10 big facts you didn’t know about Kenya's economy—for investors only

Oversubscribed eurobonds, big expenditure on infrastructure, beating the global turmoil...it really is the best time to put your money in Kenya.

A KENYA Trade and Investment Summit got underway at the Convention Centre in Sandton, Johannesburg. Mail & Guardian Africa is the media partner.

So? Well, Kenya has in recent years established itself as the leading East African economy and regional financial, transport, and logistic hub.  

It is also a key geopolitical state in the wider eastern Africa security set up, anchoring the search for peace in Somalia, South Sudan and Burundi.

Despite security challenges, which it has taken big steps to address including its entire security set up, it remains a renowned tourism destination and well-known internationally for its entrepreneurial spirit, its technological and financial innovations, and the warmth of its people—who include luminaries like Oscar-winning actor Lupita Nyong’o, not to add the fact that US president Barack Obama’s father was Kenyan.

It seems inconceivable that there is still anything about Kenya that is not widely known, but there could be. The country is full of surprising economic facts—tailored for the investor seeking hard returns.

1—KENYA last year rebased its economy, which saw its nominal gross domestic product rise 25% to $55 billion, making it a middle-income status country. It is now the largest economy in eastern Africa, and ninth in Africa, and the fourth largest in sub-Saharan Africa, after Nigeria, South Africa and Angola. While per capita income is now up tp $1,246 from $999, the improved statistics may not mean that Kenyans are immediately better off; but it does mean that their status quo has been more accurately defined, helping build accurate data for investors.

2—BUT that is rapidly changing: in a increasing volatile regional and global economy, Kenya is projected to grow 6% this year and by as much as 7.6% next year, according to the World Bank—ahead of sub-Saharan Africa’s average 4.2%. The IMF forecasts 6.5%, a revision from 6.9% given the tempest in global markets that has seen other African economies halve their own forecasts, but still by far a star performer. Analysts say there has never been a better time to be in Kenya, both long-term and short-term, as the government spends big on regional infrastructure programmes, and gains in agriculture, financial services and construction remain solid.

3—THE number of dollar millionaires in Kenya will grow at more than double the global rate over the next decade as the economy expands, according to Africa’s biggest lender, Standard Bank Group Ltd. Individuals with a net worth of more than $1 million will increase 74% by 2024, compared with 31% globally. Most wealthy Kenyans have businesses in the manufacturing industry, real estate and horticulture industries, but other industries are fast coming up on the rear view mirror, including technology.
The country also has a great position geographically making it a well-located hub, in addition to a well-diversified economy. Kenya currently has about 8,700 millionaires out of 18 million globally, with Nairobi home to 6,200 of them—the fifth largest host city for high net worth African individuals.

Renewable energy
4—IT is a green “superpower”: it was the first African country to build geothermal energy sources, reducing energy imports by 51%, making it Africa’s largest producer and freeing it from over-dependence on dams. Kenya aims to expand its installed capacity to 6,700 MW by 2017, the bulk of it from renewables, from just 1,700 MW in 2013, as it anticipates a peak demand of 15,000 MW by 2030. In 2010, geothermal accounted for only 13% of Kenya’s power, now it holds a 5% share of the global installed capacity. This has seen its electricity bills shrink by 30% since 2014, according to the World Bank.

It is also building the 310-MW Lake Turkana Wind Power project, which when complete would become Africa’s largest wind power plant, while it is rich in solar energy, with US-based micro-grid developer Powerhive set to offer off-grid electricity to more than 200,000 homes following a successful pilot that saw people pay using—wait for it: their mobile phone.

5—DURING his recent historic visit to Kenya, where his father hails from, US president Barack Obama said Africa  was “on the move” while attending the Global Entrepreneurship Summit 2015—held in sub-Saharan Africa for the first time. He praised the spirit of entrepreneurship in Africa, which is amply demonstrated in Kenya—it is home to the world renowned M-Pesa money transfer service and was as the first testing ground of the globally recognised crowd-sourcing platform Ushahidi, (which means “testimony” or “witness” in Kiswahili)—just two of its pioneering tech successes that have seen it christened the Silicon Savannah, in addition to billion-dollar tech projects in the pipeline, including the Konza Technology City.

6—KENYA is a major attraction for foreign direct investment destined for Africa, while it remains a major hub for multinationals ranging from GE to Google. Mail & Guardian Africa recent put together its own survey—an index of business attractiveness, by putting together a basket of 10 major consumer-facing companies - five African, and five international - and seeing where these businesses have chosen to operate.

Of the 10 sampled, Multichoice (DStv), Dangote Cement, Ethiopian Airlines, pan-African financier Ecobank, brewer SAB Miller, Marriott Hotels, Etisalat, Google, Nestlé and fast food company KFC, seven were present in Kenya, making it the fifth most attractive destination after Nigeria, Ghana, South Africa and Tanzania, a position it is set to improve on as it invests billions in infrastructure.

Big Business
7—KENYAN multinationals have also rapidly expanded into nearby countries, from major bankers such as KCB and Equity Bank to retailers such as Nakumatt. The country remains a popular launching pad for companies with regional ambitions, while its strategic geographical position makes its a natural port for both ships and aircraft, which serve both its hinterland and scores of international destinations. Various surveys consistently rank the country among the top three most preferred destination in Africa for multinational corporations seeking to set up shop. It is also a star performer in attracting and retaining talent.

8—UNDERSCORING its respect for the rule of law, president Uhuru Kenyatta of Kenya was the first sitting head of state to appear at the International Criminal Court, appearing on October 8 over the post-election violence in 2008. The charges against him were dropped on December 5th while his deputy, William Ruto, is going through the court process, setting examples at the highest level of the need for accountability and respect for its international obligations.

9—KENYA was the first developing country to have an open government portal and the 22nd country globally. In July 2011, it launched the Kenya Open Data Initiative, becoming the first sub-Saharan country to do so, and only the second African country after Morocco, later to be followed by Tunisia and Ghana. This made key government data freely available to the public through a single online portal, helping better inform social and economic planning. 

10—LAST year, it offered a Eurobond that attracted subscriptions worth $8 billion, four times the amount that the country was looking for—an “African record” according to international media. It was a reinforcement of the fact that long-term international investors have learnt to sift out the morbid headlines depicting the old narrative of conflict, disease and famine in Africa, and are staking billions of dollars on the emerging continent’s underlying economic fundamentals.

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