Doing Business in Kenya - EAS

Doing Business in Kenya

Webinar

29th April 2021

3

Agenda


1 Introduction to Webinar and Hosts (Enterprise Estonia & Stepchange Africa)

2 Welcome to Kenya (Country Overview)

3 Sector Opportunities

4 The Real Deal: Challenges & Opportunities

5 Doing Business in Kenya Testimonial

6 Question Time

7 Next Steps

8 Key Contacts

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Introduction to Webinar

and Hosts

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Stepchange Africa Webinar Hosts & Guest


Andrew HerwegManaging Partner

Corporate GovernanceFinance

Accounting

Dr. Andrew SsemwangaManaging Partner

Business Development Marketing & Strategy

International Partnerships

Grace MuthoniLead Partner

Growth Shield Africa

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Welcome to Kenya

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Country Overview: Kenya

Key Information


Source: Stepchange Africa

Economic Powerhouse of East Africa

Population of ~47 million inhabitants

Two Official Languages: Swahili & English

Nairobi as the capital city holds ~4.3 million inhabitants

Kenya’s currency is the Kenyan Shilling (KSH)

Major Trade Hub for entire East African Community.

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Economic Performance Indicators Figure

GDP US $79 billion

GDP growth rate per annum (‘21) 5%

GDP per capita US $ 1,504

Inflation 5%

Key Indicators

What to Know


Sources: EU; African Development Bank; Central Bank of Kenya

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Tax Elements Rates

Value Added Tax (VAT) 16%

Social Security rate (payable by companies) 10%

USD Exchange rate *107 Kshs per $1.00

Corporate Tax rate 30%

Important Rates

What to Know


Source: Kenya Revenue Authority & Central Bank of Kenya

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What to Know: Import & Export with the EU

Sources: EU Delegation to Kenya 2019-2020


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What to Know: Import & Export with the EU

Sources: EU Delegation to Kenya 2019-2020


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Sector Opportunities

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ICT

❑ Ranked 3rd in Africa in the Global Innovation Index

❑ Tech start-ups raised 191 million USD in 2020

❑ Links to various sectors including:

❑ Agriculture: B2B marketplaces (Fruit & Veg); farm inputs❑ Financial Services: Consumer & SME lending, salary advances❑ Healthcare: Diagnostics, pharmaceutical deliveries, tele-medicine, EMR.❑ Education: mobile (SMS) & skills based after school learning.

❑ 23 million internet users, increased by 16% between 2019-2020



Sources: Disrupt Africa 2020 Funding Report; Datareportal ‘Kenya 2020’; Stepchange Africa

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Agriculture

❑ Critical sector for development (re: Big 4 Agenda):❑ Chronic food storages❑ Climate change (droughts, locusts)❑ Employs 53% of Kenyans & contributes 26% of GDP

❑ Unique opportunities:❑ Agro-processing: local value addition for tea, coffee, meat, nuts & dairy (i.e. Macadamia Nut Oil)

❑ Storage: Cold chain supply & site storage & warehousing.

❑ Fish: aqua-culture, fish feed-mills & fish processing industries



Source: ILO; Stepchange Africa

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Manufacturing

❑ Key pillar of Kenya’s Big 4’ Agenda.❑ Aim to grow the sector from 9.2% to 15% of GDP by 2022.❑ Create 1million new jobs❑ Aims a 5x increase in FDI inflows to USD 3.8 billion.

❑ Specific Opportunities:❑ Textiles, apparels & leather- cotton processing & ginning industries, build or upgrade

existing textile mills.

❑ ‘Heavy industries’ (oil, gas, mining)- exploration, exploitation & production of oil, gas, coal and mineral deposits through JV agreements with Government of Kenya.

❑ ICT & Services: phones, laptops, TVs.



Source: Stepchange Africa; KAM; The Presidency of Kenya

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Visualizing Sector Opportunities


Stepchange Africa

TURKANA COUNTYOil & Gas

Infrastructure

NAIROBIFast Moving Consumer GoodsConstruction and Real Estate

Small Scale ManufacturingFinancial Banking Services

InfrastructureICT MOMBASA

Infrastructure (Port)Small Scale Manufacturing

RIFT VALLEYAgriculture*(Coffee, Tea, Tobacco, Cattle, Others)InfrastructureSmall Scale Manufacturing

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The Real DealChallenges & Opportunities

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Looking above and beneath the surface

Sources: World Bank; Stepchange Africa


Progress:Trade hub of Eastern Africa; market sophistication; high mobile penetration rates.

Challenges:Lack of general infrastructure (but slowly improving), security incidents, high unemployment rates and corruption.

Unforeseen obstacles:Evolving regulation and tax regimes add unwelcome challenges. High cost and complexity for filing an IP. Lack of global R&D companies.

Untapped Opportunities:Access to capital (VC, PE, commercial finance); Advance start-up community. Home to large international delegations and corporations.

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Tackling underlying challenges


Corruption Index

Kenya scores poorly in Transparency International’s Corruption Index

Land Ownership

Do a background check on your landlord; ensure you have all appropriate titles if buying

Intellectual Property

Protect your business against possible copyright and trademark infringements

Items of Value

Protecting goods, services, property and items of value by reducing attempted theft

Admirable Culture

Creating a culture of ethics and values across and within your company

Monitoring Grounds

Hiring security personnel to counter grounds disturbances & movements

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Unique Opportunities

❑ Strong work ethic– Many employees in Nairobi are at their desks by 7/8am in order to beat traffic.

