israel-kenya business forum€¦ · africa is increasingly becoming an attractive market for...

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


Introducing Kenya

Why Kenya?

Business Facilitation in Kenya

Trade Statistics Statistics: Kenya-Israel

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The Story is changing……..

Africa is increasingly becoming an attractive market for investment

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CAGR by FDI Projects

4


Kenya at a Glance…

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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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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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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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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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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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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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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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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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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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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


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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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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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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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: [email protected]

Website: www.investmentkenya.com

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www.investmentkenya.com

Thank You

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