Population (2018): 51,393,010
GDP (2018): US$ 87.9 billion
World Bank “Ease of Doing Business” Rank (2019): 61
Kenya is one of the fastest growing economies in East Africa, with GDP growth averaging at 6% per year between 2010 and 2017. The sustained economic growth is due to the country’s significant political, structural and economic reforms.
The Kenyan government has taken proactive steps to promote a more business-friendly environment in Kenya. This resulted in Kenya jumping 12 places on the World Bank’s Ease of Doing Business rankings from 92nd to 80th in 2017.
As part of Kenya’s Vision 2030, the government has planned a national long-term development policy aimed at transforming Kenya into an industrialising and middle-income country by 2030.
Kenya is East Africa’s regional trade and finance hub, and the undisputed gateway to the region. Mombasa has one of the most important ports in the Indian Ocean seaboard, while the capital Nairobi serves as East Africa’s diplomatic and business centre.
Kenya has one of Africa’s most developed financial services infrastructure. In addition, many multinational corporations like General Electric, Google, Huawei, Microsoft, Nokia, Pfizer, Toyota, and Visa have established their regional headquarters in Nairobi.
Nairobi is also the African headquarters of international organisations such as World Bank, and the United Nations.
The Kenya government is building on the country’s connectivity. Kenya is the region’s air hub, with over 100 international connections from Nairobi. Nairobi is the transportation hub of Eastern and Central Africa, and the Port of Mombasa supplies the shipping needs of more than a dozen countries.
The opening of the Mombasa-Nairobi Standard Gauge Railway (SGR) has significantly improved logistics efficiency. This will be the first installment of a seven-country rail network.
The Lamu Port and South Sudan, Ethiopia Transport (LAPPSET) corridor development creates Kenya’s second logistic corridor. This will help to improve infrastructure development and scale down the cost of transportation and logistics, which can be one of the biggest setbacks of doing business in Kenya.
A flagship infrastructure project by the Kenyan government is the building of another port at Lamu. The US$5 billion Lamu port will comprise 32 deep-sea berths and increase Kenya’s port handling capacity by 23 million tons per year by 2030.
You can capitalise on these opportunities in infrastructure building and improved connectivity in Kenya to reach the rest of the country and the region.
Strong Information and Communications Technology Sector
Kenya is known as Africa’s Silicon Valley or “Silicon Savannah”. This is due to the Kenyan government’s major Information and Communications Technology (ICT) push, the M-Pesa mobile payments revolution, and the launch of iHub – a space for startups that has transformed Nairobi into a technology epicentre.
These measures have seen the ICT sector’s output increase by 10.9% to Ksh 345.1 billion (S$4.66 billion) in 2017.
The Kenyan government has laid out further plans to develop the ICT sector in its Vision 2030 goals. One strategy is to develop the US$14.5 billion (S$19.8 billion) Konza Technology City that would build Kenya’s capabilities in Business Processing Outsourcing and other related IT services. Construction would be carried out in several phases over 20 years, and expected to be completed by 2019.
Your company can benefit from these developments, which have made it easier to do business in Kenya. For example, customs paperwork has been replaced with an electronic interface system known as Simba. It is also more efficient to conduct trade in Kenya, as customs checks are now conducted mainly via computerised scanning, with fewer physical checks.
Agriculture forms the backbone of Kenya’s economy. As the largest economic sector, agriculture contributed 35% of Kenya’s GDP in 20171. It employs over 40% of the total population, including more than 70% of Kenya’s rural people2.
The agricultural sector also drives the non-agricultural economy that includes building and construction, education, manufacturing, transportation, tourism, and other social services.
Kenya is known for being the largest tea producer and flower exporter in Africa, and one of the leading producers of coffee. Other key agricultural products include avocados, coffee, corn, green beans, onions, sugarcane, and wheat. However, the country’s agricultural productivity has remained stagnant, and the ever-present threat of drought limits the rate at which the sector can grow.
Only 20% of the country’s land is arable. These areas have not reached maximum yields3 as most farmers work without modern seeds or technology. This offers your business opportunities in the upstream agribusiness value chain. You can bring in new ideas and technologies to improve the productivity and incomes of farmers and their families.
