TRADE AND INVESTMENT OPPORTUNITIES IN KENYA UNDER AGOA THE SAFARI COUNTRY

1. TRADE AND INVESTMENT OPPORTUNITIES IN KENYA UNDER AGOA THE SAFARI COUNTRY

2. INTRODUCTION • Africa is endowed with huge natural resources and is emerging as the new development frontier of the 21st Century. • AGOA provides duty free market access to 39 SSA beneficiary countries for over 6,400 products. Kenya will be hosting the AGOA forum between 4th to 6th August 2009.

3. INTRODUCTION Your Ultimate Investment Partner

4. The Republic of Kenya is in East Africa and neighbours Ethiopia, Somalia, Tanzania, Uganda, Sudan. Size:582,646 sq kms. Population:37.2 million (2007) GDP:$27 billion(2007) Per capita:$3,000 KENYA - YOUR INVESTMENT & TOURISM DESTINATION

5. Kenya is a member of UN, AU, EAC, COMESA, ACP, Non Aligned Movement, and WTO among others. It hosts the only headquarters of UN outside New York, Geneva and Vienna i.e UNEP and Habitat. KENYA AT A GLANCE

6. Nairobi-Capital City Kenya is also a regional headquarters for numerous international Media and NGO Agencies. It also hosts regional offices of World Bank, IMF, IFC, WHO, UNDP, UNHCR, UNESCO, East African Development Bank, Eastern and Southern African Trade and Development Bank (PTA Bank) among others.  REGIONAL HEADQUARTERS

7. Regional air traffic and transit hub providing connections to most destinations in Africa, Europe, Asia and beyond. In 2008 Travel News & Lifestyle Magazine voted Kenya Airways as African Airline of Choice, Best Regional Airline,Flying Blue voted the best Frequent Flier program and Msafiri - Best inflight magazine NAIROBI- REGIONAL AIR SERIVICES HUB

8. Kenya has the largest Securities Exchange in East and Central Africa. The NSE index market capitalisation for example increased by 314% from Kshs 112 Billion in 2002 to Kshs 792 Billion in 2006. The three East African Securities Exchanges, namely the Nairobi Stock Exchange (NSE), Uganda Securities Exchange (USE) and Dar es Salaam Stock Exchange (DSE) have established a working relationship among them in the spirit of integrating and developing capital markets in the East African Community (EAC). The exchanges operate under the umbrella of the East African Securities Exchanges Association (EASEA). CENTRE FOR REGIONAL CAPITAL MARKETS

9. Wangari Maathai receiving her Nobel Prize from Ole Danbolt Mjøs, Chairman of the Norwegian Nobel Committee, 10 December 2004 Home to the first African woman Nobel Prize Laureate, Prof Wangari Maathai. NOBEL PRIZE WINNER

10. TOURISM Origin of Safari and the most preferred tourist destination in Africa. The wild beest of masaai mara migration is now one of the 7th wonders of the world.

11. NATIONAL HERITAGE AND PRIDE Enjoys cultural mosaic and linguistic tapestry based on ethnic diversity

12. Home to Olympic medalists and perennial winners of Boston, Chicago and Los Angeles marathon. SPORTS

13. ECONOMIC BACKGROUND Achievements by the Government under Economic Recovery Strategy (ERS) Years: 2003-2007 Since 2003 the Government developed the ERS as a strategy aimed at revitalizing economic growth, wealth and employment creation based on three pillars of promoting economic growth, reducing poverty, and good governance. The focus has been macroeconomic stability, financial sector development, infrastructure development through private sector participation and revitalization of agriculture, trade, tourism and the manufacturing sectors.

14. Growth Rates Since 2002 the GDP growth rate has maintained a steady growth rate expanding from only 0.5% in 2002 to a high of 6.4% in 2006 and 7.1% in 2007. Despite the 2007 election stalemate and other global factors the economy grew by 3.5% in 2008. Economic Growth

15. Structural reforms at the Kenya Revenue Authority has resulted in revenue collection growth of an average of 10% and above 20% of GDP per year thus enabling the government to fund 95% of the national budget. ACHIEVEMENTS

16. Education Since 2003 the Government implemented universal Free Primary school education and also from January 2008 free tuition in secondary schools was introduced. ACHIEVEMENTS

17. Tourism Growth by over 1.6 Million Visitors from Yr 2006 with earnings increasing to over 1 Billion US Dollars. International arrivals hit over 1.6 million in 2007 with US surpassing Germany in terms of arrivals and second after UK. ACHIEVEMENTS

18. ACHIEVEMENTS • Nairobi Stock Exchange • Capitalisation of the Nairobi Stock Exchange has grown tremendously. The successful conclusion IPO’s especially for state owned corporations such as Safaricom and Telkom that were fairly oversubscribed is an indication of the vibrancy of the market.

