Investing in Kenya – Investment Opportunities in Kenya


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Kenya is the gateway to eastern and Central Africa. lt is a regional hub for business, investment and commerce. Enormous investment opportunities await investors. Investing in Kenya has been made easier.

Kenya has signed tax treaties and investment promotion and protection agreements. Exports from Kenya enjoy preferential access to world markets under special duty reduction.

Factors that favour local and foreign investment are political stability, stable macro-economic policies, competitive incentives, guarantees to investors and preferential market access. Others are a friendly tax system, developed human resource and good infrastructure.

Since the early 1990s, the Government of Kenya has set up various schemes to encourage investment. They offer fiscal and infrastructural benefits to the business community. The Government continues to improve the investment environment. Some of the policy initiatives include liberalization of exchange controls to make them market-driven, removal of price controls, abolition of import licensing except for products that relate to national security, health and environment.

Others are the opening up capital markets to foreign participation, generous investment and capital allowance, remission of duty and VAT manufacture under bond status, export processing zone

Kenya Investment Guide

Why you should invest in Kenya

  1. Qualified Work Force
  2. Dynamic Private Sector
  3. Harmonious industrial Relations
  4. Preferential Market Access
  5. High Returns
  6. Convenient Time Zone
  7. Political Stability

What are the procedures of establishing a business in Kenya ?

Registration of a company in Kenya with the Registrar of companies.

This could be:

A branch office of an overseas company, or

A locally incorporated company Registration incorporated company Registration could also be done under the Business Names Act.

What are the approval and licensing procedures of new investment in Kenya?

The Kenya Investment Authority (KIA) will process and grant approvals of new investment, once proposals are submitted on a prescribed application form. Proof of company registration must be attached to the application.

Where the investment may have adverse impact on security, health or environment, clearance from the competent authorities (such as, National Environment Management Authority (NMA), Public Health authorities, etc) will be required before approval is granted.

Also, clearance is required from parent ministries for investments in restricted areas before IPC approval is granted. These investment comprise:-

  • Investments to produce excisable goods (clearance from customs and Excise is a pre-condition).
  • Investments in forest products and mining (clearance from Ministry of Environment and Natural resources).
  • Investment in energy and petroleum products (clearance from ministry of Energy).
  • Investment in the manufacture Under Bond Programme (MUB) (authority to manufacture under bond must be obtained from minister for finance).
  • Investments in the tourism industry (clearance from the ministry of Tourism).

Are there any restrictions to doing business in Kenya ?

  • Equity restrictions are only in the telecommunications sector (a minimum of 30% must be local).
  • Investments in the insurance industry must have local participation.
  • Ownership of agricultural land by foreigners is restricted.
  • Engagement in petty business by foreigners is also restricted.
  • Engagement in petty business by foreigners is also restricted.

How are the living conditions in Kenya?

Security in Kenya.

Security situation in Kenya is good and better than most third world countries.

Health in Kenya.

Adequate health facilities of international standards are available, particular in urban areas.

Education in Kenya

High quality educating for investors locating in Kenya is available for their families. Overseas curricular is available in most of the international schools.

Entertainment in Kenya

There are adequate world class entertainment facilities for the comfort of the investor and his family.

Communication Kenya.

An adequate communication channels by air, road, sea, postal and telecommunication are available to any destination in the world.

What are the immigration requirements ?

  • Investors are given work -permits class ‘H’for directors and class ‘A’ for expatriate employees. KIA can facilitate Entry into Kenya will require visitors to obtain business visa or visitors visas.
  • Expatriate professionals, engineers or technicians who are required to install machineries or train local employees for a short-period are issued with special passes.
  • Health certificates are required as proof of inoculation against yellow fever from some countries in Asia . This includes cholera and malaria.
  • For those issued with work -permits, passes are issued to their dependants.

What Business Opportunities are available for investment in Kenya ?