You can also explore the many downstream opportunities in Kenya’s food processing industry, given the country’s abundance of raw agricultural supply and low labour cost. A company which has done this is integrated agri-business company Wilmar, which has partnered with Kenyan-based conglomerate Bidco to venture into palm oil processing.
Information and Communications Technology
Kenya is evolving to become a knowledge-based nation, which presents new business opportunities in the Information and Communications Technology (ICT) sector. The country’s ICT output increased by 10.9% to Ksh 345.1 billion (S$4.66 billion) in 20174, and the sector is estimated to have contributed 8% to the country’s GDP and created 180,000 direct jobs by 20175.
The country’s mobile phone penetration is one of the highest in the world, with nine out of ten Kenyans having a mobile phone6. This has helped Kenya emerge as a leader in mobile payments, with millions using mobile phones for banking and online transactions. There are 18 million active users of the M-Pesa system created by Safaricom – Kenya’s leading mobile network service provider7.
The Kenyan government has laid out development strategies of the ICT sector in its Vision 2030 goals. One plan is to develop the US$14.5 billion (S$19.8 billion) Konza Technology City that would build Kenya’s capabilities in business processing outsourcing and other related IT services. It has plans to build and expand the Konza Technology City over 20 years. The first phase of construction started in November 2016 and is expected to be completed by 2019.
You can expand into the country at innovation hubs that promote the use of ICT through co-working, collaboration, and incubation services. For example, the iHub brings together technologists, investors, tech companies, and hackers to form an ecosystem of creators and users of mobile technologies.
If your business is in e-Government services, Kenya may be the ideal launchpad into Sub-Saharan Africa. Bank on your experience in public sector management, to design or implement e-Government systems that are relevant to Kenya’s reform agenda.
Kenya has the most developed manufacturing sector in East Africa. The sector accounted for 9.2% of the country’s GDP in 2016. The Kenyan government has plans to grow the manufacturing industry to contribute 15% of the GDP by 20228. These plans come under its Vision 2030, Kenya Industrial Transformation Programme, National Trade Policy, Investment Policy, and “Buy Kenya Build Kenya” (BKBK) plan.
Much of the country’s manufacturing is dominated by food-processing industries. This is made up of more than 1,200 businesses that range from small family firms to large multinational companies such as Cadbury, Coca Cola, and Nestle. The processing of coffee and tea, fruit and meat canning, cornmeal and wheat flour milling, and sugar refining are important in Kenya’s manufacturing sector.
Explore breaking into the Kenya manufacturing market by supporting the current players in the industry. This can be in the form of technological solutions, or solutions that improve yield or productivity.
Besides food processing, the other key manufacturing areas for Kenya are beverage, basic metals, chemicals, non-metallic minerals, paper, pharmaceuticals, plastic, printing media, rubber, and textile and apparel.
Kenya’s growing middle class population currently accounts for 45% of its population. These consumers with higher spending power are driving demand in its consumer and retail market9. If you are a trader or manufacturer of fast-moving consumer goods, this is your chance to seize the window of opportunity before local manufacturing and local brands take root.
Kenya has a well-established tourism industry. It recorded a 20.3% growth in earnings that reached Ksh $1.2 billion (S$16.2 million) in 201710.
The country is a well-known safari destination with some 60 national parks and reserves, and beaches along its 500 km of coastline. Kenya’s top tourist sources are from Europe, continental Africa, and the United States, and increasingly from Asia and Latin America.
The Kenyan government recognises the increasing importance of tourism in the Kenyan economy and is on an investment and marketing drive in this sector. One area of focus is business tourism, which includes the meetings, incentives, conventions and exhibitions (MICE) segment. The government is building new convention centres in Mombasa, Kisumu and central Kenya to increase capacity for MICE events.
Another key government investment is in the new Lamu Port South Sudan Ethiopia Transport (LAPSSET) Corridor—which will link Kenya with Ethiopia, Uganda and South Sudan. Part of the LAPSSET project includes the development of new resort cities Lamu, Isiolo, and Turkana.
You can look for opportunities in the hospitality and tourism sectors to establish your presence in Kenya. These could be in the development of resort cities and new tourist circuits, entertainment and golf facilities, branding of premium parks, development of high-value niche products and MICE tourism facilities, and the construction of new international hotels.
