Kenya’s long-term development plan aims to transform the country into an industrialized, middle-income country offering all of its citizens a high quality of life by the year 2030. The 2014 GDP of $58.1 billion US meant that Kenya became one of the largest economies in sub-Saharan Africa and one of the fastest growing economies in the world.
Kenya’s economy is built around agriculture, manufacturing, real estate and services. Agriculture, which contributes about 27 per cent of the GDP, remains the mainstay of the economy with major cash crops being tea, coffee and horticulture. Manufacturing contributes 10 per cent to the economy and real estate contributes 5 per cent.
The government has created an environment that enables investment by ensuring political and economic stability, which are key pillars for the long-term prosperity of any country.
To support investments, the government has developed world-class infrastructure projects to support transportation and power-generation that will ultimately make the country more globally competitive.
The newly built standard gauge railway from Mombasa to Nairobi is one of Kenya’s success stories. It has reduced travel times between the two cities from more than 10 hours to five hours. The train is now the preferred mode of travel for citizens and tourists. The railway has an axle load of 25 tonnes and expects to move up to 22 million tonnes of cargo per year at a speed of 80 to 100 kilometres per hour. Passenger trains operate at a speed of 120 kilometres per hour.
Kenya is currently east and central Africa’s largest economy, making it a favourable destination for investment. Kenya has a population of 43 million people and is growing at 2.7 per cent per annum. The country’s large middle class in the urban areas is contributing to increased consumer demand for high-value goods.
Kenya has a low-risk investment environment and is becoming a favoured business hub, not only for oil and gas exploration in the region, but also for industrial production. Many multinational companies are headquartered in Kenya and apart from the country’s strategic geographical location, investors also enjoy wide market access through Kenya. The proposed tripartite free-trade agreement between the East African Community, Common Market for Eastern and Southern Africa and the Southern Africa Development Committee creates a potential market of more than 600 million.
Improved infrastructure, reduced cost of energy and improved energy availability are other factors that are attractive to potential investors. The country’s favourable investment policy encourages the private sector to become central partners in the development and growth of Kenya’s economy. Foreign investments are guaranteed by transparency and corporate governance systems provided by the constitution and other legislative frameworks.
For interested investors, opportunities exist in sectors such as transport, especially on the Lamu Port, Southern Sudan Ethiopia Transport Corridor, Nairobi Commuter Rail and Thika toll road, as well as more general opportunities in airport, road and container terminal construction. There’s also much potential in the energy sector with prospects in hydropower, geothermal, wind and solar energy generation throughout the country.
After President Uhuru Kenyatta took the oath of office for his second five-year term in 2017, he has this year focused on the “big four” agenda for the next five years. The four areas of focus are housing, manufacturing, universal healthcare and food security.
To carry out these priorities will require Kenya to reach out to its key trading partners to achieve win-win outcomes and enable the country to get the most out of its products. It will also involve negotiations to open new international markets.
On affordable housing, the government wants to allow every Kenyan to own property. Investors will find opportunity in financing housing projects, consulting and supplying inputs.
On manufacturing, the government aims to increase manufacturing capacity from 9 per cent to 20 per cent of GDP by 2022. That means creating 400,000 more jobs and adding $2 billion to $3 billion US to the GDP. Areas of focus include fish processing, leather, textile, apparel and cotton, agro-processing, construction materials, oil, mining and gas, iron and steel and ICT.
Canada has a well-established trade relationship with Kenya. In 2017, two-way merchandise trade reached $176.2 million, consisting of $141.7 million in exports to Kenya and $34.5 million in imports from Kenya. Exports to Kenya are predominately vehicles, aircraft and associated equipment and textile products. Kenya’s main exports to Canada are primarily vegetables and textiles.
Canadian investments in Kenya totalled $30 million last year, most notably in the natural resources sector, where exploration companies are actively seeking mineral and oil deposits. Oil discoveries have recently been made in Turkana, while large deposits of gold were discovered in western Kenya last year.
Other major Canadian investments include aircraft service centres. Opportunities exist for Canadian companies in extractives, clean technology, transportation infrastructure and education sectors.
John Lanyasunya is Kenya’s high commissioner. Reach him at (613) 563-1773 or balozi@kenyahighcommission.ca.