Here is a list of the business opportunities that you can invest in:

  1. Health Sector in Kenya
  2. Land Sector in Kenya
  3. Cooperative Development in Kenya
  4. Regional Development Projects in Kenya
  5. Building and Construction in Kenya
  6. Environment and Mineral Sector
  7. Education Sector in Kenya
  8. Water and Irrigation Sector in Kenya
  9. Trade Sector in Kenya
  10. Fisheries Sector in Kenya
  11. Livestock Sector in Kenya
  12. Agricultural Sector in Kenya
  13. Nairobi Development
  14. Transport and Infrastructure Sector in Kenya
  15. National Heritage and Culture Sector in Kenya
  16. Tourism Sector in Kenya
  17. Manufacturing Sector in Kenya
  18. ICT sector in Kenya
  19. Privatization Commission in Kenya

Does the Kenya government grant incentives to investors?

INCENTIVES:

  • MUB program
  • 100% investment allowance
  • Duty and VAT exemption on machinery, equipments and raw materials.
  • Epz programme
  • 10 year tax holiday
  • Duty and VAT exemption
  • Single license
  • Exemption from stamp duty
  • Exemption for withholding tax
  • 25% corporate tax for 10 years after the first 10 years expire
  • 100% investment allowance

Duty remission

  • Exemption on duties and VAT on raw materials utilized to process confirmed exports orders.
  • Liberals Depreciation Rats
  • Loss- Carry forward
  • Business must recover previous losses before paying corporate tax.

Capital expenditure

  • Duties paid for capital expenditure in excess of US$ 70,000 can b recovered from corporate tax.
  • CAPITAL GOODS AND BASIC RAW MATERIALS AR ZERO- RATD.

What taxes are levied by the government?

Income tax in Kenya

  • Corporate tax30% for local companies, 37.5% for branch overseas of foreign companies
  • Withholding tax 5 %
  • Pay-as-you-earn: graduated up to a maximum of 30% of income

Customs Duty in Kenya

  • 4 bands from 0-35%

Excise Duty in Kenya.

  • Tax applicable on cigarettes, alcohol, petroleum, confectionaries
  • VAT- 16% standard Rate.

Do Kenyan produced products have access to other markets?

  • Uninstructed entry into USA market under African Growth and Opportunity Act (AGOA) for specified Kenya products.
  • Market access to the COMESA market of 80 million.
  • Market access to the European Union under the Lome Cotonou Agreement police unit.

Emphasized on the rule of law.

  • To enhance transparency in the licensing process through enactment of an Investment Act.
  • Streamling government procurement procedures. (Procurement act enacted).
  • Enhancing accountability in the judicial system.

What customs procedures are applied when goods are being imported?

  • Consignment.
  • Preformed invoices showing the value of the goods.
  • Specification of the goods and packing list.
  • Bill of lading.
  • Inspection certificates in respect of goods exceeding Kshs. 500,000.

Do you have labour laws in Kenya ? What are the important provisions these laws?

  • Minimum wages set by the government depend on skills. It is specific for different urban areas. (For example in Nairobi, Mombasa and Kisumu general laborers should be paid a minimum of Kshs. 3,905, while artisans Grade 1 are supposed to b paid a minimum of Ksh 8,813 per moth.
  • Workers are allowed to join trade unions related to their sectors of work.
  • Wages are negotiated through tripartite agreements (between trade unions, government and employers.
  • Disputes are settled through the Industrial Court .

Are foreign investments protected in Kenya?

  • The constitution of Kenya guarantees protection of life and private property
  • The foreign Investment protection Act guarantees against expropriation of private property by government. If expropriation ever occurs, it will be for public good and prompt compensation must be given.
  • Kenya is a signatory o and member of the Multilateral Investment Guarantee Agency (MIGA) an affiliate of the World Bank which guarantees investors against loss of investment to political problems in host countries.
  • Kenya is also signatory to International centre for settlement of Investment Disputes which is a channel for settling disputes between foreign investors and host governments.
  • Do you have adequate business support infrastructure? Banks, insurance, transport, professional services legal, engineers, human resource with advanced skills, international languages, research institutions.
  • Kenya has a well developed professional services sector with some multinational professional companies such as KPMG, E& Y etc having regional offices in Nairobi . Most insurance companies, Banks etc have a presence in Kenya .

About the Author

Hello, I'm Josphat Gachie, a digital media consultant and the founder / CEO of Softkenya.com. We provide affordable website design and online marketing solutions to small businesses. If you have a limited budget and need a website or a way to advertise your business / product you are at the right place. CALL ME ON 0720573178 or Email me at info@softkenya.com or Visit our website at http://softkenya.com/solutions/