Kenya’s marketing campaigns in international and domestic exhibitions, including in the US, attracted Sh117.8 billion in fresh investments in the year to June 2024, a new government progress report shows, surpassing a target of Sh100 billion.
The value of investments as a result of State-sponsored campaigns abroad and locally represents a growth of 57.68 percent over Sh74.71 billion in the prior year, according to the State Department for Investments Promotion.
The ventures that set up shops helped create 12,061 jobs, the report states, more than double the 5,638 employment opportunities created the year before. The jobs exceeded the 10,000 goal by 20.61 percent.
“The 2023/2024 target surpassed due to increased campaigns and information dissemination to investors that grew FDI [foreign direct investments] inflows,” the investments promotion department wrote in the progress report, which will form the basis for budget allocation for the next financial year from July 2025.
The highlight of Kenya’s trade missions abroad was the months-long roadshow in the US in 2023, which sought to market the country as a manufacturing and technology hub for American firms looking for new low-cost production bases in Africa.
President William Ruto joined the roadshow in the US, pitching camps in Chicago to scout for investors in agri-business on September 13, 2023, before proceeding to San Francisco from September 15 to woo tech giants.
“The whole tech space …is the space that we must pay very special attention to. And it is the reason why I travelled to the Silicon Valley [in the US] with the assistance of my good sister Meg [former US ambassador to Kenya Meg Whitman] so that we can speak the language of technology to the leading companies globally,” Dr Ruto told a past forum in Nairobi following the US trip.
“It is because of the pitching that we have made…that they can now start to see the opportunity in Africa because that’s where the future is.”
Kenya’s investment engagements resulted in Dr Ruto’s State visit to Washington where the Ministry of Investments, Trade and Industry signed memorandums of understanding (MoUs) with a number of America multinationals, including Coca-Cola Central East and West Africa and Coca-Cola Beverage.
The Kenya Investment Authority (KenInvest) also sent other investment promotion missions to India, Japan, Ghana, Poland, the Czech Republic, Egypt, Canada, the Korean Republic, the China-Africa Economic and Trade Expo (Caete) and Indonesia.
The State also sponsored teams participating in the Homa Bay and Kakamega international investment forums.
During the year under review, Kenya also signed an MoU with the British Chamber of Commerce, and participated in joint commissions of cooperation with Ghana, Egypt, Ethiopia and Uganda.
KenInvest issued 207 investment certificates to projects in the year ended June 2024, surpassing 200 projects in the prior year, the report states citing “ongoing digitisation and automation of investor services”.
Investment capital
Investment certificates qualify firms to get incentives such as investment deductions for targeted sectors such as manufacturing and tax rebates from the Treasury through the Kenya Revenue Authority.
Foreign firms are required to show proof of raising at least $100,000 (about Sh12.93 million at current exchange rate) as part of the conditions to be granted the investment certificates, while the floor for domestic companies has been set at Sh1 million.
The minimum capital for foreigners is set to shoot to $500,000 (Sh64,698,994.86), while that for local firms will be Sh5 million under proposed changes to investment promotion laws.
One-stop online platform
In the 1960s and 1970s, Nairobi was the darling of foreign investors looking to set up operations in eastern and southern Africa.
However, a past analysis of the country’s investment landscape by the United Nations Conference on Trade and Development (Unctad) suggested a considerable number of big-ticket investors have been discouraged by “poor economic policies and inconsistent efforts at structural reforms, growing problems of corruption and governance, and the deterioration of public services have discouraged FDI since the 1980s”.
Kenya has tapped the Unctad to develop a one-stop online platform for investors seeking to set up business in Kenya, which when completed, will integrate business registration systems at national and county levels.
“The system will connect with existing government databases such as the eCitizen portal [for business registration], the Kenya Revenue Authority’s iTax system, and county government portals. This integration will enhance the functionality of existing platforms, making it easier for businesses to navigate the regulatory environment,” Unctad wrote in the World Investment Report 2024 in June.
“Although some applications can be completed online, the lack of integration among systems adds significant barriers for investors and entrepreneurs. There is a pressing need for enhanced facilitation to elevate investment levels sufficiently to address interconnected economic, health, security, and climate challenges.”
KenInvest currently runs a one-stop, in-person shop that helps foreigners register their firms and directors for taxation, connect their businesses to electricity and assist employees in obtaining work permits.
Regulatory licences
However, the services offered by KenInvest do not include crucial permits and licences at the county levels since the systems are not integrated. Investors have to also separately apply for other key permits such as environmental impact assessment approvals from the National Environment Management Authority.
Businesses have complained over the years that overlapping regulatory requirements at national and county levels drive up operating costs. Some agencies have overlapping and duplicative roles, they claim.
In general, companies in Kenya need nearly 20 permits and licences to comply with various regulatory requirements, but this varies depending on the nature of the business.
Some of the permits that businesses need to comply with include those for business registration and licensing, calibration, premises safety, environmental standards, food and beverage processing, waste management, and water and sewerage rules.
Others include noise and vibration licences, construction regulations, cess requirements, specialised materials certificates, controlled substance regulation as well as conservancy fees.
