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8/6/2019 ICT in Kenya
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c r e a t i n g p r o s p e r i t y t h r o u g h i n n o v a t i o n
Kenya: a globally
competitive ict
outsourcing
destination
Kenya is Running
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The Ministr of Information and Communications
All Rights Reserved 2006.
Telsposta Towers, 10th Floor
P.O Box 30025-00100, Nairobi, Kenya
Phone: +254 0(20) 251152, 250517, 250978
Fax: +254 0(20) 249664
Email: [email protected]
Text, Editing & Proofreading:
Wanjiku Maina
Jay BhallaPeter Kimacia
John Gikanga
Access Leo Burnett
Cover Pictures:
Photos.com & Adobe Stock Photos
Other Photos:
Thirdworldmedia.com Imagebank
The Tea Board of Kenya
The World Agroforestry Centre
Stock photography from Photos.com
Design&Illustration: John Gikanga / Thirdworldmedia.com
Printing: Ramco Printing Works / Nairobi, Kenya
Printed on Scandia 2000 Paper
Tis book is published by the Ministry of Information & Communications.
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Te Government of Kenya has made IC a priority in its economic recovery strategy initiatives with the long-term commitment to have
Kenya develop into a globally competitive IC outsourcing destination, as well as a base for the development, production and sale of
information, knowledge, and technology products and services.
Te major force moving the IC industry is the power of the services sector, and more particularly the spread of international business process
outsourcing. As a recipient of this information booklet, we invite you to share with us the progressive belief that much can be achieved
when people, institutions and Governments work together.
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Contents
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Con
tents
01Kenya at a glance / page 12
Kenya at a Glance 12
The Kenyan Economy 14
Investment Opportunities 18
Agriculture, Tourism, Building & Industry,
Financial & Business Services, Energy,
Natural Resources, ManufacturingICT & the Knowledge Industry 44
02Why Kenya? / page 48
Political Stability 50
Dynamic Private Sector 51
Harmonious Industrial Relations 51
Preferential Market Access 51
Qualified Work Force 52
Convenient Time Zone 53
Frequently Asked Questions 54
03the emerging ict Sector / page 60
ICT Sector Overview 62
Current Market Structure 64
Kenya Fibre Network 66
Important Contacts 68
Abbreviations 70
. introduction
. foreWord
. preface
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Nations the world over have recognized the developmental opportunities as well
as the challenges brought about by the fast-paced information age whose hallmark
is information and communication technologies (ICTs). Evidence from developed
countries has shown that ICTs can play a dramatic role in enhancing economic and
social development by acting as a production sector for economic growth and an
enabler for social development.
The decisions and actions we take about the use of ICT will be critical in determining
which road we go down as a nation in our fight against poverty. The old debate, about
choosing between ICTs and other development imperatives, has shifted from one of
trade-offs to one of integrating the two approaches in order to harness the benefits of
sustainable economic and social development.
Kenya has reached a point to embrace a knowledge economy. The imminent upgrading
of the ICT sector in Kenya through the formulation of a National ICT Policy and Strategy
is signifificant because it has the potential and prospects to generate additional jobs
and employment opportunities for a growing youthful population. In setting out the
direction, the policy lays emphasis on the development, deployment and exploitation
of ICTs to aid the development of the Kenyan economy.
Introduction
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Nations the world
over have recognized
the developmental
opportunities as well as the
challenges brought about by
the fast-paced information age
whose hallmark is information
and communication technologies
(ICTs). Evidence from developed
countries has shown that ICTs can
play a dramatic role in enhancing
economic and social development
by acting as a production sector
for economic growth and an
enabler for social development.ICT applications have enabled
these countries make gigantic
improvements in both productivity
and quality in agriculture,
manufacturing, infrastructure,
public administration, and services
such as nance, trade, distribution,
marketing, education and health.
The decisions and actions we take
about the use of ICT will be critical
in determining which road we
go down as a nation in our ght
against poverty. The old debate,
about choosing between ICTs and
other development imperatives,
has shifted from one of trade-
offs to one of integrating the two
approaches in order to harness the
benets of sustainable economic
and social development.
Kenyas National ICT Policy (2005)
and ICT Strategy for Economic
Growth (2006) are the start of a
journey that represents our nations
vision in the information age. The
preparation of the two documents
was guided by the aspirations set
out in Kenyas key socio-economic
development framework documents
including: The Economic Recovery
Strategy for Wealth Creation andEmployment, 2003-2007; Poverty
Foreword
Reduction Strategy Paper; 2001;
Sessional Paper No. 2 of 2005
on Development of Micro and
Small Enterprises for Wealth and
Employment Creation for Poverty
Reduction. The development of this
ICT Strategy for Economic Growth
is a result of wide consultations
involving all key stakeholders in the
public sector, private sector and civil
society.
Kenya has reached a point when
she must shift from depending
on an agricultural base which is
characterized by a relatively weak
industrial foundation and embrace a
knowledge economy. The imminent
upgrading of the ICT sector in
Kenya through the formulation of a
National ICT Policy and Strategy is
signicant because it has the potential
and prospects to generate additionaljobs and employment opportunities
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policy and regulatory framework.
The Government recognizes that
skills and knowledge underpin
Kenyas goal of becoming a
knowledge economy and that the
economic future and the strength
of our communities will depend
on the extent of investments in thedevelopment of human capital. In
this regard, the development of
the right balance of ICT skills and
knowledge that are anchored in
collaborative partnerships between
the government and all stakeholders
in transforming a shared vision
into reality through programs and
policy response is now a national
imperative. The Government is set
to play a crucial role not only in
assisting local companies benet
from existing and arising market
opportunities, but also more
importantly in fostering the necessary
ICT infrastructure development and
for a growing youthful population. In
setting out the direction, the policy
lays emphasis on the development,
deployment and exploitation of
ICTs to aid the development of
other sectors of the economy. It
also provides a basis for facilitating
the socio-economic development
of the country in a globalization
era, dominated by information and
knowledge-based economies.
In developing the ICT Strategy for
Economic Growth, the Government
recognizes the broad challenges
involved in living in an informationage and knowledge economy, and
in harnessing the potential of
ICTs for economic growth and
poverty reduction. Faced with these
realities, the Strategy is based on
four guiding principles, namely:
infrastructure development, human
resource development, stakeholder
participation and appropriate
regulatory framework.
The Governments key objective is
to transform the Kenyan economy
through ICTs by promoting and
facilitating the private sector to
serve as the driver for economic
development through innovation in
the ICT sector. Another long-term
commitment is to have Kenya develop
into a globally competitive ICT
outsourcing destination as well as a
base for the development, production
and sale of information, knowledge,
and technology products and services.
To achieve these objectives, theGovernment will collaborate with
all stakeholders in maintaining a
favorable climate for investment in
ICT manufacturing and services as
well as Foreign Direct Investment.
Hon. Mutahi Kagwe MPMinster for Information and
Communications
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0
Preface
The strategic focus of Kenyas
ICT Strategy for Economic
Growth is to simultaneously
target the development of the
ICT sector and to use ICTs for
employment creation, poverty
reduction, as well as a broad-
based enabler for economicrecovery and the achievement
of national developmental goals.
Trends in a number of transition
economies such as India, Costa
Rica and Mauritius indicate that
one of the major forces moving
the ICT industry is the powerof the services sector, and
more particularly the spread of
international business process
outsourcing. The Kenyan services
sector remains under-exploited.
The import of this is that there
are numerous opportunities for
the development of a services
sector business hub that produces
and serves the local market and
exports to the region and beyond.
In this connection, the Kenyan
services sector can be expanded
through the Business Processing
Outsourcing (BPO) approach
given the number of advantages
the country has for providing such
services.
