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Successfully investing in Kenya

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last updated on 19 May 2021 | reading time approx. 2 minutes

 

 

 

How do you assess the current economic situation in Kenya?

Until the Covid-19 pandemic in 2020, Kenya was one of the fastest growing economies in Africa having attained lower-middle income status in 2014. Kenya has also successfully established a diverse and dynamic economy and serves as the point of entry to the larger, 300 million people East African market. Its economic activity has been hit hard by the Covid-19 pandemic, but the growth outlook is positive. The economy is projected to grow by 5.0 per cent in 2021 and 5.4 per cent in 2022.
 

How would you describe the investment climate in Kenya? Which sectors offer the largest potential?

Kenya has a positive investment climate that has made it attractive to international firms seeking a location for regional or pan-African operations. The Covid-19 pandemic has affected the short-term economic outlook, but the country remains resilient in addressing the health and economic challenges.

In the World Bank’s 2020 “Doing Business report” Kenya is ranked at number 56 out of 190 economies reviewed. Kenya continues to improve its regulatory framework and its attractiveness as a destination for foreign direct investment.

Further, the Kenyan government’s “Big Four” agenda still remains a key driver for investment into four sectors of health, housing, agriculture and manufacturing. There has also been increased FDI in the ICT sector.

 

What challenges do German companies face during their business ventures into Kenya?

Some of the challenges faced by the companies include:

  • decreased disposable income (reduced sales) due to the Covid-19 pandemic,
  • local content regulations in some of the sectors, and
  • a different judicial system (common law system).


The Pan-African Free Trade Area “AfCFTA” strengthens Africa's economic position. In Kenya, for example, one of Africa's largest deep-sea ports is being built, which is to become a gateway to the Asian market and an important transhipment centre. How important is the free trade zone for foreign investors?

The Pan-African Free Trade Area will be quite beneficial to foreign investors as it will tackle barriers to investment entry, reduce time and costs of investment approvals, enhance transparency, improve efficiency, and promote investment-related cooperation and coordination across the African continent. The Pan-African Free Trade Area will also provide foreign investors with a larger market.

 

How do you think Kenya will develop?

Like most countries in the world, the Kenyan economy has been negatively impacted by the Covid-19 pandemic. However, the growth outlook remains quite positive. The recovery of the economy will be fueled by proper implementation of the recovery strategies put in place by the government, the country capitalising on an expected improvement in external liquidity and benefiting from initiatives for example, debt refinancing, to meet its external financing needs. However, the recovery could be slowed down by delays in the full reopening of the economy, failure to secure external financing to execute the budget, a slowdown in global growth and disruptive social conditions during the run-up to the 2022 general elections.

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