The Report: Kenya 2018
While Kenya is no stranger to political strides experienced across the region, the country has managed to avoid long periods of crisis – whether political, economic or social – and has been able to overcome its challenges in relatively short periods of time.
Country Profile
As a market-based economy with a supportive domestic policy environment, Kenya has been dubbed the commercial “gateway” to East Africa. With Mombasa acting as a trade platform with one of the busiest ports in the region, and the capital Nairobi the country’s political and financial centre, the country has quickly recovered in the aftermath of the 2007 financial crisis and has been able to sustain strong annual growth levels of over 5%. Following the electoral victory of President Uhuru Kenyatta in 2017, the Big Four agenda, a list of priority initiatives and projects for his second term of government running until 2022, was announced. Those programmes are organised around four pillars: food and nutritional security; affordable housing; manufacturing; and universal health care. This chapter contains interviews with President Uhuru Kenyatta; Monica Juma, Cabinet Secretary, Ministry of Foreign Affairs and International Trade; Libérat Mfumukeko, Secretary-General, EAC; and Liam Fox, UK Secretary of State for International Trade.
Explore chapterEconomy
After the costly drought and political uncertainty of 2017, the Kenyan economy appears to have stabilised on an upward trajectory in 2018, with most forecasts seeing a more robust expansion of economic activity. Indeed, Kenya’s diverse economy forms a solid platform from which the government can generate economic growth over the coming years. The resolution of the electoral process, improving business confidence and strong private consumption are likely to support GDP expansion over 2018 and into 2019. However, a structural fiscal deficit and an increasing public debt continue to pose significant challenges. Consequently, a sense of urgency surrounds the process of economic reform by which Kenya hopes to establish itself as a globally competitive, prosperous nation by 2030. This chapter contains interviews with Anne Kirima-Muchoki, Chairperson, Kenya Investment Authority; Carole Kariuki, CEO, Kenya Private Sector Alliance; and Ray W Washburne, President and CEO, Overseas Private Investment Corporation.
Explore chapterBanking
As the full-year results for 2017 began to emerge, the effects of a new cap on lending interest rates become apparent, with most banks reporting reduced margins and profitability. A tighter lending environment, however, has encouraged banks to find alternative routes to revenue. Technological innovation, in particular, has received a fresh impetus as lenders reach out to prospective customers through new channels, such as mobile banking. However, despite the challenges of 2017, solid fundamentals point to continued positive performance in 2018. Increases in net assets and deposits, consolidation and the continued streamlining and digitisation of bank services have contributed to sector resilience. This chapter contains interviews with Patrick Ngugi Njoroge, Governor, Central Bank of Kenya; Joshua Oigara, CEO and Managing Director, KCB Group; Jeremy Awori, CEO, Barclays Kenya; and Kenneth Kaniu, CEO, Britam Asset Managers.
Explore chapterCapital Markets
The market entered 2018 on the back of strong performance the previous year, in which the main index followed a broadly positive trajectory that continued into the first quarter. Though the markets saw some fluctuation over the following months, continuing legislative support and positive sector developments suggest a resilience going forward. At the same time, continuing regulatory support and a project pipeline that includes the continued launch of financial derivatives for equities, bonds and currencies, as well as the expansion of commodity derivatives, ensure the market will remain a driver in the region. This chapter contains interviews with Geoffrey Odundo, CEO, Nairobi Securities Exchange; and Geoffrey Gangla, CEO, Genghis Capital.
Explore chapterInsurance
With its large population, diverse economy and an insurance penetration rate of less than 3% of GDP in the first quarter of 2018, compared to a global average of more than 6%, Kenya holds significant promise as an insurance arena. Recent years have seen the government and the industry regulator attempt to realise this potential by developing a micro-insurance framework, increased training for insurance agents and the promotion of technology in transacting insurance business. In the shorter term solid growth forecasts for the Kenyan economy bode well for the prospects of continued premium growth in the sector. This chapter contains an interview with Godfrey K Kiptum, Commissioner of Insurance; and CEO, Insurance Regulatory Authority.
Explore chapterIndustry & Retail
After a challenging 2017, the industrial sector has started to show signs of recovery and is expected to perform well in the coming years, as several government initiatives and programmes focus on boosting the manufacturing sector and its contribution to Kenya’s economy. Although official efforts are already under way, implementation of policies concerned with raising local output and lowering production costs could help Kenya on its path to becoming the industrial hub of East Africa. As for the retail sector, with the economy strengthening, foreign investors entering the local retail market and the middle class continuing to grow, prospects remain positive. Conversely, companies that weathered these difficulties are in good shape and, in fact, benefitting from the rebound. This chapter contains interviews with Peter Munya, Cabinet Secretary, Ministry of Industry, Trade and Cooperatives; and Ahmed Rady, General Manager, East Africa Coca-Cola.
Explore chapterEnergy & Mining
A stable and expanding energy supply is central to Kenya’s ambition to establish itself as an industrialised middle-income country, as set out in its Vision 2030 development strategy. The nation is fortunate in its energy mix: hydro, geothermal, solar and wind energy already play a significant role in power generation, and – particularly in the case of geothermal – there is room for further expansion. Recent oil finds in the South Lokichar Basin may soon feed into the segment and establish Kenya as a hydrocarbons exporter for the first time. For the private sector, the promulgation of the new Energy Bill and Mining Act promise to open up these closely related sectors to increased domestic and foreign investment. If fully implemented, the legislation can be expected to provide the necessary framework to support investment and the expansion of both sectors. This chapter contains interviews with John Munyes, Cabinet Secretary, Ministry of Petroleum and Mining; and Johnson Ole Nchoe, Managing Director and CEO, Geothermal Development Company.