It is difcult to ignore Kenyas
uninterrupted political stability
since independence, its strategic
location with easy access to
regional and world markets, and
a substantial and varied private
sector. In addition, the country
has a highly educated, English-
speaking workforce with the
potential for turning Kenya into
a world-class player as a service
provider. Besides, the country has arelatively good telecommunications
infrastructure which is being
progressively improved, low labor
costs, and a very convenient time
zone to Western and Eastern
countries. When these factors
are combined with the countrys
extensive natural assets for tourism,
they open major opportunities
that can be exploited through the
deployment of ICTs.
We recognize that for ICTs to spur
economic recovery Kenya needs
to have depth of relevant skills,
a good work ethos, managerial
capabilities, entrepreneurial drive,
intellectual property protection
and establishment of linkages
between companies in the rst
world and those in Kenya.
Further, the modernization of
our ICT infrastructure is essential
in achieving higher rates ofinvestment and competitiveness in
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our economy. The Government
is currently working on
putting in place an enabling
telecommunications infrastructural
and regulatory framework. We are
conscious of the great potential
for job creation for our youth in
setting up ICT-enabled business
services such as customer, back-
ofce and professional services
to offshore, near-shore and
in-shore companies that are
keen on concentrating on their
core competencies and cutting
operational costs.
In order to take advantage of
this emerging trend, we shall put
some initiatives in place. These
include among other things:
adjusting our education and
training programs to enable our
youth cash in on new employmentopportunities; taking advantage
of existing and new marketing
networks and promoting local
and international partnerships;
and recruiting highly qualied
staff, motivating and retaining
them as part of the process
of building a critical mass for
emerging business opportunities.
In addition, collaborating with our
universities and the private sector,
we shall establish ICT business
incubators to support existing and
start-up businesses; set operating
standards in accordance with
international principles to ensurequality assurance; and provide for
decisive response based on market
intelligence and research. In order
to ensure a more broad-based
diffusion of ICTs and benets
from synergy, the Government
will link the ICT Strategy for
Economic Growth with other
national development policies.
The ICT Strategy for Economic
Growth will be implemented
through rolling plans initiated
by inter-sectoral Task Groups
(drawn from public, private and
civil society sectors) working
under the oversight of an ICTs
National Steering Committee.
With the right sets of action plans
it will be possible for Kenya to
embark on an alternative socio-
economic development path that
is guided by the development,
deployment and exploitation of
ICTs within the different sectorsof the economy without rst going
through an extensive and tedious
industrialization process.
Bitange Ndemo, PhD.
Permanent Secretary
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Location:Eastern Africa, on the East Coast
of Africa along the Indian Ocean
at 1 00 N, 38 00 E
Land Area:
569,250 sq km
Capital Cit:
Nairobi
Climate:
Varies from tropical along coast to
arid in the interior
Time Zone:
GMT + 3
Geography
Kenya at a glance
Population:33,829,590 million
Workforce Population:
11.85 million
Life expectanc
Male:
48.87 years
Female: 47.09 years
Literac rate age 15 and oer:
85.1%
Main Languages:
English (ofcial),Kiswahili (ofcial), numerous
indigenous languages
Student Enrolment:
Primary 7,384,800
Secondary 912,624
Universities 91,541
Demography
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Goernment:National Assembly 210 members
single-member constituencies,
plus 12 members nominated by
political parties on a proportional
representation basis.
The attorney general and the
speaker are ex-ofcio members of
the National Assembly.
Elections are held every 5 years,
the last one in 2002.
Head of State:
President
Head of Goernment:
President
Legal Sstem:
Based on Kenyan statutory law,
Kenyan and English common law,
tribal law, and Islamic law; judicial
review in High Court; accepts
compulsory ICJ jurisdiction,
with reservations; constitutionalamendment of 1982 making
Kenya a de jure one-party state
repealed in 1991
Government and Legal System
Local Connectiit:Fully Digital Network
Fixed Line Connectiit:
273,000
Mobile Connectiit:
4,295,000 in 2004
Internet Users:1,500,000
Data Serices:
Kenstream, Jambonet ,
ADSL services, Analog leased
lines(Kenline), Kenpac, Kensat,
ISDN
Satellite Serice:
International Broadcast, VSAT,
Voicecast
Global Connectiit:
Satellite links
Telecommunications
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The Kenyan Economy
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Kenya is strategically located
within easy reach of
various markets in the
region and the destination of its
exports has been the European
Community (EC) countries, USA
and other African countries. The
government of Kenya been very
keen to implement economic
liberalization and has institutedvarious reforms. This has led to
better economic performance
and an improved environment forconducting business.
The country has in the last
few decades tried to reduce
dependence on the traditional
agricultural export commodities
such as tea and coffee and has
made serious efforts to promotenon-traditional exports such as
TheKenyan
Economy
horticultural crops, manufactures,
and most recently the export ofservices. Services such as banking,
insurance and business have also
grown and the countrys currency,
the Kenya Shilling, remains fairly
stable.
Kenya is host to numerous multi-
national corporations, majorityof which are from USA, United
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Kingdom, Germany and the FarEast, and has for a long time been
viewed as a gateway to the wider
East African region.
The Government of Kenya
is taking a variety of steps to
create an enabling environment
for both foreign and domesticinvestment. This is in line with
the Governments Economic
Recovery Strategy for Wealth
and Employment Creation
(20032007), which is focused
on the promises contained in the
manifesto of the ruling party,
the National Rainbow Coalition
(NARC). Priorities are investment
in infrastructure and improving
access to education and healthservices. Also at the top of the
agenda are ghting corruption
and promoting good governance.
Kenyas economy showed signs of
recovery in 2003, after ve years
of poor performance, and posted
real economic growth of 1.8%, as
compared to 1.2% in 2002. At thesame time, however, the overall
ination rate increased from 2% in
2002 to 9.8% in 2003.
Agriculture remains the dominant
sector, it contributed 24% to
the GDP in 2003. Nevertheless,
other sectors like manufacturing,
tourism and business services
also make signicant contributions(Figure II.1). Growth in agriculture
increased to1.5% in 2003, up
from 0.7% in 2002, while the
manufacturing sector grew by 1.4%
in 2003, up from 1.2% in 2002 and
0.8% in 2001. This modest positive
growth was mainly attributable
to tight scal and monetary
policies, stable exchange rates, low
demand for imports, low food
prices and stable petroleum prices.
Considering sub-Saharan Africas
(excluding South Africa) GDP
growth of 3.6% in 2003.
Kenyas economic performance can
be said to be no more than fair.
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TheKenyanEconomy
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Investment Opportunities
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0
Economic Indicators Over a 3-5 year Period
2000 2001 2002 2003 2004
Population 30.2 30.9 31.8 32.7 33.6
GDP at market prices(Kshs M) 967,838 1,025,918 1,038,764 1,141,780 1,273,716
Real GDP Growth Rates (%) 0.6 4.4 0.4 2.8 4.3
Ination Rates - - - - 9%
Unemploment Rate - - - - 30-40%
Oerall Balance of Paments(Kshs M) - -13,072 -257 -31,385 -4,851
Net International Reseres(Kshs M) +7,833 +4,828 -12,292 +4,487 +383
Imports (Kshs M) 187 200 169 205 245.6
Exports (Kshs M) 191 204 226 260 296.1
Tourist Arrials (000) 1,036.5 993.6 1,001.3 1,146.2 1,360.7
S: Kenya Investment Authority, Central Bank of Kenya, Central Bureau of Statistics and Telkom Kenya
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AGRICULTURE
Horticulture
The horticultural sector is one of
the fastest growing sectors in the
economy and is the second largest
foreign exchange earner after tea.
Opportunities exist in production
and export of products such as cut-
owers, French beans, pineapples,
mushrooms, asparagus, mangoes,macadamia nuts, avocados, passion
fruits, melons, and carrots.
