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19TH JUNE 2014ISRAEL-KENYA BUSINESS FORUM
Dr Moses M Ikiara, PhD, MBS
Managing Director
Kenya Investment Authority
Venue: Serena Hotel
Date:19th June 2014
ISRAEL-KENYA BUSINESS FORUM
19TH JUNE 2014ISRAEL-KENYA BUSINESS FORUM
Introducing Kenya
Why Kenya?
Business Facilitation in Kenya
Trade Statistics Statistics: Kenya-Israel
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19TH JUNE 2014ISRAEL-KENYA BUSINESS FORUM
The Story is changing……..
Africa is increasingly becoming an attractive market for investment
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19TH JUNE 2014ISRAEL-KENYA BUSINESS FORUM
CAGR by FDI Projects
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19TH JUNE 2014ISRAEL-KENYA BUSINESS FORUM
Kenya at a Glance…
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19TH JUNE 2014ISRAEL-KENYA BUSINESS FORUM
82%
11%2%
2%
2%
1%
0%0%
Top Ten Exports to Israel
Fish, fresh (live or dead), chilled or frozen
Coffee and coffee substitutes
Crude vegetable materials, n.e.s.
Miscellaneous manufactured articles,
n.e.s.
Paper and paperboard, cut to size or
shape, and articles of paper or paperboard
Fruit, preserved, and fruit preparations
(excluding fruit juices)
Internal combustion piston engines, and
parts thereof, n.e.s.
Atricles of apparel, of textile fabric ,
whether or not knitted or crocheted ,
n.e.s.
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19TH JUNE 2014ISRAEL-KENYA BUSINESS FORUM
35%
15%10%
9%
8%
7%
5%
4%4% 3%
Top Ten Imports from Israel Aircraft and associated equipment;
spacecraft (including satellites) and
spacecraft launch; and parts thereof
Internal combustion piston engines, and
parts thereof, n.e.s.
Plates, sheets, film, foil and strip, of plastics
Other non-electrical machinery, tools and
mechanical apparatus, and parts thereof,
n.e.s.
Metallic salts and peroxysalts, of inorganic
acids
Telecommunications equipment, n.e.s., and
parts, n.e.s., and accessories of apparatus
falling within division 76
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19TH JUNE 2014ISRAEL-KENYA BUSINESS FORUM
Balance of Trade
Trade Statistics between Israel - Kenya
-8E+09
-6E+09
-4E+09
-2E+09
0
2E+09
4E+09
6E+09
8E+09
1E+10
1 2 3 4 5 6 7 8 9 10 11 12 13 14
YEAR EXPORTS IN KSH IMPORTS IN KSH BALANCE OF TRADE
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19TH JUNE 2014ISRAEL-KENYA BUSINESS FORUM
Why Invest in Kenya?
… An Attractive Country For Investment
Political Stability
Stable Macroeconomic Environment
Numerous Investment Opportunities and ROI
Strategic Geographic Position
Developed Human Resource
Market Access
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19TH JUNE 2014ISRAEL-KENYA BUSINESS FORUM
Judicial reforms: “ Kenya leads its East Africanneighbors in the race to reform national judicialsystems and make them friendlier to businesscommunity…courts are essential…because theyinterpret the rules of the market and protecteconomic rights”World Bank and International Finance Corporation,Doing Business in EAC (East Africa Community) 2012
Political Stability….
Peaceful national elections in March 2013 and asmooth transition of power renewed businessconfidence, strengthening prospects for the economyto achieve a growth rate of 5.7% in 2013, compared to4.3% in 2012.The World Bank, Kenya economic Update
Kenya redeemed: “Political stability is key forKenya to maintain its influential position in theregion and following political instability in 2007,Kenya…has emerged in less than five yearswith a strengthened political, economic and
social system.”
Kenya’s Constitution, Kenyans now have a newconstitution, which not only creates lower levelcounty governments but also…establishes manyindependent institutions that are not subject tomanipulation by the executive.“I am pleasedthat they have taken this step, which representsa major milestone”Hilary Clinton
Kenya Vision 2030 political pillar: “A democratic political system that is issue basedpeople centered, result oriented and accountable to the public”
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19TH JUNE 2014ISRAEL-KENYA BUSINESS FORUM
Stable Macro Economic Environment
Kenya is experiencing an improved economic
position with an expanding economy and
decreasing inflation.
