KENYA has put in place the building blocks to attract and support foreign investment, top technocrats said at the just-ended Kenya Trade and Investment Summit in Sandton, South Africa’s financial hub.
With projected economic growth of between 6% to 7% this year and next, East Africa’s largest economy presents attractive opportunities that are no longer merely the preserve of foolhardy or adventurous investors.
While tackling political and security instability, Kenya has set about building its economy by being frank, open and pragmatic. Most importantly, its political leaders acknowledge and welcome the important role that private enterprise has to play in its economic goals.
Outlining the opportunities and frameworks that the government has put in place to attract investment, director of the Public Private Partnership (PPP) unit in the National Treasury Stanley Kamau outlined the plans that have been hatched to build the country’s infrastructure.
“Kenya is ripe for private sector investments,” he said. “The economy has been driven by the private sector and we are not going to move away from that. The government will continue putting in the right frameworks and addressing all the challenges that may come up.”
The PPP route was the most viable to finance these projects, he added, as the government’s current debt-to-GDP ratio of around 46% was on the higher side and the government was alert to the risks of borrowing more in the light of the Greek crisis.
The scale of the PPP opportunity as initiated by his unit between 2013 and 2017 was valued at $22-billion, which will be realised through 69 infrastructure projects ranging from port, rail, and power to road and housing infrastructure.
He said that attracting private-sector partnerships was reliant not only on presenting opportunities, but also creating an environment that was transparent and easy to understand.
“We are trying to realign processes with the PPP Act and want to streamline this so that investors know where to find what. What we are also trying to do is to create a programme whereby investors know when projects are coming up,” he said.
“We are trying to standardise most of the documentation so that the private sector knows what it takes, the documentation required and doing that, I think, will reduce the timeframes.”
Linked to this, the country has also introduced a range of investor-friendly policies and incentives. Much of this strategy is being incorporated into the government’s proposals for the Special Economic Zones it is establishing.
Under this programme, companies in these zones will enjoy exemption from corporate tax for the first 10 years and pay 10% corporate tax in the following five years. The proposals also include exemption from VAT and excise duties.
Apart from these incentives, the Kenyan Revenue Authority is working on strengthening tax treaties with other countries and has introduced special dispensations in the telecommunications and extractive industries to attract investors.
“We believe this is the new partnership for engagement in which Kenyan leadership is reaching out,” said Silvester Kasuku, director general and chief executive of the LAPSSET Corridor Development Authority, which has been tasked with building the billion-dollar Lamu Port-South Sudan-Ethiopia Transport Corridor.
“In the infrastructure sector, there are numerous instruments that are being offered by the government of Kenya for the private sector to share in the investment. We are ready to listen to new ideas to improve in these areas.
“We believe as you make proposals to engage with government, we are open to new ideas. Come with recommendations and show us how you think they can work. We can only make it perfect if we involve stakeholders.”
This attitude will be welcome news for South African companies looking to expand into East Africa. The opportunities in Kenya itself are abundant, and links into the regional economy are strengthening by the day.