❑ Port of Mombasa, is the most important deep water port in the region.

❑ Well educated labour market, home to East Africa’s top universities (i.e. Uni of NBO) and secondary schools.

❑ GoK investment in innovation has been a welcome change, particularly through the tech city project dubbed ‘Konza City’

Good to know

❑ Favourable conditions for expats & foreign companies, long history of business and commerce between Europe & Kenya.

❑ Tensions are high around elections, party leaders have taken steps to calm nerves but expect operating challenges during election season.

❑ Excellent market to leverage the existing social communities, Kenyans are quick with technology adoption, easy to monetize.

❑ Success in Kenya doesn’t guarantee success in EAC, few companies in Kenya have been able to scale their businesses from Kenya to neighbouring countries.

The more you know!


Sources: Stepchange Africa

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What to Know!

❑ Kenya is one of four countries in Africa that have a ‘real’ middle class.

❑ Areas for growth and expansion beyond Nairobi (i.e Mombasa; Kisumu; Nakuru)

❑ No paid-in minimum capital requirement to start a business.

❑ 3rd best place to do business in Africa according to World Bank’s Doing Business 2020 Index.

Catalyst for Growth


Sources: World Bank; KenInvest; Stepchange Africa

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Doing Business in Kenya Testimonial

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Question Time

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Next Steps

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Life-cycle of starting a business in Kenya

End-to-end execution of long-term co-creation potentials



Listen Research Reach out Visit

I 2 3 4

Follow each webinar to receive do-it-best

insights

Target, scale and identify sectors by

knowing the ins & outs

Contact the webinar stakeholders & other

key contacts

Go & see your potential investments and start building partnerships

Stay committed, build trust and establish partnerships

29th April 2021

13th May 2021

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Key Contacts

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Network & Collaboration Potential

Key Contacts Immediate client benefit



Target-oriented, pragmaticand hands-on kick-start...

...with a tailored go-to-market strategy & use cases...

...via field-tested and innovative ways of working...

...towards a successful business transformation.

Grace MuthoniGrowth Shield AfricaLegal, HR, Real Estate & Tax [email protected]

EU Delegation (Economic Growth)Data & Economic [email protected]

Kenya Investment AuthorityInvestment arm of Gov. [email protected]

Andrew HerwegStepchange AfricaBusiness growth [email protected]

European Business Council KenyaPrivate Sector Lobby [email protected]

Jason MusyokaViktoria VenturesInvestment & Fund [email protected]

Kenya Private Sector AlliancePrivate Sector Lobby [email protected]@or.ke

Metta NairobiCo-working; [email protected]

Kenya Revenue AuthorityNational Tax [email protected]

mailto:[email protected]

https://eeas.europa.eu/delegations/uganda_en

mailto:[email protected]

https://www.stepchangeafrica.com/

https://www.ura.go.ug/

Contact us

+49 1522 4632368

Stepchange Africa

[email protected]

Suite 124, Unit B., 63-66 Hatton Garden,Holborn, London, UK, EC1N 8LE

1

www.stepchangeafrica.com

Stepchange Africa is an established partnership between five unique, well-rounded and experienced thinkers, doers, entrepreneurs and long-time consultants based between the fast growing economies in Africa to Europe’s economic centres and beyond.

We provide customer-centric and hands-on cross-industrial solutions to fast growing start-ups, established SMEs and larger corporations that are operating, investing and expanding in Africa.

We are at the forefront of innovation, transformation, technology, change, creativity and agility, dedicated to become Africa’s most preferred growth partner.

For further information please visit our webpage or one of our media channels.

Copyright @Stepchange Africa LLP 2021. All rights reserved.

@StepchangeAfri1

https://twitter.com/StepchangeAfri1

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EU Business & Kenya In Detail

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EU Businesses in Kenya

Sources: 2020 EU Investment Mapping


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EU Businesses’ Impact in Kenya



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EU Businesses in Kenya



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Export to EU (Country Specific)

Sources: 2019 World Bank; ITC; EuroStat


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Other sector opportunities appendix

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Healthcare

❑ Key Pillar of ‘Big 4’ Agenda❑ Aim is for 100% universal healthcare❑ Reduce medical out-of-pocket expenses.

❑ Specific Opportunities include:❑ Low cost insurance products & schemes.❑ Pharmaceuticals production and/or distribution.❑ Low cost private healthcare facilities and laboratory services.

Other sector opportunities


Source: Government of Kenya; Stepchange Africa

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Affordable Housing

❑ Key Pillar of ‘Big 4’ Agenda❑ Create 500,000 affordable homes across all 47 counties.❑ Reduce cost of home ownership by 50%❑ Reduce the cost of construction by 30%❑ Create 300,000 new jobs in the construction sector

❑ Specific Opportunities include:❑ Home/social/ commercial construction❑ Construction of mass rapid transit systems for urban centres❑ Credit facilities & financing vehicles for property developers & future homeowners

Other sector opportunities


Source: Government of Kenya; Stepchange Africa

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Advantages of investing in Kenya

1) EAC (175 million) and COMESA (529 million); Source: Stepchange Africa


Intelligent Workforce

CostStructure

Market Growth

BusinessEnvironment

Highly educated workforce at your disposal.

Favourable labour & operating costs and generous incentives on taxes.

Secondary cities, allow expansion within Kenya.

Leader of the EAC; spear-heading the Economic Partnership Agreement with EU.

Documents

Doing Business in Kenya - EAS