India and Kenya are maritime neighbours. The contemporary ties between India and Kenya have now evolved into a robust and multi-faceted partnership, marked by regular high-level visits, increasing trade and investment as well as extensive people to people contacts.
The presence of Indians in East Africa is documented in the ‘Periplus of the Erythraean Sea’ or Guidebook of the Red Sea by an ancient Greek author written in 60 AD. A well-established trade network existed between India and the Swahili Coast predating European exploration. India and Kenya share a common legacy of struggle against colonialism. Many Indians participated and supported the freedom struggle of Kenya.
India established the office of Commissioner for British East Africa resident in Nairobi in 1948. Apasaheb Pant was the first Commissioner. Following Kenyan independence in December 1963, a High Commission was established. India has had an Assistant High Commission in Mombasa. Vice President Dr. S Radhakrishnan visited Kenya in July 1956. Smt. Indira Gandhi attended the Kenyan Independence celebrations in 1963. PM Indira Gandhi visited Kenya in 1970 and 1981. PM Morarji Desai visited Kenya in 1978. President Neelam Sanjeeva Reddy visited Kenya in 1981. President Moi visited India for a bilateral visit in 1981 and for the NAM Summit in 1983.
The State visit of PM Narendra Modi to Kenya on 10-11 July 2016 gave a new impetus to bilateral partnership. PM Narendra Modi and President Uhuru Kenyatta discussed a wide range of bilateral issues. Both leaders witnessed signing of seven (MoUs)/Agreements in the fields of defence, trade and developmental assistance. PM handed over 30 field ambulances for the use of the Kenya Defence Forces. PM and President Kenyatta addressed an India-Kenya Business Forum. Five business to business MoUs were signed on the side-lines of the business event. Both leaders visited the ‘India Innovation Pavilion’ and released a booklet on ‘Doing Business in Kenya’. PM addressed a gathering of over 20,000 Indian community members in Nairobi. Significantly, President Kenyatta joined him during the diaspora interaction. PM delivered a special lecture to a large gathering of students at the University of Nairobi and visited United Nations Office at Nairobi. India announced gifting of a state-of-the-art made in India cancer therapy machine – Bhabhatron II – to Kenyatta National Hospital, grant of US$ 1million for the refurbishment of the Mahatma Gandhi graduate library of the University of Nairobi and holding of the first ever Festival of India in Kenya.
President Uhuru Kenyatta paid a State Visit to India from 10-12 January 2017 on an invitation extended by PM Narendra Modi. The two leaders held official talks on 11 January in New Delhi. President Kenyatta attended the Vibrant Gujarat Summit 2017 on 10 January. President Kenyatta was accompanied by several Ministers, senior officials and a high-level business delegation. President Kenyatta held meetings with the President and Vice President and attended a business forum in Delhi on 12 January. Discussions were held on key elements of bilateral relationship including increasing cooperation in defence and maritime security, enhancing trade and investment relationship and counter-terrorism. MoU on Cooperation in the agriculture sector and allied sector and LoC for US$100 million for agricultural mechanization was signed during the visit. Earlier, President Uhuru Kenyatta attended the 3rdIndia-Africa Forum Summit and held bilateral meeting with PM Modi in October 2015.
Bilateral Trade: An India-Kenya Trade Agreement was signed in 1981, under which both countries accorded Most Favoured Nation status to each other. The India-Kenya Joint Trade Committee (JTC) was set up at Ministerial level in 1983 as a follow-up to the Agreement. The JTC has met eight times since, the last in August 2018 in Nairobi. India was Kenya’s largest trading partner in 2014-15 with bilateral trade of US$ 4.235 billion. However, in 2017-18, bilateral trade was US$ 2.05 billion. For the period April to August 2018, bilateral trade was US$ 1.062 billion. Main Indian exports to Kenya include petroleum products, pharmaceuticals, steel products, machinery, yarn, vehicles and power transmission equipment. Main Kenyan exports to India include soda ash, vegetables, tea, leather and metal scrap.
