Kenya is one of Africa’s major economic hubs with a continued focus on the pursuit of pro-business policies and incentives, demonstrating that the country is the investment destination of choice. This has contributed to the country being a leading investment hub across East Africa and the continent. In recent times there have been numerous challenges which have led most African countries including Kenya, to be faced with a huge debt burden, with the rate of debt also being a cause of concern to the general public and international financial institutions such as the World Bank and the International Monetary Fund. However, in these difficult times, Kenya has continued to show economic resilience, and this has been one of the major factors in attracting investment into the country and growing regional dominance.
ALN Ready Business Roadshow
The Kenya Edition of the ALN Ready Business Roadshow discussed the extent of Kenya’s business opportunities in key sectors and suggested steps investors can take to translate those opportunities into profitable and sustainable businesses within the country’s legal framework. The discussion further aimed to give investors insight into Kenya’s business landscape and what the country can offer potential investors.
“Kenya has an elaborate and robust policy and legal framework that guide the conduct of trade and investment. Kenya is a safe, secure, stable, and democratic state anchored on the rule of law with a well-developed legal system guaranteeing the security of property rights and committed to a free market economy.” President of Kenya, William Ruto
Paradigm Shift and Investments
The focus on Africa is greater than ever, with the U.S. and China including Africa in their foreign policy. This has led to a paradigm shift in which several African countries have become more economically open to seize opportunities. More African countries are restructuring their political systems, taking up tax structure reforms and keen on human rights issues.
As a result, investments in various sectors such as manufacturing, agro-processing, and pharmaceuticals are starting to pick up, showing that more sectors are available for investment than in the past. However, governments, the private sector, and other major stakeholders need to come together to ensure transparency, accountability, and goodwill for their citizens. Governments need to ensure that the right types of investments are streaming in and offer fiscal incentives and progressive policies and regulations to promote sustainable investments.
Sustainable investment is vital to the economy’s growth, and Kenya is making efforts to ensure an effective platform for investment in the country. Some of the recent measures that have been taken were announced at the American Chamber of Commerce of Kenya Business Summit 2023, where various tax legislative changes were announced in a bid to attract more investment into Kenya and to enhance the ease of doing business. These legislative changes include a national tax policy that avoids substantive change over a multi-year period, aligning Digital Service Tax and VAT on exported services to global standards, and streamlining the tax refund process. All these changes will be included in the Finance Bill 2023.
Catalysing Private Investment
The government recognises the role of private investment in Kenya’s economic development so that economic growth is inclusive, resilient, and sustainable. To catalyse that kind of private investment, the Kenyan government has established a state department of investment promotion, which has the sole responsibility of coordinating the promotion of private capital into the Kenyan economy. Actively engaging the private sector to identify areas of reforms in the business and investment climate and position Kenya as the preferred investment destination. – Abubakar Hassan Abubakar, Principal Secretary, State Department for Investment Promotion, Ministry of Industrialisation, Trade and Enterprise Development, Government of Kenya
Capital and Exchange Controls
On the other hand, capital and exchange controls continue contributing to Kenya’s open economy and ease of doing business. In Africa, Kenya was one of the first countries to sign the African Continental Free Trade Area, showing the country’s keen interest in economic cooperation and development. Some factors contributing to Kenya being an attractive investment destination include abundant human capital and a dynamic fintech sector. For instance, in 2022, more than USD 1 billion was invested in the fintech sector in Kenya. It continues to see many start-ups being established, especially in Fintech, which has contributed immensely to financial inclusion and the growth of businesses through digital lending platforms and access to other financial services.
“Kenya has 47 bankable projects worth approximately USD 18 billion across different sectors. This shows that Kenya is open for business, and we are working to facilitate and open the door for investors to provide aftercare, which is an important factor as well.” June Chepkemei, CEO, Kenya Investment Authority
African Business Opportunities
Africa is open for business, with much work going into eliminating barriers that prevent market access, which has often made it difficult to do business in Africa. African countries continue to foster cooperation and integration. Political issues should not hinder investments in Africa, investors should feel safe when they decide to come to Africa.
“The Ready Business Roadshow not only intends to showcase Kenya as an investment desti-nation but also gives a continental overview of the business opportunities available and which sectors are lucrative for investors to venture into and shows that Africa is open for business.” Rosa Nduati-Mutero, Co-Managing Partner, ALN Kenya.
Africa needs to come up with viable solutions to the challenges in the continent and this will lead to capital flow for many businesses, including those looking to start up. Additionally, building strong institutions and governance structures is standard and one of the key ways in which Africa can attract investment.