Investment Guide: Kenya
Summary
Summary Kenya is the largest and most advanced economy in East and Central Africa. Its GDP accounts for more than 50 percent of the region’s total, and its 2021 GDP stood at 110.35 billion dollars in current market prices. The Government of Kenya recognises the critical role investments play in economic development and realising Vision 2030 objectives.
Kenya has streamlined business licensing regimes and adopted online investment facilitation portals to ensure faster registration and approval of new investment projects. These changes led to an improvement for Kenya in the World Bank Group’s Doing Business Report, 2020, where Kenya’s rank improved from 61 to 56 out of 190 economies in the ease of doing business.
Highlighted below see some sectors that are prime for investments.
Financial Services
Kenya’s financial sector is the third-largest in sub-Saharan Africa and it makes a significant contribution to economic growth and job creation. The financial system comprises of numerous commercial banks, non-bank financial institutions, a range of insurance companies and a stock exchange.
A three-fold growth n the number of commercial banks has taken place in Kenya over the last thirty years. Similarly, there has been a phenomenal growth of non-bank financial intermediaries and the insurance industry has also experienced a rapid expansion, both in terms of numbers and services offered.
Through Vision 2030, the Government aims to create a ’’vibrant and globally competitive” financial sector. Some opportunities for growth in this sector include providing; ICT enabled Financial Services, mediumand long- term financing to SMEs, innovative and, reliable risk management solutions.
Energy
Kenya has been hailed for having one of the most developed energy sectors in Sub-Saharan Africa- and more so in the green sector. The government opened its market to Independent Power Producers in the mid-1990s.
Private companies are allowed to generate electricity, which they can sell to government-controlled entities for transmission and distribution, or use toward rural electrification in mostly off-grid areas.
In 2022, 81 percent of Kenya’s electricity generation came from the low carbon sources of geothermal, hydro, wind, and solar power. Over half of this low carbon electricity came from geothermal energy, which Kenya has in abundance. There is an opportunity to generate more clean, cost- effective energy in Kenya.
Real Estate and Construction
The Real Estate sector recorded a growth of 6.7 percent in 2021 compared to a percent growth in 2020. The performance is attributed to the increased development activities as a result of a general improvement in Real Estate transactions and an improved business environment. On the other hand, the construction sector recorded a growth of 6.6 percent, a slower rate compared to the 10.1 percent growth recorded in 2020.
The provision of affordable housing is part of the government of Kenya’s Big 4 Agenda. Kenya’s Affordable Housing Programme was launched in December 2017. In particular, the government had set a goal of constructing or facilitating the construction of an additional 500,000 houses by the end of 2022.
Technology
Kenya continues to experience a surge in fintech business and is gaining a reputation as a leading fintech hub in Africa. Indeed, it was ranked number 37 in the 2021 Findexable Global Fintech Rankings report. Eighty-three countries and 265 cities were analysed in the 2021 edition.
FinTech investment in Kenya was expected to set a new annual funding record of USD 248 million in 2022 based on investment in the first half of 2022. That’s a five-fold increase from 2021 levels and a more than three-fold increase from the Kenyan FinTech investment peak of USD 75 million in 2018. Deal activity in the country is also expected to rise to 64 deals, a 52% rise from 2021 levels.
