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REMARKS BY KEPSA CEO ON “ECONOMIC TRANSFORMATION OF KENYA THROUGH BUSINESS

TO CREATE WEALTH AND EMPLOYMENT” DURING THE AFRICA DAY ANNUAL EVENT ON 2ND

NOVEMBER 2013 IN AMSTERDAM, NETHERLANDS

BACKGROUND & OVERVIEW

Let me begin my speech by taking us down memory lane, much like the Minister did briefly.

Since the 1950s Africa has gone through major transitions both democratically and

economically; for many sub Saharan African countries these can be grouped into 3 distinct

transitions: independence, reforms and economic growth. Different countries have gone

through these at different times and in different ways. What is common is the independence

transition fell around the same time for most countries as the economic growth which is

currently sweeping the continent. Other transitions and sub transitions depend from country to

country.

For Kenya, the independence transition was shaped by the Nationalists who fought for political

independence from the British. After independence, the transition of reforms began

economically with nationalization of industries which saw many foreigners; especially of Asian

origin leave the country, indigenous Kenyans then begun to own businesses and Government

increase its share of businesses. This was then followed by political reforms shaped by the civil

society, calling for rule of law, human rights, changes in the constitution and other governance

issues. This period was most active in the 1980s and 1990s leading to the early 2000s. This led

to changes in sections of the constitution, continued clamor for a new constitution and revival

of governance and economic institutions.

Both the independence transition and reform transitions were very heavily characterized by

foreign Aid. The era of economic growth then started in early the 2000s and this was

characterized with business getting more organized, thriving, engaging in pro growth policies

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and strategies like the economic recovery strategy of 2003 and the vision 2030 of 2008, joining

forces with civil society in clamoring for a new constitution finally promulgated in 2010, rule of

law, security and continued political stability. This era though different in many countries led

and continues to shape Africa's economies. It is a transition focused on trade and investments

with many African countries including Kenya changing its foreign policy to economic diplomacy,

where engagement with the West is trade and investment. A time for building new economic

partners with the rise of Asian countries as well as Russia and Brazil

Africa’s economic pulse has quickened, infusing the continent with new commercial vibrancy.

Real GDP rose by 4.9 percent a year from 2000 through 2008, more than twice its pace in the

1980s and ’90s. Telecommunications, banking, and retail are flourishing. Construction is

booming. Private-investment inflows are surging.

Many of Africa’s 50-plus individual economies face some development challenges; yet Africa’s

collective GDP, at around $2.0 trillion in 2011, is now roughly equal to Brazil’s or Russia’s, and

the continent is among the world’s most rapidly growing economic regions. While Africa’s

increased economic momentum is widely recognized, its sources and likely staying power are

less understood. Soaring prices for oil, minerals, and other commodities have helped lift GDP

since the year 2000.

According to a report “Lions on the move: The progress and potential of African economies,” by

the McKinsey Global Institute (MGI), resources accounted for only about a third of the

newfound growth. The rest resulted from internal structural changes that have spurred the

broader domestic economy. Both the long term, internal and external trends indicate Africa’s

economic prospects are strong, but each African country is expected to follow its own path to

economic prosperity.

On Kenya’s economic performance, Kenya's macroeconomic indicators have shown a positive

trend on average over the last 10 years pointing to economic growth of Kenya. According to

figures from the Kenya National Bureau of Statistics (KNBS), Kenya’s GDP was about US$17.39

billion 8 years ago. Per capita GDP averaged approximately US$450 annually. Adjusted in

purchasing power parity (PPP) terms, per capita GDP was about US$1,200. The country’s real

GDP growth picked up to 2.3 percent in early 2004 and to nearly 6 percent in 2005 and 2006,

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compared with a sluggish 1.4 percent since (1997–2002). Kenya’s economy evidenced an

annual real GDP growth rate of 4.73 in 2012, as compared to an annual real GDP growth rate

of 4.4% in 2011 and 5.8% in 2010.Real GDP is expected to continue to improve, largely because

of expansions in tourism, telecommunications, transport, and construction and a recovery in

agriculture and now the new sector of oil and other minerals.