Kenya strongly intends to continue
“Moving the economy
up the value chain”
Decreasing Annual Average inflation rate (%)
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19TH JUNE 2014ISRAEL-KENYA BUSINESS FORUM
Vision 2030 Target
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Strategic Geographical Location ….
…Kenya is the Business Hub of the East & Central Africa
Kenya’s geographical location makes the country
ideal for strategic partnerships aimed at
improving regional and global market share
Regional market share: Kenyan infrastructure is the gateway to the vibrant East African economy and access to the 138 million population
i.e Mombasa ports, KE-UG railway,
International market share: Jomo Kenyatta International
Airport functions as an effective Air hub between
Africa, Europe and Asia
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19TH JUNE 2014ISRAEL-KENYA BUSINESS FORUM
Investment Opportunities
AGRICULTURE SECTOR:
• 1 Million Acre Galana Kulalu irrigation Scheme
• Privatization of 5 sugar companies
• Development of Multipurpose dams for irrigation
• Fisheries development, management & processing (Lamu Fish Port;
Counties like Busia) Deep Sea fishing
• Agricultural Development along LAPSSET Corridor
INFRASTRUCTURE/CONSTRUCTION SECTOR:
• Construction of housing units (deficit of 150,000 units p.a.); Nairobi
• 2nd Runway JKIA to facilitate 20 millions arrivals by 2017
• Standard Gauge Railway Nairobi- Malaba
• Commuter Rail; Parking systems to sort out congestion in large cities;
• Special Economic Zones (Airport City at Nairobi & Dry Port at Voi)
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19TH JUNE 2014ISRAEL-KENYA BUSINESS FORUM
FINANCIAL SERVICES SECTOR:
• Establishment and implementation of Nairobi International Financial
Centre
MANUFACTURING SECTOR:• Agro-processing• Development of SME parks• Development of Industrial &technology parks• Development of Iron and mini steel mills• Leather manufacturing• Textiles & Garments manufacturing
WHOLESALE & RETAIL TRADE SECTOR:• Establishment of Special Economic Zones in Mombasa• Construction of 3 wholesale hubs• Construction of 3 Tier-1 Retail Markets• World class Trade, modern Exhibition and Convention centre
Investment Opportunities contd…
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19TH JUNE 2014ISRAEL-KENYA BUSINESS FORUM
Investment opportunities in Tourism
Development of 5 high
end resort cities in
Isiolo, Turkana and
Lamu
Development of
International Hotel
Brands to meet the
growing demand for
bed capacity
Investment in
conference facilities in
major cities of Nairobi,
Mombasa and Kisumu
Development of Golf
Resorts
Development of water-
sport facilities and
marina across Kenyan
water ways
Development of
Tourism Training
Institutions
19TH JUNE 2014ISRAEL-KENYA BUSINESS FORUM
Sector Enablers
“Deploying world Class Infrastructure Facilities and Services”INFRASTRUCTURE/
CONSTRUCTION
ENERGY
Opportunities exist in:Current power generation: About 1,850 MW; Generation of additional 5,000+MW of Energy in 40 Months from various sources:
Opportunities exist in:
• Development of LAPSSET• Building housing units• Nairobi Metropolitan Mass
Rapid Transit Program• Rapid rail system• Parking system
Thika Superhighway
Before
After
Continued development of physical infrastructure is pivotal to economic growth and lowering business costs
KenGen: Pre-tax profits (KES, Millions)
•Coal Fired Power Plants – IPP
•480 MW x 2 – Coast (Initial Imports)
•480 MW x 2 – Kitui (Local Coal)
•Geothermal: 1,000 MW
•Liquefied Natural Gas (LNG): 1,000 MW
•Other sources: 1,070 MW
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Developed Human Resource
Active potential working population of • 198,119 university students, (115,094 male 83,026
female)• No of public and private universities• 1,796,467 secondary students • 9,425,390 in primary school• 2,247,071 are attending pre-primary school.
Unit Labor Costs in the region
Overall
Small
Large
Medium
Source: ICA Survey
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Market Access Incentives20% local sales to EAC market (upon
payment of all taxes). To be
increased under SEZs.