Oeriew
Agriculture is the mainstay of the
economy, providing livelihood to
approximately 75 per cent of the
population. There is considerable
scope for diversication and
expansion of the agricultural sector
through accelerated food crop
production and increase of non-
traditional exports. There are also
opportunities for improvement
in technology infrastructure
such as packaging, storage, and
transportation. Intensied irrigation
and additional value added
processing are marketable areas forinvestments.
Agricultural Support
Investment opportunities exist in
seed production, manufacture of
sprayers and pesticides, veterinaryservices, construction of dams and
bore holes, installation of irrigation
systems and services. Opportunities
also exist in support services, such as
cold storage facilities and refrigerated
transport for horticultural and other
perishable products.
Agriculture
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considerable potential for the
expansion of chocolate and
confectionery products for export.
Opportunities for investment exist
in the production and processing
of sugar, tea, meat and dairy
products.
Poultr Products
Hatcheries for the production of
chicken for both domestic and
regional consumption are under-
exploited.
Fisheries
Kenyas water resources of the
Indian Ocean and Lake Victoria
provide vast shing potential.
At present, deep sea shing,prawn and trout farming are in
their infancy but growing rapidly.
Opportunities also exist in sh
processing (lleting and sh meal
production), as well as sheries-
support infrastructure (refrigerated
transport, cold storage, etc.).
Leather and Leather Goods
Most hides and skins are processed
up to the wet blue stage for export
while investment opportunities
exist in production of nished
leather, offering potential for the
manufacture of shoes and other
leather products.
Liestock
Investment opportunities exist in
the rearing of livestock for meat
and dairy products. The dairy
industry has been liberalised,
providing new investment
opportunities in milk processing
for local and regional markets. Non
conventional livestock farming, for
example, of ostrich and crocodile
farming, represent an exciting new
area of investment. Bee keeping
and honey processing are untappedpotential in Kenya.
Agro-Processing
Numerous investment
opportunities exist in this sector.
Edible and other oils produced
locally include butter, ghee and
margarine as well as sunower,
rapeseed, cottonseed, sesame,
coconut and corn oils, while a large
quantity of palm oil is imported.Investments to develop substitutes
for palm oil imports are welcome.
Kenya produces excellent beer,
utilising locally grown barley. The
country has recently developed
papaya and grape wines that
can be exported to regionaland international markets.
Opportunities exist in coffee
roasting and grinding, with a
further potential such as in the
production of decaffeinated coffee
for export.
Sugar production, at 402,000tonnes per annum is below the
domestic demand estimated
at 600,000 tonnes per annum.
Molasses, a by-product of sugar
production, is processed into
power alcohol, potable alcohol,
and bakers yeast. There is also
Agriculture
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The tourist sector is one of
the most important sectors
of the Kenyan economy.
The sector provides employment
to thousands of people directly
and many more indirectly. It is the
second highest foreign exchange
earner after agriculture.
The tourism sector has been
performing well over the last
one year, becoming the leader in
service sector. During the rst
three quarters of 2005, visitors
by air and sea increased by 28.2%
to 605,969 from 476,471 in the
corresponding period of 2004.
The robust growth in the tourism
sector was attributed to the
stepped up marketing particularly
Oeriew
TOURISM AND LEISURE
in non-traditional markets such
as China, Japan, India and the
domestic market, and also the
widened area covered by Kenya
Airways. Some of the newly
inaugurated Kenya Airways routes
include Cairo-Istanbul, Bamako-
Dakar, Harare-Maputo and Dubai-
Guangzhou.
The success in marketing beneted
from the negative effects of the
Tsunami in the Asian and Indian
Ocean Islands markets and
Tourism improved security in the
tourism circuits. The diversication
away from traditional beaches and
wildlife tourism to new circuits in
the western and northern parts
of Kenya also contributed to the
improved performance. Looking
forward, tourism is expected to
remain buoyant in the medium term
following the stepped up marketing
campaigns. The World Cross
Country Championship that is to
take place in Mombasa in 2007, the
delayed negative effects of bird u
and the effects of the Tsunami in
Asian markets is also expected to
help boost tourism.
Tourism is Kenyas third largest
foreign exchange earner. The
tourism industry is growing as a
result of the liberalisation measures,
diversication of tourist generating
markets and continued Government
commitment to providing an
enabling environment, coupled
Tourism
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with successful tourism promotion
and political stability. Enormous
opportunities exist for investment
in lm production; recreation
and entertainment facilities in the
following areas:
Conference Tourism
Cultural tourism
Cruise ship Tourism
Aviation/tour and travel
Tourism
Eco-tourism
Potential investors can take full
advantage of these opportunities
through direct investments or
joint-ventures with Kenyan
entrepreneurs. Opportunities
also exist in this sector in theconstruction of tourist hotels and
game lodges all over the country.
Kenya is a vast country with a
wide range of potential tourist
attractions, which have not
been fully exploited. Currently,
the tourism industry is mainly
concentrated at the countrys
coastal area and in the National
Parks and Game Reserves. As a
policy matter, the Government
of Kenya is strongly committed
to the regional diversication ofthis very important industry to
other areas for some good reasons.
Similarly, the potential for the
domestic market has not been fully
exploited. There is also need to
identify other tourist attractions
besides the existing National Parks,
Game Reserves and the Beach.
In order to extend the length of
stay of safari tourists in Kenya,
emphasis will be put into the
development of inland resorts
situated close to the national parks
and game reserves. It is noted
that the main constraint to thedevelopment of such resorts has
been lack of sufcient investment
capital. Participation in such
investment ventures will, therefore,
be very much encouraged by the
Government of Kenya in order
to exploit the tourism potential in
those areas.
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TourismThe tourism industry is
mainly concentrated at
the countrys coastal area
and in the National Parks
and Game Reserves.
As a policy matter, the
Government of Kenya isstrongly committed to the
regional diversification of
this important industry
Tourism
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0
BUILDING ANDINDUSTRy
Oeriew
Development of infrastructure is
one of the key pillars in achieving
the economic recovery and has
been identied as a priority area
in Economic Recovery Strategy
for Employment and Wealth
Creation. In 2003,the building
and construction sectors key
economic indicators recorded
improved performance. Cement
consumption went up by 4.5
per cent from 1,212.3 thousand
tonnes in 2002 to 1,267.0 thousand
tonnes in 2003 partly due to use of
cement in road construction and
maintenance.
The index of government
expenditure on roads increasedfrom 62.7 in 2002 to 68.5 in 2003.
The total value of building plans
approved increased by 2.7 per cent
from Kshs 10,607.4 million to
Kshs 10,892.6 million in the years
2002 and 2003 respectively. The
total estimated cost of new private
buildings completed registered an
increase of 2.2 per cent from KShs
1,395.6 million in 2002 to KShs
1,426.2 million in 2003.
The overall construction cost
index recorded an increase of
7.1 per cent in 2003 as compared
to 1.4 per cent in 2002. Wageemployment increased marginally
from 76.5 thousand persons in
2002 to 76.6 thousand persons in
2003. E/N/no emergency Fund
reconstructed several roads spread
across the country at a total cost of
KShs 522.2 million. Commercial
banks loans and advances to the
B
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sector went down marginally by
1.8 per cent from KShs 17,298
million in 2002 to KShs 16,995million in 2003. The Kenya Roads
Board disbursed a total of KShs
6.92 billions to the various roads
agencies in 2003
Road Construction
Rehabilitation of Airports
Rehabilitation of port facilities
at Mombasa, which is ongoing
Rehabilitation of inland port
facilities
Development of a Second Port
at Lamu
Kenya - Uganda & regional
pipeline extension (Petroleum)
Construction of upstream
renery
Construction or upgrading
of storage, distribution, andproduct handling facilities
(Petroleum)
Solar / wind energy plants
Urban housing development by
private and public sector
The overall construction cost
index recorded an increase
of 7.1 per cent in 2003 as
compared to 1.4 per cent in
2002
Wage employment increased
marginally from 76.5 thousand
persons in 2002 to 76.6
thousand persons in 2003
The Kenya Roads Board
disbursed a total of KShs 6.92
billions to the various roads
agencies in 2003
7.1%
employment
disbursed
Buildingand
Industry
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and Business Servicesfinancial
F
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Oeriew
In 2003 the Central Bank pursued
a prudent monetary policy stance
aimed at sustaining a stable
macroeconomic environment.