Many economic studies conducted in Kenya have attributed this improved performance to the

recent reforms in Kenya, the area of exchange rates is one, from fixed exchange rate regimes to

pegged and later floating regime through liberalization in the nineties. Kenya’s overall monthly

inflation has dropped to 7.76% in the month of October 2013 from 8.29% in the month of

September 2013. This is an indicator of the effectiveness of the inflation targeting policies the

Central Bank of Kenya has continued to implement.

In the next 20 years, an average annual growth of above 6% and 3% in productivity is

projected. Kenya is ideally situated as a regional export base catering for demand from

neighboring economies and is the 9th most attractive economy in Africa (Rand Merchant Bank,

2012); 10th in Africa on the Global Competitiveness Index; 9th in Africa on Ease of doing business

and 3rd on World Bank assessment of economy, reforms and governance covering 16 African

nations.

Kenya like many African countries has undergone economic transformation for the last several

decades to attain this growth. Various studies conducted have tried to explain the patterns and

forces in this process; they unanimously agree on the positive and immense role of the business

in o creating wealth and employment. Privatizations that have occurred over the last few

decades have had immense impact on business activities in Kenya leading to creation of wealth

and employment. This is now being re-thought the high speed privatization is now giving way

to Government run enterprises as more studies around the world reveal Government can still

do good business based on corporate governance and business principles while privatizing

those that need to be privatized.

The Kenya private sector has over the years contributed to social good like building of schools,

providing water and infrastructure to communities they operate in, it has remained the engine

of economy growth, creating wealth an employment for the country. Out of 510,000 new jobs

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created in 2011, the private sector was responsible for 96% of employment generated (only

21,000 were in the public sector) according to Kenya National Bureau of Statistics (KNBS)

statistics. It also contributes over 80% of Kenya’s GDP and is currently rated as the most vibrant

and dynamic. The sector has proofed its resilience despite various external and internal shocks

experienced during the 1980s and 90s, terrorism attacks in 1998, 2001, the post-election

violence in 2008and most recently 2013, engaging with different stakeholders to mitigate the

negative effects to the economy by these incidences . After the 2007 post-election violence the

private sector under the Kenya Private Sector Alliance (KEPSA) engaged the leaders and other

stakeholders to end the violence. In 2013, KEPSA spearheaded a spirited peaceful election

campaign (previous a preserve of the civil society) which inspired the first Presidential election

debates, a first in Kenya and Africa; the campaign contributed greatly to peaceful elections in

2013. Kenya’s private sector is currently rated as the most vibrant and dynamic in East Africa.

ECONOMIC RELATIONS

A. Terms of Trade

In terms of trade and Investments between Kenya and Netherlands, the main exports coming

from Kenya in order of magnitude include: Cut flowers and flower buds of a kind suitable for

bouquets or for ornamental purposes, fresh, dried, dyed, bleached, impregnated or otherwise

prepared; Vegetables, fresh or chilled; Other live plants (including their roots), cuttings and

slips; mushroom spawn; Feldspar; leucite, nepheline and nepheline syenite; fluorspar; Fruit,

nuts and other edible parts of plants, otherwise prepared or preserved, whether or not

containing added sugar or other sweetening matter or spirit, not elsewhere specified or

included; Fruit juices (including grape must) and vegetable juices, unfermented and not

containing added spirit, whether or not containing added sugar or other sweetening matter;

Fish fillets and other fish meat (whether or not minced), fresh, chilled or frozen; and Foliage,

branches and other parts of plants, without flowers or flower buds, and grasses, mosses and

lichens, being goods of a kind suitable for bouquets or for ornamental purposes, fresh, dried,

dyed, bleached, impregnated or otherwise prepared.