Duty free Access to USA for 6,000 + products under
AGOA(GSP)
Duty free Access to EU market
under Economic Partnership
Agreement (EPA)
Duty free or Preferential access to 18
counties under COMESA FTA & common market
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Investor Facilitation and Protection
Investor Facilitation
Investment Incentives
Business Reforms
Investment Protection
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Business Reforms
Divesture
Rationalizing and reducing
import tariffs;
Revoking all export duties
No Exchange rate controls
Allowing residents and
non-residents to open
foreign currency accounts
Progressive & pro-business support investment growth and productivity.
Independent judiciary and legislature
National Land Commission County Governments – new
centers for investment Private Public Partnership
(PPP) Act 2013 that provides legal framework for private sector investments in government projects
Licensing Act of 2007-deregulation and simplification of business licenses
Bilateral Investment agreements (IPPA) : with 12 countries
Avoidance of double taxation treaties (DTA) : with 8 countries
Competition Act- Prohibits restrictive and predatory practices in mergers and acquisitions
One Stop Shop- KenInvest
Market Liberalization
Business Facilitation
Constitution of Kenya 2010
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Investment Incentives
100% to 150% investment allowance depending on location (For investment of over USD 2.4M)
Capital goods are zero rated
Duty exemption and VAT waiver for machinery and equipment
Export Processing Zones programme (Special Economic Zones):
• 10-year Corporate Tax holiday and 25% tax rate on profits thereafter (except for commercial activities)
• 10-year Withholding Tax holiday
• Duty and VAT exemption on inputs
• Stamp Duty exemption
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Investment Incentives
Infrastructure incentives in EPZsLower investment costs, improved efficiency, security:
EPZ firms may wish to:
Lease ready factory shells and start immediate operations - rentals range from $2-$3.5/sq. ft/year depending on location
Lease serviced land for construction of customized buildings - Athi River EPZ offers 1ha plots for $5,000 annually + service charge or $100,000 for 50 years
Set up own EPZ on own/leased land - EPZA physical requirements must be met
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Investment Incentives
Market Access Incentives
20% local sales to EAC market (upon payment
of all taxes). To be increased under SEZs.
Duty free Access to USA for 6,000 + products
under AGOA(GSP)
Duty free Access to EU market under Economic
Partnership Agreement (EPA)
Duty free or Preferential access to 18 counties
under COMESA FTA & common market
NB: OTHER SECTOR SPECIFIC INCENTIVES UPON REQUEST
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Kenya Investment Authority
Our Mandate
• Kenya Investment Authority (KenInvest) is a statutory body established in 2004 through an Act of Parliament (Investment Promotion Act No. 6 of 2004) to promote and facilitate investments for both domestic and foreign investors.
Our Vision
• To Make Kenya a Country of Choice for Investments
Our Mission
• To Attract, Facilitate, Retain and Expand both Domestic and International Investments in Kenya through Provision of Quality Services
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Our Role
Policy Advocacy
Investment Promotion
Investment Facilitation
Investor Tracking
After Care Services
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We are Tackling Remaining Challenges
• Poor ranking in ease of doing business
– a top priority now
• High costs of production: cost of power;
transportation
– 5000MW additional in 40 months
– Unprecedented investment in road, rail & maritime
transport
– Better logistics
• Insecurity:
– but back of Al Shaabab has been broken
• Corruption – Problem but some perception gap
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Conclusion….Message to Israeli Investors
According to the World Bank: “Kenya is at the beginning of a major transformation that will shape its development
prospects for decades to come.”
“Every year, Kenya’s population grows by about one million people, who are healthier, better educated and moving to the
cities. With improved urban infrastructure and connectivity, particularly through the port of Mombasa, Kenya’s new
entrepreneurs will increasingly find new paths to prosperity.”
Johannes Zutt, World Bank Country Director for Kenya.
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Useful Contacts
Kenya Investment AuthorityP. O. Box 55704-00200, NAIROBI, KENYA
Tel: +254 730 104 200
Mobile: +254 0722205 424
+254 0733601184
Fax: +254 20 2243862
Email: info@investmentkenya.com
Website: www.investmentkenya.com
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19TH JUNE 2014ISRAEL-KENYA BUSINESS FORUM
www.investmentkenya.com
Thank You
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