The monetary policy adopted for
the calendar year 2003 targeted
to contain ination below the
5.0 per cent level and allow real
GDP growth to recover to 3.0 per
cent in 2003 up from 1.2 per cent
growth attained in 2002. The major
challenge in the implementation
of the monetary policy was the
expansionary scal policy due to
the -implementation of government
programmes such as the free
universal primary education scheme
for public schools that resulted in a
wider budget decit for the scal year
2003/2004. At the same time, the
government relied more on domestic
non-bank public sources of nance
as opposed to borrowing from the
banking sector in 2003.
FINANCIAL AND BUSINESS SERvICES
Some areas for inestment
opportunities:
Lease Hire
Micro-Financing on whole sale basis
Investment Banking
Insurance Services
Business Advisory services
trusteeship and Receiverships
FinancialServices
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ENERGy
Oeriew
Kenyas energy policy emphasizes
the need for sustainable energy
supplies in adequate quantities at
effective costs, so as to achieve
national development goals. The
policy also emphasizes delivery
of quality energy services so
as to ensure that Kenya willcontinue to attract investments
in those economic activities of
which energy inputs are basic to
production at competitive prices.
The country is dependent mainly
on three forms of energy namely:
petroleum, electricity and wood-
fuel. To a lesser extent wind, solar
and biogas are used as alternative
energy sources.
Petroleum is the major source
of commercial energy in the
country providing about 87% of
the countrys requirements. Thetransport sector consumes more
than half of the petroleum fuels
used in the country. Industry
consumes some 31% of petroleum
fuels.
Hydro electric power accounted
for 54.8% of electricity supplyin the country, while geothermal
and thermal sources accounted
for 18.8% and 26.4% respectively.
During the same period of 2004,
hydro-electric power accounted
for 60.4% of domestic power
generation while geothermal and
thermal sources accounted for
19.5% and 20.2% respectively.Electricity consumption grew by
5.9% during the period reecting
increased demand to support the
pick up in the economy. Average
crude oil prices remained high
with Murban Adnoc crude oil
from Saudi Arabia increasing
from US $ 41.4 per barrel in
September 2004 to US $ 61.1 per
barrel in September 2005. The
sharp increase in crude oil prices
continues to be associated with
political risks, rising global demand
and disruption in the US oil plants
by bad weather. However, pricesmay drop in the coming months
as the market recovers from
damaging hurricanes Katrina and
Rita in the USA in late August
and September. In addition, the
unseasonably warm weather in the
North eastern part of USA has
curbed demand for heating oil and
allowed reners to build stocks.
Presently, the Kenyan oil market,
whose total sales volume reaches
around 2.3 million cubic metres per
annum, is served by eight private
companies. The Government
of Kenya expects that, upon
deregulation of the oil industry, the
Kenyan market will open up to new
companies.
Moreover, potential demand for
Liqueed Petroleum Gas (LPG)
is expected to increase to twice its
present amount in the near future.
However, supply and distribution
of LPG have been constrained
by a number of factors including
limitation of production from
the Kenyan Petroleum Reneries
Ltd. (KPRL). LPG supply and
distribution thus represents an areawhere opportunities are available
for investment.
The Government also plans to
invest in the petroleum sub-
sector, embarking on projects like
oil exploration and oil pipeline
rehabilitation.
E
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87%Petroleum is the major
source of commercial
energy in the country
providing about 87% of the
countrys requirements
Hydro electric power
accounted for 54.8% of
electricity supply in the
country, while geothermaland thermal sources
accounted for 18.8%
and 26.4% respectively
Electricity consumption
grew by 5.9% during theperiod reflecting increased
demand to support the pick
up in the economy
growth
nergy
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Electricit sub-sector
The demand for electricity is
estimated to have increased at
the rate of 5.4% per annum
between 1994 and 2000. To meet
this demand, the Government,
in collaboration with the World
Bank, has prepared an investment
programme for the electricity
sub-sector. The National Power
Development Plan recommends
that during the next 15 years
geothermal generation should
increase to 280MW, partly due
to the predicted abundance ofgeothermal energy resources in the
country.
Transformers
Local investors intend to promote
a project based on joint ventures
with interested investors, to
manufacture transformers mainly
for electric power. Currently, all the
requirements of the country are
imported.
Petroleum
Following liberalization of power
generation by the Government
in 1994, projects earmarked for
development through least cost
development criteria have been
and will continue to be offered for
implementation on the basis of
international competitive tenders.
These projects include geothermal
energy, hydropower, oil based
thermal and any other economically
competitive source. Advertisements
for such projects will be made
both locally and internationallyfrom time to time. In addition, all
such projects will be screened for
their environmental impact and
mitigation cost weighed against
potential benets to ascertain their
economic viability.
En
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Water
The demand for water supply
and sewerage facilities has been
outstripping the development of
the same. While most urban centres
in Kenya have functional facilities,
the level of service has not been
at the expected level and most of
these systems are in dire need of
rehabilitation and augmentation to
meet the rising demands. One major
area that needs improvement is the
management of the water utilities,
and private sector involvement
would be welcome in order toimprove on the efciency and
accountability. There are still quite
a number of urban centres that
require the development of new
facilities, as the existing facilities can
no longer cope up with the demand.
However, with the new policy which
advocates for the adoption of the
user pays and the polluter pays
principles, development of these
facilities could be undertaken by
the private sector as viable business
ventures with the arrangement that
the developer will be granted water
undertaking.
nergy
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Env
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ENvIRONMENT ANDNATURAL RESOURCES
Oeriew
Sustainable exploitation of
natural resources for Economic
Recovery Strategy for Employment
and Wealth Creation is a majorchallenge for them Government
as it endeavors to put in place
policies to guide the process in all
environment and natural resources
sub-sectors. The Government is
in the process of reviewing and
implementing policies that govern
the natural resources exploitation,
management and conservation.
Water Suppl
The Government through the
Ministry of Water Resources
Management and Development
has the responsibility of ensuring
that all Kenyans have access to safe
drinking water within a reasonable
walking distance and in achieving
the set goals of the Millennium
Development Goals (MDGs). It
is estimated that about 75.0 per
cent of the urban population
and nearly 50.0 per cent of rural
population had access to safe
drinking water in 2003. However,
with the increasing population
coupled with inadequate resources
for expansion and maintenance of
water supply programmes, theseproportions are deteriorating. In
this regard, the Government has
put in motion a reform process in
the water sector and has embarked
on implementing the Water
Act 2002. The new legislation
encompasses commercialization
of the urban water programmes
and community participation
in the rural water supply. The
new policy details Governments
role, including, regulation and
supervision of water resources;
while welcoming stakeholders
and beneciary communities toparticipate in the implementation,
nancing, operation and
maintenance of water resources
and supply facilities. The purpose
is to attract investment in the water
sector and provide adequate water
and sanitation services to meet the
various sectoral demands.
Fisheries
Fish continues to play an important
role not only as a source of food
and income for local shing
communities but also for the export
market. The Government has
directly put in place a task force to
develop a comprehensive sheries
policy that will guide the sector
towards the MDGs. It will also take
cognizance of all environmental
issues and within the framework of
the Economic Recovery Strategy
paper.
Forestr
The Department of Forestry has
continued to experience difculties
in discharging its mandate due
to limitations of the current
forest policy and legislation. Anemergency tree planting programme
is being implemented to address the
serious degradation and destruction
of the countrys forests.
vironment
andNaturalResources
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0
Mining
The Government through the
Department of Mines and Geology
in the Ministry of Environment
Natural Resources and Wildlife
has prepared a mining policy and
is in the process of enacting a new
mining law. The aim is to develop
a comprehensive policy framework
for regulating the mining sector
and an appropriate legal and scal
framework, which are in line with
the current global mining trends.