In 2017, Mission supported Source India Kenya (January), SRTEPC (March), Complast (June), Agritec Africa (June), ‘Make in Gujarat Business Expo’ (July) and Mission organized a full-day business event in February 2017 titled “Leapfrogging India-Kenya bilateral Trade & Investment – Vision 2018. Mission organized its annual Trade and Investment Promotion Event on “Kenya’s Big Four Agenda and India’s Partnership in Realizing this Vision” on 16 March 2018 in Nairobi where Adan Mohamed, Cabinet Secretary for Industry, Trade & Cooperatives was the Chief Guest. In 2018, Mission supported Complast (June), Agritec Africa (June), ‘Vibrant Gujarat’ roadshow (Sept) and Big 5 Construct East Africa (Nov).
According to the Kenya Investment Authority (KenInvest), India is the second largest investor in Kenya. Over 60 major Indian companies have invested in various sectors including manufacturing, real estate, pharmaceuticals, telecom, IT & ITES, banking and agro-based industries. Indian investments have resulted in creation of thousands of direct jobs to Kenyans. Indian pharmaceutical companies have a substantial presence in Kenya. A bilateral Double Taxation Avoidance Agreement (DTAA) was signed in 1989. Revised DTAA was signed in July 2016 and came into force on 30 August 2017.
A Joint Business Council (JBC) was set up in 1985 by the Federation of Indian Chambers of Commerce & Industry (FICCI) and the Kenya National Chamber of Commerce & Industry (KNCCI). FICCI and KNCCI signed a fresh MoU in January 2017 on the sidelines of the Business Forum during the State visit of President Uhuru Kenyatta. Revived JBC met in New Delhi in January 2017 and in August 2018. In February 2016, Mission revived a forum of CEOs of over 40 Indian companies based in Kenya and seven meetings of the India Business Forum have been held since then.
Minerals, machinery, pharmaceuticals, vehicles, plastics, paper, organic chemicals, printed books.
|Product Code||Product Label||India’s exports to Kenya in 2018 (Value in USD million)|
|’27||Mineral fuels, mineral oils and products of their distillation; bituminous substances; mineral …||583.5|
|’84||Machinery, mechanical appliances, nuclear reactors, boilers; parts thereof||232.6|
|’87||Vehicles other than railway or tramway rolling stock, and parts and accessories thereof||133.3|
|’39||Plastics and articles thereof||116.2|
|’48||Paper and paperboard; articles of paper pulp, of paper or of paperboard||77.3|
|’85||Electrical machinery and equipment and parts thereof; sound recorders and reproducers, television …||74.4|
|’72||Iron and steel||56.7|
|’49||Printed books, newspapers, pictures and other products of the printing industry; manuscripts, …||44|
According to ITC Trade Map, India currently has an untapped export potential of US$ 1.1 billion to Kenya led by rice, medicaments consisting of mixed or unmixed products, for retail sale, and flat-rolled products of iron or non-alloy steel.
|Product code||Description||Untapped export potential|
|100630||Semi-milled or wholly milled rice||US$ 259.7 million|
|3004Xb||Medicaments consisting of mixed or unmixed products, for retail sale||US$ 13.5 million|
|720839||Flat-rolled products of iron or non-alloy steel||US$ 92.1 million|
|871120||Motorcycles, piston engine >50cm3 but <=250cm3||US$ 18.2 million|
|3808||Insecticides, rodenticides, fungicides, herbicides & similar||US$ 41.6 million|
|252310||Cement clinkers||US$ 44.9 million|
|170199||Cane or beet sugar & chemically pure sucrose||US$ 14.5 million|
|300420||Medicaments containing antibiotics, for retail sale||US$ 10.7 million|
Chemicals, tea, coffee, spices, vegetables, pharmaceuticals, copper, aluminium, wool, plastics
|Product Code||Product Label||India’s imports from Kenya in 2018 (Value in US$ millions)|
|’28||Inorganic chemicals; organic or inorganic compounds of precious metals, of rare-earth metals, …||20.4|
|’09||Coffee, tea, maté and spices||19.1|
|’07||Edible vegetables and certain roots and tubers||18.6|
|’74||Copper and articles thereof||10.4|
|’44||Wood and articles of wood; wood charcoal||9.9|
|’76||Aluminium and articles thereof||8|
|’41||Raw hides and skins (other than furskins) and leather||4.6|
|’51||Wool, fine or coarse animal hair; horsehair yarn and woven fabric||4|
|’39||Plastics and articles thereof||2.4|
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