19. The government has embarked on a major overhaul and reconstruction of roads across the country to facilitate trade and investment and also reduce the cost of doing business. Road network ACHIEVEMENTS

20. CHALLENGES • Achieving MDG’s e.g complete elimination of poverty and hunger • Unemployment for the youth • Infrastructure constraints e.g ports, roads and airports • Huge deficit in energy production ETC

21. Vision Strategy Master Plan Implementation VISION 2030 A globally competitive and prosperous nation with a high quality of life by 2030 Overarching vision Economic Social Political To maintain a sustained economic growth of 10% p.a over the next 25 years A just and cohesive society enjoying equitable social development in a clean and secure environment An issue-based, people-centered, result-oriented, and accountable democratic political system Strategy Plans and implementation

22. INVESTMENT OPPORTUNITIES UNDER VISION 2030

23. SIX KEY SECTORS(GROWTH DRIVERS) • Tourism • Increasing Value in Agriculture • Better & More Inclusive Wholesale and Retail Trade Sector • Manufacturing for the Regional Market • Business Process Offshoring (BPO) • Financial Services

24. FLAGSHIP PROJECTS • TOURISM • 3 Resort Cities: Coast, South Coast, Isiolo • AGRICULTURE • Improving value gained in the production & supply chain through branding Kenyan farm products • Tana River Basin Agricultural Development Scheme • WHOLESALE & RETAIL • Creation of at Least 10 Wholesale Hubs and 1,000-1,1500 Produce Business Groups (Maragua, Central Province) • Building at Least 10 “Tier 1” Retail Markets (Athi River) • Building free trade port at the coast to “Bring Dubai to Kenya” servicing Eastern and Central Africa

25. FLAGSHIP PROJECTS • MANUFACTURING FOR THE REGIONAL MARKET • Development of Strategy for Establishment of 2 special “economic clusters” related to industries located together • Development and creation of 5 Small and Medium Enterprise (SME) Industrial Parks • BUSINESS PROCESS OFFSHORING (BPO) • To design and establish 1 major BPO Park in Nairobi that will have world class infrastructure developed by top international IT suppliers • FINANCIAL SERVICES • Facilitate the transformation of the banking sector to bring in fewer stronger, larger scale banks • Implement legal and institutional reforms required for a regional finance centre

26. TAX AND INVESTMENT INCENTIVES

27. TAX INCENTIVES AVAILABLE IN KENYA • Tax incentives are mainly in place to promote investment or exports. Major tax incentives available include: • Investment Deduction Allowances (IDA): introduced in 1991 to encourage new investment, • Industrial Building Allowance: granted on cost of construction of buildings used for manufacturing purposes and also hotel premises, • Capital Expenditure on agricultural land: targeted at farmers who incur capital expenditure in the course of their operations • Mining deduction allowance: granted to businessmen involved in mining, • Import duty set off: allows import duty paid on import of capital equipment to be set off against income tax payable

28. Export Processing Zones: allow for duty and VAT free importation of inputs for production of export products within specified zones. Incentives include 10 year tax holiday, exemptions from stamp duty, non liability on income tax for non resident employees, etc, TAX INCENTIVES AVAILABLE IN KENYA

29. Manufacture under bond: also allow for duty and VAT free importation but require that corporation tax be paid, Tax Remissions Export Office: TREO primarily involves VAT refunds since duty on most of their inputs is already at 0% TAX INCENTIVES

30. IVESTMENT PROCEDURES AND GUARANTEES TO INVESTORS One Stop Shop – Kenya Investment Authority Registration of the business Submit applications for approval by the Kenya Investment Authority. Private/Public Partnership (PPP) in place Kenya is a member of MIGA (Multilateral Guarantee Agency) an affiliate of World Bank and guarantees against non-commercial risks.