The proposed law once enacted,
will attract, guide and encourage
private investments into the sectoras well as tap the countrys huge
mineral potential. Under the
envisaged mining law, a new mining
licensing system is to be introduced
to provide for among others;
a simplied and harmonized
licensing of mining operations, a
considerably curtailed discretion on
the part of the Minister in charge
of mining and a greater security of
tenure for mining investors. The
new law also seeks to harmonize
mining with the Environment
Management and Co-ordination
Act of 1999 and requires a
restoration and rehabilitation of
mined out areas and cushioning of
local communities against adverse
effects of mining.
Kenya has well-developed
cement processing plants that
satisfy the domestic market and
exports to the regional market.
Approximately 1.2 million tones
of cement are consumed locally
each year. Opportunities exist in
the production of glass, as the
country is not self-sufcient. A
few manufacturing units produce
ceramic pottery and tiles, however,substantial quantities of ceramic
pottery, tiles, sanitary-ware,
and insulators are imported.
Investment potential exists in
prospecting and mining of other
minerals such as gold, precious
stones and petroleum.
Refuse Management
Accumulation of refuse in most
urban centers in the country
remains a serious health and
environmental problem. The
emergence of such substances
as mobile phone scratch cards,
polythene bags and plastic bottles
has raised concern about the
products effects on environment,
as they do not decompose. The
situation is more serious in major
towns of Nairobi, Mombasa,
Kisumu and Nakuru where the daily
refuse accumulation out-paces thequantity disposed. This is a result
of limited resources allocated to
most local authorities coupled with
inefcient waste disposal methods.
Fisheries
Kenyas water resources of the
Indian Ocean and Lake Victoria
provide vast shing potential. At
present, deep sea shing, prawn and
trout farming are in their infancy but
growing rapidly. Opportunity also
exists in sh processing (lleting
and sh meal production), as well
as sheries-support infrastructure
(refrigerated transport&cold storage.
Inestment in Forestr
In order to achieve sustained forest
management, there will be a need to
carry out a well-focused investmentin the following areas:
Env
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Forest valuation
Capacity building in resource
assessment, planning
and management, impact
assessment, geographical
information systems, monitoring
and evaluation
Research in non-wood treeproducts to enhance their
economic potential
Development of credit support
to private forest investments
Improving data and information
for management planning
through regular surveys and
Forest inentories
Developing and improving
marketing of forest products
Modernisation of forestindustries to improve efciency
vironmentandNaturalResources
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MANUFACTURING
Oeriew
In 20022003, the manufacturing
sector contributed about 19%
of Kenyas GDP. Kenya has
traditionally been an exporter
of a variety of manufactures to
the East African region. More
recently, it has begun to exportgarments to the US market. A
wide range of opportunities for
direct and joint-venture investment
exist in the manufacturing sector,
including the manufacture of
textiles and garments, the assembly
of automotive components and
electronics, and the manufactureof tyres, plastics, paper, chemicals,
pharmaceuticals, and metal and
engineering products for the
domestic and export markets.
Textiles and apparel
Within two years of qualifying
for the African Growth and
Opportunity Act (AGOA), Kenyas
exports of clothing and investment
in the textile sector have
experienced a remarkable growth.
There is a cotton-textile-apparel
supply chain in place, but only
the apparel part of it can be said
to be thriving or competitive.Cotton production is insufcient,
and the capacity to produce
high-quality fabric is lacking. The
option of sourcing fabric from
other AGOA-eligible sub-Saharan
African countries is limited, since
the region does not meet the
fabric requirements of its apparel
sub-sector because of supply
constraints and poor quality.
For quality fabrics to be supplied
locally and competitively,
substantial capacity building in the
lower parts of the cotton-textile
chain would be required.
Metal, Steel and Iron
The country possesses a broad-
based metal products industry with
various independent engineering,foundry and metalwork shops.
Opportunities exist in the
development of a nucleus foundry
making precision castings that can
then be processed into precision
components, aluminum cans, high-
strength reinforcement bars, ductile
iron rolls, and so on. Vehicle parts
19%
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and assembly The number of new
motor vehicle registrations has
been increasing, with about 34,000vehicles registered in. Products
such as tyres, tubes, batteries,
springs, radiators, brake pads,
cables, rubber components and
lters are now produced locally,
with a number of rms fabricating
bodies for commercial vehicles.
General Motors East Africa
has a supply chain development
programme and buys close to $20
million worth of local supplies.
There are opportunities in the
manufacture of components for
use by local assemblers and for
export to regional markets.
Electronics and electrical
equipment
Although Kenyas electronics
industry is still in its infancy,
a number of rms in theassembly, testing, repair and
maintenance of electronic goods
are in operation and are rapidly
increasing their scope to meet the
growing demands of the industry.
Investment potential can be found
in the production of motors,circuit breakers, transformers,
switch gears, irrigation pumps,
capacitors, resistors, insulation
tape, electrical ttings, integratedcircuit boards, and a wide range of
other electronic goods.
Plastics, chemicals and
pharmaceuticals
The plastics industry is welldeveloped and produces goods
made of polyvinyl chloride (PVC),
polyethylene, polystyrene and
polypropylene. A number of
pharmaceuticals are produced
locally in the form of tablets,
syrups, capsules and injectables,
but the bulk is imported. Many
opportunities in the manufacture
of chemicals, pharmaceuticals
and fertilizers remain unexploited.
These include the production of
PVC granules from ethyl alcohol;
formaldehyde from methanol;
melanine and urea; mixing andgranulating of fertilizers; cuprous
oxychloride for coffee bean
disease; caustic soda and chlorine-
based products; carbon black;
activated carbon; precipitated
calcium carbonate; textile dyestuff;
ink for ballpoints; and gelatincapsules.
19%The manufacturing sector
contributed about 19% ofKenyas GDP
The country possesses a
broad-based metal products
industry with various
independent engineering,
foundry and metalwork
shops
Some pharmaceuticals are
produced locally in the form
of tablets, syrups, capsules
and injectables
metal
medicine
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Informationand Communication
Infor
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rmationandCommunication
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Kenya is
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INFORMATION ANDCOMMUNICATIONSECTOR
The Government of Kenya
has made ICT a priority in its
economic recovery strategy
initiatives. With the incentives and
benets of other Countries that
Kenya has to offer, the following
areas can be investment in:
I.T. Enabled Service
Call Center for both inbound
and outbound calls
Wide range of Business Process
Outsourcing activities
Disaster Recovery
Software Development
Education and Training
ICT Habitats
Development of Broadband
Infrastructure
KNOWLEDGEINDUSTRy
To complement all the above
sectors, Kenya aspires to
attract internationally reputable
educational institutions,
Universities and training centers.
The following areas exist for
investment:
Science and Technology centers
IT Centers of Excellence
Training Centres for the
Hospitality industry
School Fashion and Design
R&D Institutes
Schools for Business and
International Marketing
Kenya isprogressively improving
an existing relativelygood telecommunications
infrastructure
low labor costs, and avery convenient time zone
to Western and Eastern
countries
extensive natural assets
for tourism that are being
exploited through the
deployment of ICTs
working to establish ICT
business incubators to
support existing and start-up
businesses
we offer
we have
we are
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WhyKenya?
Invest
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Strategically located in the
Eastern part of Africa, bordering
the Indian Ocean, Uganda,Tanzania, Ethiopia, Sudan and
Somalia, Kenya is poised to be an
outsourcing powerhouse. With
a population of slightly over
30 million people, an improved
business environment, easier
investment environment and aconvenient time zone (GMT +3),
Kenya positions itself as a leading
destination for call center, Business
Process Outsourcing, software
development and other related
activities.