Explore chapterTransport
Transport and logistics are at the core of Kenya’s economic narrative due to the country’s role as a trans-shipment hub for goods moving to landlocked countries in East and Central Africa. The Port of Mombasa is located on international container routes, serving as a well-integrated landing port for regional shipping networks, while land connectivity has also become a major focus, with a number of large-scale projects undertaken to link regional countries with the global market. However, while the authorities need to address the high cost of large-scale infrastructure projects if it is to continue successfully procuring funding, developments currently under way mean Kenya is well situated to become a major transport hub in East Africa. This chapter contains an interview with Silvester Kasuku, Director-General and CEO, Lamu Port Southern Sudan-Ethiopia Transport Corridor.
Explore chapterAgriculture
Agriculture remains a significant part of the Kenya economy, however, growth was slowed by several hurdles, most prominently a drought that the state declared to be a national disaster. The drought restrained domestic production of staple crops such as maize, leading to food scarcity and steep rises consumer inflation. Despite the lower grain output, production of horticultural crops marked an all-time high and remained crucial sources of foreign exchange earnings. Meanwhile, meeting the ambitious target set by the Big Four agenda, which aims to transform Kenya from a state incapable of satisfying domestic demand into a food-secure country, will require mitigating dependence on rainfall, diversifying the nation’s staple basket and supporting smallholders. This chapter contains an interview with Agnes Kalibata, President, Alliance for a Green Revolution in Africa.
Explore chapterICT
Having earned the moniker Silicon Savannah – a status the country first actively sought in 2013 when it launched its economic development roadmap, Vision 2030 – Kenya has made significant strides in ICT. Vision 2030 included a technology development blueprint with the main objective of transforming the country into a global digital player. Progress in this regard is being fuelled by favourable government policy, investment in infrastructure and a vibrant entrepreneurial ecosystem. Improvements, such as the addition of four fibre-optic sea cables between 2009 and 2016, have stepped up the quality of connectivity and reduced costs for consumers and businesses. Value-added services supported by mobile money have enabled mobile operators to maintain profitability, as the industry’s focus has shifted, first from voice to SMS, then to the current era of data-driven growth. This chapter contains an interview with Joseph Mucheru, Cabinet Secretary, Ministry of ICT.
Explore chapterConstruction & Real Estate
Kenya’s construction and real estate sectors experienced slower growth in 2017 than in previous years, owing in part to uncertainty surrounding the contested August general elections, which translated in part, to no major government-led infrastructure projects being announced in the second half of the year. However, while the construction sector grew by less than the 9.8% recorded in 2016, healthy expansion of 8.6% was seen in 2017 for the sector to constitute 6.4% of that year’s GDP. Steady tendering activity is continuing, particularly for irrigation, transport and housing projects that are outlined in Vision 2030, the government’s long-term strategic planning document. Specifically, the real estate sector was marked by softening prices for prime residential and commercial properties. However, the outlook is brighter for the short-to-medium term, due to the government’s commitment to housing and the post-election resumption of normal commercial activity. This chapter contains an interview with Mucai Kunyiha, Chairman, Kenya Property Developers Association.
Explore chapterTourism
After some challenging years, Kenya’s tourism industry is recovering, with the country becoming an increasingly attractive destination as stability and confidence return, travel connections improve and relevant government programmes come into effect. The authorities are adopting increasingly innovative policies to encourage growth, which appear to be yielding results, with tourism arrivals and sector earnings both on the rise in recent years. However, connectivity is an area with potential for development and diversification must also be taken into account. In an effort to achieve this diversification, the country is looking to offer a more contemporary experience, combining traditional attractions with new offerings.
Explore chapterHealth & Education
Given that the country has one of the youngest populations in the world by average age, Kenya is aware that investment in health and education will be a key component in supporting the Vision 2030 goals of transforming the nation into a middle-income country. For instance, the new Health Act, 2017 further codifies constitutional protections and mandates the provision of minimum basic services. Yet while the domestic health industry performs solidly in comparison to its regional peers, there are substantial obstacles standing in the way of progress. In regard to education, significant reform is under way to make the Kenyan education system more efficient and better able to train workers for the modern economy. The government is upgrading the curriculum, expanding coverage and placing an added focus on technical and vocational education and training. While long-term prospects are positive, doubts have risen about the costs and effectiveness of the incoming framework. This chapter contains an interview with Vimal Patel, Managing Director, Cosmos.
Explore chapterTax
In conjunction with Ernst & Young, this chapter explores the taxation system and Kenya’s efforts to build an investor-friendly environment. It also contains a viewpoint with Gitahi Gachahi, CEO, EY Eastern Africa.
Explore chapterLegal Framework
This chapter introduces the reader to the different aspects of the legal system in Kenya, in partnership with Oseko & Ouma. It also contains a viewpoint with Christine A Oseko, Managing Partner, Oseko & Ouma.
Explore chapterThe Guide
This section includes information on hotels, government offices and other listings, alongside useful tips for visitors on topics like currency, visas, language, communications, dress code, business hours and electricity.
Explore chapterTable of Contents
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Carole Kariuki, CEO, Kenya Private Sector Alliance
Patrick Ngugi Njoroge, Governor, Central Bank of Kenya (CBK)
Joshua Oigara, CEO and Managing Director, KCB Group
Geoffrey Gangla, CEO, Genghis Capital
Peter Munya, Cabinet Secretary, Ministry of Industry, Trade and Cooperatives : Interview
Gitahi Gachahi, CEO, EY Eastern Africa
Christine A Oseko, Managing Partner, Oseko & Ouma: Viewpoint
President Uhuru Kenyatta
Libérat Mfumukeko, Secretary-General, EAC
Anne Kirima-Muchoki, Chairperson, Kenya Investment Authority: Interview
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