31. SECTOR SPECIFIC OPPORTUNITIES

32. Largest sector of the economy-tea, coffee, sugar, horticulture, meat, dairy products etc: 25% of GDP TEA Kenya is a leading producer of tea of which 95% of it is exported in bulk. Egypt is the leading export destination for Kenya tea in volume terms followed by Pakistan, UK, Afghanistan and Sudan. Potential exists in value addition/processing. AGRICULTURE

33. COFFEE Kenya is a producer of some of the best types of quality Coffee in the world. Coffee is important in the Kenyan economy due to its contribution to foreign exchange earnings, farm incomes, employment and food security to smallholder coffee farmers belonging to co-operative societies, who are about 700,000 in numbers. AGRICULTURE

34. Kenyan Flowers The flower industry has maintained an average growth of 20 per cent per annum. This has seen Kenya emerge as the largest supplier to the European Union, representing 31 per cent of their imports. The major market for Kenyan flowers is Holland with 69 per cent of all the Kenyan flower exports. Other destinations include UK accounting for about 19 per cent and Germany 6 per cent, among others. AGRICULTURE

35. AGRICULTURE - Investment Opportunities Agriculture and Agro-processing Adding value to: Tea, coffee, cotton, pyrethrum, and horticultural products. Livestock products: processing of meat and dairy products. Developing niche products and markets e.g. beef concentrates. Irrigation projects: potential in arid and semi arid areas Provision of agricultural extension services.

36. MANUFACTURING Developing high-tech industries Agro-processing Manufacture of textiles, garments and apparels Domestic and industrial products Fast moving consumer goods Electronic & electrical goods Car assembly, among others Manufacture of products to serve the regional market. Petroleum products e.g. construction of more refineries.

37. KNOWLEDGE BASED INDUSTRIES Research & development Biotechnology Science & Industrial parks Information Technology enabled services Assembly lines

38. INFRASTRUCTURE AND UTILITIES Energy Geothermal & coal powered electricity generation plants Solar Energy Plants and Wind Energy Generation LPG handling storage and bottling facility Storage, distribution and product handling facility Regional Electricity Distribution Kenya-Uganda and regional pipeline extension Construction of refinery Exploration and production Transmission lines

39. INFRASTRUCTURE AND UTILITIES Road Infrastructure BOO and BOT or concession. Ports Privatization and development of ports Rehabilitation of inland port facilities Telecommunications

40. The government is constructing an undersea Fibre Optic Cable from Mombasa to Fujaira to provide cheap international broadband connectivity. ICT

41. INFORMATION AND COMMUNICATION Back office operations and call centers Software development and consultancy Internet services Hardware assembly and repairs Privatization of telecommunication providers Provision of ICT training for growing market Development of broad band Infrastructure Investment in digital radio and television

42. Demand for housing stands at about 200,000 unit against the supply of about 35,000 units per year especially for middle and lower income groups. HOUSING

43. MINING Precious metals: gold, silver. Metallic minerals: titanium and iron ore. Industrial minerals: Vermiculite, Limestone, Carbon dioxide, Zircon, Soda ash, Common salt, Fluorspar and Gypsum, among others Building materials: Volcanic rocks and Tuffs, granite for dimension stone and silica sand. Gemstones: Ruby, garnet, sapphire and tourmaline. Potential for energy minerals: coal and oil.

44. TOURISM Film making Recreation and entertainment facilities Safaris Conference tourism Cultural tourism Cruise ship tourism (ocean and lake) Eco-tourism Tourists Hotels Game lodges

45. Fastest growing sector of the economy. Earnings at$0.5billion in 1st half of 2007.A 25% increase over similar period last year. TOURISM

46. INVESTMENT IN HOTELS – TO INCREASE BED CAPACITY WHICH IS FAIRLY INADQUATE AT 40,000

47. CONFERENCE TOURISM • Huge potential for expansion- (KICC)

48. INTERNATIONAL COMPANIES DOING BUSINESS IN KENYA Barclays Bank Shell Nation Media Group British American Tobacco

49. EMBASSY OF THE REPUBLIC OF KENYA 2249 R STREET, WASHINGTON, DC 2008, USA. TEL- 202-387-6101 EMAIL: commerce@kenyaembassy.com END & THANK YOU