Kenya is making great stridestowards becoming an outsourcing
giant in Africa. The practice of
outsourcing is evolving from
simply a cost cutting measure toa core strategic activity, aimed at
enabling companies to focus on
their core business. The internet
has created opportunities for
rms to outsource some functions
to companies outside their own
countries, taking advantage ofvarious benets such as different
time zones and lower labor costs.
Outsourcing to companies in
developing countries gives US &
European rms access to highly
skilled, well educated staff able to
provide high quality services at a
reasonable cost.
Investment Opportunities
tmentOp
portunities
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0
Political Stabilit
Since independence, Kenya has
maintained remarkable stability
despite changes in its political
system and crises in neighboring
countries. Particularly since the
re-emergence of multiparty
democracy, Kenyans have enjoyedan increased degree of freedom.
A cross-party parliamentary reform
initiative in the fall of 1997 revised
some oppressive laws inherited
from the colonial era that had been
used to limit freedom of speech
and assembly. This improved
public freedoms and contributed to
generally credible national elections
in December 1997.
In December 2002, Kenyans held
democratic and open elections,
which were judged free and
fair by international observers.
The 2002 elections marked an
important turning point in Kenyas
democratic evolution in that power
was transferred peacefully from
the single party that had ruled the
country since independence to a
new coalition of parties
Under the presidency of MwaiKibaki, the new ruling coalition
promised to focus its efforts on
generating economic growth,
combating corruption, improving
education, and rewriting its
constitution.
Dnamic Priate Sector
The Private Sector has played an
important role in the economic
development of the country. It
has participated extensively in
the Manufacturing, Agriculture,Tourism and Financial Sectors of
the economy, and is now looking
towards ICT sector.
Harmonious Industrial
Relations
Kenya has enjoyed decades of
stable and harmonious industrial
relations in all sectors of the
economy with trade unions
existing in every sector.
Preferential Market Access
Given its Geographic position in
Africa, Kenya is a hub to the rest
of Africa and the World. A market
outlet of over a billion people
can be reached from Kenya, and
Kenya is an active member of most
regional and International tradeagreements.
Kenyas major trading partners
are the COMESA and EAC
members, the European Union,
Japan, the United Arab Emirates
and the United States. It is the
largest single exporter to the EAC
and COMESA. Geographically,
Kenya is well placed to be the
nancial and air transport hub of
the region, making the country an
ideal investment destination for
investors targeting regional markets.
The countrys strategic locationprovides easy access to the EAC
market, with a population of over
93 million, and COMESA, with a
population of 385 million.
In March 2004, Kenya, together
with Tanzania and Uganda, signed
the East African Community
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Customs Union Protocol, whichcame into force in January
2005. This agreement is a major
breakthrough in establishing the
region as a single market and
investment area. The Protocol
makes provisions that bind
Kenya, Tanzania and Uganda toremove existing barriers to trade
(tariff and non-tariff) in order
to move towards the institution
of a full free trade regime in ve
years. The Protocol provides
for a three-band external tariff
(0% for raw materials, 10% for
intermediate goods and 25% fornished goods). Membership in
the African, Caribbean and Pacic
States (ACP) and the Generalised
System of Preferences (GSP)
enables eligible agricultural
products Kenya to qualify for
preferential tariffs on exports tomember countries. Kenya also
has access to the US market,
provided by the African Growth
and Opportunity Act (AGOA).
Kenya is also a member of
the World Banks Multilateral
Investment Guarantee Agency
(MIGA), which offers insurance
against non -commercial risk, andof the International Centre for the
Settlement of Investment Disputes
(ICSID) between foreign investors
and the Government. The
countrys legal system is exible,
and investors have a choice of
entry mechanisms. The mostcommon methods of investing
in Kenya include the setting up
of a new corporate body, a joint
venture with existing investors, and
the acquisition of the whole or
part of an existing local company.
Conenient Time Zone
With a very Convenient Time
Zone (GMT +3), Kenya positions
itself as a leading destination
for call center, Business
Process Outsourcing, Software
development and other related
activities.
Reasons whyyou should
invest in
Kenya?
1. Qualified Work Force
2. Dynamic Private Sector
3. Harmonious Industrial
Relations
4. Preferential Market Access
5. High Returns
6. Convenient Time Zone
7. Political Stability
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Investm
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Why the Kenyan
Professionals?
1. Very good English and otherinternational languages
2. Well-trained in recognized
institutions of higher
learning locally and
overseas3. Highly-skilled, college
graduate staff
4. Highly computer-literate
5. Up to 40% lower
professional fees than in
Europe and North America
6. 24 hour availability
mentOp
portunities
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FrequentlyAskedQuestions
Frequen
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What are the procedures ofestablishing a business in Kena?
Registration of a company in Kenya
with the Registrar of companies.
This could be:
A branch ofce of an overseas
company, or
A locally incorporated company
Registration could also be done
under the Business Names Act.
What are the approal and
licensing procedures of newinestment?
The Kenya Investment Authority
(KIA) will process and grant
approvals of new investment,
once proposals are submitted on
a prescribed application form.
Proof of company registrationmust be attached to the
application.
Where the investment may
have adverse impact on security,
health or environment, clearance
from the competent authorities
(such as, National Environment
Management Authority(NEMA), Public Health
authorities, etc) will be required
before approval is granted.
Also, clearance is required from
parent ministries for investments
in restricted areas before IPC
approval is granted. Theseinvestments comprise:-
Investments to produce
excisable goods (clearance from
Customs and Excise is a pre-
condition.
Investments in forest productsand mining (clearance from
Ministry of Environment and
Natural resources).
Investments in energy and
petroleum products (clearance
from Ministry of Energy)
Investments in the manufactureUnder Bond Programme (MUB)
(authority to manufacture under
bond must be obtained from
Minister for nance).
Investments in the tourism
industry (clearance from the
Ministry of Tourism).
Are there an restrictions to
doing business in Kena?
Equity restrictions are only in
telecommunications sector (a
minimum of 30% must be local).
Investments in the insuranceindustry must have local
participation.
Ownership of agricultural land by
foreigners is restricted.
Engagement in petty business by
foreigners is also restricted.
How are the liing conditions?
Securit
Security situation in Kenya is
satisfactory and not worse than that
prevailing in many parts of the world.
Health
Adequate health facilities of
international standards are available,
particular in urban areas.
ntlyAsk
edQuestions
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EducationHigh quality educating for investors
locating in Kenya is available for
their families. Overseas curricular
is available in most of the
international schools.
Entertainment
There are adequate world classentertainment facilities for the
comfort of the investor and his
family.
Communication
Adequate communication channels
by air, road, sea, postal and
telecommunication are available toany destination in the world.
What are the immigration
requirements?
Investors are given work
permits Class H for directorsand Class A for expatriate
employees. KIA can facilitate
Entry into Kenya will require
visitors to obtain business visa or
visitors visas.
Expatriate professionals,
engineers or technicians who are
required to install machineries ortrain local employees for a short-
period are issued with special
passes.
Health certicates are required
as proof of inoculation against
yellow fever from some
countries in Asia. This includescholera and malaria
For those issued with work
permits, passes are issued to
their dependants.
What opportunities are aailablefor inestment in Kena?
Kenyas economy is basically
agricultural 24% of GDP
is derived from agricultural
activities. Capacity is required
to boost production such as
in irrigation, better inputs andbetter technologies
Value-addition of agricultural
materials.
Infrastructure and utilities
Further investment required to
open up new areas and reduce
costs of production. This willbe done through occasioning
building
Housing 150,000 units need to
be build annually
Further private investments
required in health and education
sector
Investments in ICT and other
knowledge based industries
Research & Development
Exploration of natural resources,
petroleum and minerals.
Does the Goernment grant
incenties to inestors?
Incenties
MUB Program
100% investment allowance
Duty and VAT exemption on
machinery, equipments and raw
materials.
