Over View

Although official Government policy has been to encourage investment in Kenya, including from abroad, its record in attracting significant foreign investment has been poor. With a liberalized economy (price controls and foreign exchange controls were lifted more than a decade ago), and a vibrant market-driven private sector, Kenya could be further along the development path than it is. Government privatization has moved along slowly with a patchy record of success (Kenya Airways was a highly successful privatization (1996), while divestiture from the state owned incumbent telecommunications, electric power, railways, ports and other utilities has been dragged out).

The Investment Promotion Act 2004 aims to encourage foreign investment and facilitate the issue of licences and permits for foreign investors by the issue of Investment Certificates by the Kenya Investment Authority. The licences include both general and industry-specific licences.

Foreign investment in the private sector has generally had a good record. Kenya ’s membership of the EAC and COMESA presents opportunities for manufacturing operations to exploit the benefits of those markets.

There are limited foreign investment incentives available in Kenya. The main area of growth has been in light assembly manufacturing in export processing zones where 10 year tax holidays are available to approved enterprises.

There are no restrictions on investment by foreigners in private companies and foreigners can be directors of companies. Minimum Kenyan co-ownership in insurance companies, banks and telecommunications companies is mandatory, while at least 25% of the shares of companies listed on the Nairobi Stock Exchange must be held by Kenyans. Certain dealings in agricultural land and beach-front property involving non-citizens are prohibited unless special approval is obtained; otherwise foreigners are free to own land.

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