various areas. This includes;
Manufacture or blending of fertilizer for redistribution to farmer based cooperatives.
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Food, agro-processing and packaging to add value to primary agricultural products.
Secondary processing of cotton and pyrethrum into higher value branded final products.
Investments in cooperatives managed medium and large scale farming and housing
schemes.
Production and marketing of ICT software and hardware to encourage standardization
and use of tailor made packages.
XVIII. Land sector:
Land is the single most important resource. To ensure it is held, used and managed in an
equitable, efficient, productive and sustainable manner, government in partnership with
investors prioritize several opportunities which includes;
Development of national land and formation management system which involves
development of data bases, safeguarding and digitizing of land proper records all over
the country.
Preparation of national spatial plan through human settlement development, industrial
and infrastructure development, natural heritage and cultural and strategic resources
preservation.
Establishment of Kenya national spatial data infrastructure by digitization of land
registration maps, modernization of national coordinate reference network and
development of large scale spatial data framework.
XIX. Health sector:
The government in the process of finalizing health sector PPPs strategy, it provides a number of
investment opportunities involving a private sector partner having management control of
public hospital to get return on investment at a rate that does not hamper access. The
investment areas include;
Making Kenya a regional health services hub by improving delivery of health care in
partnership with public sector through health tourism which involves spa, gym and
physical exercises and treatment beneficial for health and rejuvenation.
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Pharmaceutical and medical equipment manufacturing under expansion of product
portfolio, search for new markets and support for medical research.
Health service promotion where opportunities are found in inpatient and outpatient
care, preventative care and diagnostic services.
Market incentives for investment in health care which include range of tax incentives,
business friendly reforms, large pool of skilled enterprise workers and improved physical
infrastructure.
ANNEX 2: WHY INVEST OR TRADE WITH NETHERLANDS?
i. A strategic location in Europe;
ii. A superior logistics and technology centre
iii. A conducive innovation environment
iv. An international business environment
v. A solid workforce
vi. An attractive quality of life
ANNEX 3: TRADE AND INVESTMENTS OPPORTUNITIES AVAILABLE IN THE NETHERLANDS
The Dutch tax system has a number of features that may be very beneficial in international tax
planning. These include;
A corporate income tax rate of 20 percent on the first €200,000 and 25 percent for
taxable profits exceeding €200,000.
In addition, the Dutch ruling practice provides clarity and certainty in advance on future
tax positions.
Furthermore, in respect of R&D, companies can benefit from the innovation box
resulting in an effective corporate tax rate of only 5 percent, as well as an R&D
allowance taking the form of wage tax and social security contribution deductions.
Dutch tax law also provides the participation exemption, which states that all benefits
related to a qualifying shareholding are exempt from Dutch corporate income tax, as
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well as the fiscal unity regime, designed to freely offset profits and losses among group
members.
There are also advantages in debt and loss structuring, and a wide tax treaty network,
resulting in reduction of withholding taxes on dividends, interests and royalties.
Additionally, there is the 30 percent ruling, which is a tax-free reimbursement of 30
percent of the employee's salary, provided that the employee has been recruited or
assigned from abroad and has specific expertise scarce in the Dutch labor market.
Finally, the Dutch Customs authorities are well known for their practical and pro-active
approach towards facilitating international trade and optimizing customs procedures.
This fact underlies the Netherlands’ preferred status as a country in which to base
importing activities.
ANNEX 4: INCENTIVES AVAILABLE IN THE NETHERLANDS
i. Trade; Expansion of current trade volumes on the current trade commodities from
Kenya to Netherlands
ii. Agriculture; Agric-food value chain