Frequent
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EPZ Programme
10 year tax holiday
Duty and VAT exemption
Single license
Exemption from stamp duty
Exemption for withholding tax
25% corporate tax for 10 years
after the rst 10 years expire
100%investment allowance
Dut Remission
Exemption on duties and VAT
on raw materials utilized to
process conrmed exports
orders.
Liberal Depreciation Rates
Loss-Carry forward
Business must recover previous
losses before paying corporate
tax.
Capital expenditure
Duties paid for capital
expenditure in excess of US$
70,000 can be recovered from
corporate tax.
Capital goods and basic raw
materials are zero-rated.
Tourism
Investments in tourist hotels can
apply for waiver of duties andVAT on
Foreign investors are allowed
to bring in cars for personal use
duty free
100% investment allowance
for new investments inmanufacturing and tourist hotels.
25% corporate tax for
companies issuing initial public
offers in the Nairobi Stock
Exchange.
Computers are duty free
What taxes are leied b the
goernment?
Income Tax
Corporate tax 30% for local
companies, 37.5% for branch
overseas of foreign companies
Withholding tax 5%
Pay-as-you-earn: graduated up to
a maximum of 30% of income
Customs Duty
4 bands from 0 35%
Excise
Tax applicable to cigarettes,
alcohol, petroleum,
confectionaries
VAT - 16% Standard Rate.
Do Kenan produced products
hae access to other markets?
Unrestricted entry into USA
market under African Growth
and Opportunity Act (AGOA) for
specied Kenyan products.
Market access to the COMESA
market of 400 million people.
Market access to the EAC market
of 80 million.
Market access to the European
Union under the Lome Cotonou
tlyAsk
edQuestions
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Agreement.
Many Kenyan products have
access to other markets in
Europe, USA, and Japan under
the GSP.
Are there double taxationsagreements and Inestment
Protection Agreements between
Kena and other countries?
Kenya has concluded agreements
with EU, Germany, India, Belgium,
Switzerland, etc. Other earlier
agreements are being revised andothers negotiated.
What has the goernment
done to reduce corruption,
dilapidated infrastructure, and
insecurit?Declared zero-tolerance to
corruption
Established an anti-corruption
police unit.
Emphasized on the rule of law
To enhance transparency in
the licensing process throughenactment of an Investment
Act.
Streamline government
procurement procedures.
(Procurement act enacted)
Enhancing accountability in the
judicial system.
What customs procedures are
applied when goods are being
imported?
Import Declaration Form (IDF)must be completed in respect of
the consignment.
Proforma invoices showing the
value of the goods.
Specication of the goods and
packing list.
Bill of lading.
Inspection certicates in respect
of goods exceeding Kshs.
500,000
Do ou hae labour laws inKena ? What are the important
proisions these laws?
Minimum wages set by the
government depend on skills.
It is specic for different urban
areas. (for example in Nairobi,
Mombasa and Kisumu generallaborers should be paid a
minimum of Kshs. 3,905, while
artisans Grade 1 are supposed
to be paid a minimum of Kshs
8,813 per month.
Workers are allowed to join trade
unions related to their sectors ofwork
Wages are negotiated through
tripartite agreements (between
trade unions, government and
employers.
Disputes are settled through theIndustrial Court .
Are foreign inestments
protected in Kena ?
The constitution of Kenya
guarantees protection of life andprivate property.
Frequentl
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The Foreign InvestmentProtection Act guarantees
against expropriation of private
property by government. If
expropriation ever occurs, it will
be for public good and prompt
compensation must be given.
Kenya is a signatory to andMember of the Multilateral
Investment Guarantee Agency
(MIGA) an afliate of the World
Bank which guarantee investors
against loss of Investment
to political problems in host
countries.
Kenya is also signatory to
International centre for
Settlement of Investment
Disputes which is a channel forsettling disputes between foreign
investors and host governments.
Do ou hae adequate business
support infrastructure?
Banks, insurance, transport,
professional serices legal,
engineers, human resource with
adanced skills, international
languages, research institutions.
Kenya has a well developed
professional services sector with
some multinational professional
companies such as KPMG, E&Y
etc having regional ofces in
Nairobi. most major insurance
companies, Banks etc have a
presence in Kenya.
lyAsk
edQuestions
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0
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The Emerging Information&
Communication Technology Sector
ICT SECTOR OvERvIEW
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In the past decade, Kenyas hashad one of the largest and fastest
growing Internet sectors in
Africa. Since the internet came to
Kenya in 1994, the country has
experienced phenomenal growth
in its use. There are now numerous
internet hosts, close to 100 licensed
Internet Service Providers and over
quarter million internet users in the
country.
Information Technolog
The country is also rapidly gaining
a reputation as one of Africas
forerunners in the development of
Information Technology. Kenya
has always been in the forefront
of developments in Information
Technology and is emerging as
one of Africas leaders in this area.
Indeed, Information Technology isone of the fastest growing sectors
in the country. In recent years,
there has been a considerable
drop in the cost of hardware and
software, and this has further led to
the growth of this sector.
In the past decade, Kenyas hashad one of the largest and fastest
growing Internet sectors in
Africa. Since the internet came to
Kenya in 1994, the country has
experienced phenomenal growth
in its use. There are now numerous
internet hosts, close to 100
licensed Internet Service Providers
and over quarter million internet
users in the country.
Kenya which has always been
in the forefront of Information
Technology developments in
Africa, establishing the rst public
Internet peering point for ISPs in
Africa (outside of South Africa).
The country also recently rolled
out its rst national Internet
backbone connecting six cities with
the use of digital switches, ber-
optic cable and satellite services.
Telkom (K) Ltd is also in theprocess of laying ber optic cables
to facilitate faster connections. The
effect of all these developments
will be to reduce further the cost
of internet access, thereby enabling
universal use of the medium in
most parts of the country
Information Technology is nowin use in various sectors of
the economy such as banking,
accounting, medical services,
transportation, mining, research,
defense, agriculture, and
communications. Key Kenyan
para-statal organizations and
some government institutions are
also progressively making use of
Information Technology and there
is a strategy in place to link all
Government departments, agencies
and service providers with a view
to providing efcient, effective and
citizen focused public services on a24/7 basis.
Telecommunications
Infrastructure
In July 1999 the government
ofcially liberalized thetelecommunications sector and
the Communication Commission
of Kenya (CCK) was formed to
regulate the sector.
It is felt that these initiatives will
highly improve the countrys
telecommunications infrastructure,
ICT SECTOR OvERvIEW
TheEmerg
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and ensure competitiveness ininternational markets
Successful use of information
technology in any given
country is driven by the state
of the telecommunication and
information infrastructure
available in that country. Kenyais one of the fastest growing
Mobile markets in Africa. Within
a 5 Year period Kenya growth
in the Mobile industry has
managed to connect 5 million
subscribers. Since the 1970s the
Kenya government has shown a
very keen interest in improving
telecommunications in the country,
and has in fact recently set a target
to increase Tele-density in both
urban and rural areas by about ve
times by the year 2015.
gingI
nformation&Commun
icationTechnologySec
tor
MARKET STRUCTURE
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1 . Facilit-based PublicTelecommunications Serice
Proiders
Regional Telecom Operators
(Regional Carrier)
Long-Distance Telecom
Operators (Inter-Regional
Carriers)
International Telecom
Operators (International
Carriers)
Local Loop Providers (Local
Loop Operators)
2. Land Mobile based radio
communication sericesCellular Mobile Telephone
Service Providers (Mobile
Operators)
Public Radio Paging Service
Providers (Paging Service
Providers)
Commercial Trunked Radio-
Communications Network
Operators (CTROs)
Private Radio Paging
Networks
Private Radio Trunking
Networks
Private Two-Way Radio
Networks
3. Fixed and mobile satelliteserices
Public Commercial Satellite
Uplink/Downlink Gateway
Services(Gateway Services)
Private VSAT network
operator
Commercial VSAT Network
Operators
Global Mobile Personal
Communications via Satellite
(GMPCS) Gateway Services
Operator
Satellite-based Paging
Network and ServicesGlobal Mobile Personal
Communications via Satellite
(GMPCS)
Interactive VSAT terminal
(station) licence
VSAT terminal for radio
determination and related
services
VSAT terminal for space
research and related services
VSAT terminal for amateur
satellite services
4. Enhanced Facilit basedcommunication networks and
serices
Public Data Network
Operators (PDNO)
Private xed
telecommunications data
networks
Broadcast signal distributor
Cable Television Networks
5. Other facilit based proiders
Infrastructure by utility service
providers, e.g. electricity, gas,
railways, oil, etc
6. Internet facilities and serices
Internet Service Providers
Internet Backbone & Gateway
Services(IB& GS)
Internet Exchange Point
Services (IXP)
MarketStru
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7. value added sericesPremium rate service providers
Audio text service providers
Store and forward service
providers
Electronic data interface
service providers
Premium Rate Service Providers
Credit Card Validation Platform
Services Providers
Number portability Platform
Services Providers
Call Centre Operators and
Service Providers
Other new types of Value
Added Service (VAS) Providers
8. Resale serices
Bandwidth/leased circuit resale
service providers
National payphone service
providers
National telecommunications
Access Bureaux (including
cybercafs, Telephone Bureaus,
Multi-purpose Community
Telecentres (MCTs)
9. Telecommunications dealersand Contractors Licence
Telecommunications dealers
licence
Telecommunications
Contractors licence
10. Telecommunications
technical personnel licence
Telecommunications
Engineers licence
Telecommunications
Technicians licence
11. Electronic Commerce
Market Structure National Certication Service
Provider
International Certication
Service Provider
ucture
KENyA FIBER PORTION OF THE EAST AFRICA BACKHAUL TRANSMISSION LINK
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Basic EADTS Conguration is a
SDH transmission system: from
Mombasa to Malaba (Kenya-
Uganda border) through Nairobi
with Spurs to major towns within
the country.
Phase 1 of the project consists
of system from Nairobi to
Mombasa.
Contract for this phase has been
awarded and work is expected to
nish by April 2006.
Project Status
Phase 2 of the project consists
of system from Nairobi to
Malaba (Kenya Uganda
border).
Telkom Kenya in partnership
with Kenya Power & LightingCo. Ltd are in the process of
jointly developing phase 2.
Project is planned to be
completed ahead of of the
EASSy System as it is one of
the regional backhaul linksupon which EASSy will heavily
depend.
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Malaba
Bungoma Eldoret
TimboroaMuhoroni
Kisumu
KerichoLongonot E/S
Naivasha
Nakuru
Nairobi
Mtito Andei
Voi
Mombasa
Kenya Fiber Portion of The EastAfrica Backhaul Transmission Link
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References & websites
Referencesan
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www.information.go.ke - ministry portal
Ministry of Information and Communications
www.ict.go.ke - industry portal
Ministry of Information and Communications
www.tradeandindustry.go.ke - Ministry of Trade and Industry
www.foreignaffairs.go.ke - Ministry of Foreign Affairs
www.tourism.go.ke - Ministry of Tourism and Wildlife
www.planning.go.ke - Ministry of Planning and National Development
www.cbs.go.ke - Central Bureau of Statistics
www.investmentkenya.com - Kenya Investment Authority
www.nationaudio.com - Daily Newspaper
www.eastandard.com - Daily Newspaper
www.yellowpageskenya.com - Kenya Yellow Pages
www.ICTPark.com - One Stop Shop for Outsourcing
Useful Websites
nd
Websites
INSTITUTIONS DISCUSSED IN THIS BOOK
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0
Inestment Promotion CentreNational Bank Building, 8th Floor
Harambee Avenue,
P.O. Box 55704 Nairobi, City Square, 00200
Tel.: 254 20 221 401-4
Fax: 254 20 243 862
Websites: www.investmentkenya.com
www.ipckenya.org
Export Processing Zones Authorit (EPZA)
P.O. Box 50563-00200, Nairobi
Tel.: 254 20 271 2801/6
Fax: 254 20 271 3704
E-mail. [email protected]
Website: www.epzakenya.com
Ministr of Information and Communication
Kenya Bureau of Standards
P.O. Box 54974, Nairobi
Tel.: 254 20 502 210-2
Fax: 254 2503 293
E-mail: [email protected]: www.kebs.org
Ministr of Finance& Kena Reenue Authorit
Treasury Building, Nairobi
Times Towers, Haile Selassie Avenue,
Tel.: 254 20 310 900/315 553
Website: www.treasury.go.ke
Nairobi Cit CouncilCity Hall, City Hall Way, Nairobi
Tel.: 254 20 224 2 82
Fax: 254 20 218 291/214 780
Ministr of Planning and National Deelopment
Treasury Building, Nairobi
Tel.: 254 20 338 111Website: www.planning.go.ke
Principal Immigration Ofcer
Immigration Department
Nyayo House, Nairobi
Tel.: 254 20 333 531
Registrar of Companies
Sheria House, Harambee Avenue, Nairobi
Tel.: 254 20 227 461
Ministry of Trade and Industry
Teleposta Towers, Nairobi
Tel.: 254 20 315 001-7
Website: www.tradeandindustry.go.ke
Telkom Kena Ltd
Telposta Towers, Kenyatta Avenue
Tel.: 254 20 323 2000
Fax: 254 20 243 338
E-mail: [email protected]
Website: www.telkom.co.ke
ABBREvIATIONS
Institutionsdi
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Central Bank of Kena (CBK)P.O Box 60000, Nairobi,
City Square, 00200, Kenya
Tel: (254) (20) 226431 / 246000
Fax: (254) (20) 216945 / 340192
Email: [email protected]
Website: www.centralbank.go.ke
Kena Inestment Authorit (KIA)
P.O Box 55704, Nairobi,
City Square, 00200, Kenya
Tel: (254) (20) 221401 /4
Fax: (254) (20) 336663
Email: [email protected]
Website: www.investmentkenya.com
Capital Markets Authorit (CMA)
P.O Box 74800, Nairobi, City Square, 00200 Kenya
Tel: (254) (20) 221910 / 221869
Fax: (254) (20) 216681
Email: [email protected] or
[email protected] or [email protected]
Website: www.cmake.org
Nairobi Stock Exchange (NSE)
P.O Box 43633, Nairobi GPO, 00100, Kenya
Tel: (254) (20) 230692
Fax: (254) (20) 224200
Email: [email protected]
Website: www.nse.co.ke
BPOBusiness Process OutsourcingCSKComputer Society of Kenya
CSO Civil Society Organization
EassEastern Africa Submarine Cable System
EPCExport Promotion Council
EPZAExport Processing Zones Authority
EPZExport Processing Zones
FDIForeign Direct Investment
GDPGross Domestic Product
ICTsInformation Communication Technologies
IPCInvestment Promotion Centre
ITInformation Technology
KICTANETKenya ICT Action Network
MDGsMillennium Development Goals
NCSNational Communications Secretariat
NGONon-Governmental Organization
SMESmall and Medium EnterpriseTechnoParksTechnology Parks
TESPOKTelecommunications Service providers of
Kenya
voIPVoice-over Internet Protocol
vSATVery Small Aperture Terminal
isc
ussedinthisbook
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Kenya is Running
cs css K
Waiyaki Way, P.O Box 14448, Westlands, 00800 Nairobi, Kenya
Phone: +254 0(20) 4242209
Fax: +254 0(20) 315147
Email: [email protected]
t ms i & cs
Telsposta Towers, 10th Floor
P.O Box 30025-00100, Nairobi, Kenya
Phone: +254 0(20) 251152, 250517, 250978
Fax: +254 0(20) 249664
Email: [email protected]