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On the other hand, exports from Netherlands to Kenya in order of magnitude include;

Automatic data processing machines and units thereof; magnetic or optical readers, machines

for transcribing data onto data media in coded form and machines for processing such data, not

elsewhere specified or included; Polyacetals, other polyethers and epoxide resins, in primary

forms; polycarbonates, alkyd resins, polyallyl esters and other polyesters, in primary forms;

Parts and accessories (other than covers, carrying cases and the like) suitable for use solely or

principally with machines of headings 84.69 to 84.72; Turbo-jets, turbo-propellers and other gas

turbines; Petroleum oils and oils obtained from bituminous minerals, other than crude;

preparations not elsewhere specified or included, containing by weight 70 % or more of

petroleum oils or of oils obtained from bituminous minerals; Bulbs, tubers, tuberous roots,

corms, crowns and rhizomes, dormant, in growth or in flower; chicory plants and roots other

than roots of heading 12.12; Self-propelled bulldozers, angledozers, graders, levellers, scrapers,

mechanical shovels, excavators, shovel loaders, tamping machines and road rollers; Parts

suitable for use solely or principally with the machinery; Prepared binders for foundry moulds

or cores; chemical products and preparations of the chemical or allied industries (including

those consisting of mixtures of natural products), not elsewhere specified or included; and

Mixed alkylbenzenes and mixed alkylnaphthalenes, other than those of heading 27.07 or 29.02.

B. Netherlands investments in Kenya and private sector support

In October 2010 the Kenya and Netherlands governments concluded negotiations on a double

taxation treaty, responding to growing demand from Dutch business. Netherland’s Ministry of

Economic Affairs, Agriculture & Innovation supports the many Dutch flower and vegetable

growers with businesses in Kenya. Dutch investments in Kenyan horticulture and agriculture

contribute substantially to employment. KLM and Kenya Airways (KQ) work closely together;

KLM has a 26% share in Kenya Airways. Martin air and Dutch charter airlines also fly regularly to

Nairobi and Mombasa. Other major Dutch companies with branches in Kenya include Helios

(which took over Shell’s activities in Kenya), Unilever, Nutricia/Danone, Nedlloyd, Heineken and

Philips.

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The Netherlands has continued to support Kenya’s economic development with its private

sector instruments. They include programs funded through the Netherlands Development

Finance Company (FMO) and, the Private Sector Investment Program (PSI), the Infrastructure

Development Facility (ORIO), the Netherlands Management Cooperation Program (PUM) and

the Centre for the Promotion of Imports from Developing Countries (CBI).

KENYA’S KEY STRENGHTS, INVESTMENT OPPORTUNITIES & INCENTIVES

A. Kenya’s key strengths

While there is trade between the two countries this can be enhanced but more importantly

have a greater focus on investing in Kenya. For this will grow employment and wealth badly

needed by a growing economy and population. Kenya offers a desirable investment and trade

destination due to a number of key strengths that include;

Excellent connectivity to major world-wide hubs and time zones that make it easy to

work with most continents. Nairobi is the undisputed transportation hub of Eastern and

Central Africa and the largest city between Cairo and Johannesburg. The Port of

Mombasa is the most important deep-water port in the region capable of

accommodating both small and large post-panama vessels, supplying the shipping needs

of more than a dozen countries.

A deep pool of educated and skilled manpower has made the country the

manufacturing, commercial and financial hub in eastern and central Africa. Kenya has

achieved almost universal free primary education with net enrollment rates of more

than 92% and 73.3% primary to secondary school transition rates. Presently about 200

thousand students are enrolled in Kenya’s public Universities. A significant number of

Kenyan student are also enrolled in local private universities and universities abroad.

The country enjoys extensive infrastructure, extraordinarily well educated, English

speaking, and multi-lingual population, with strong entrepreneurial tradition.

A leading tourism, wildlife and safari destination. The tourism industry, already one of

the most successful in the world, continues to expand. It’s worth noting Kenya,

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Rwanda and Uganda plan to introduce a joint East African visa from 1

January 2014.

Kenyan government has taken steps to enhance Kenya’s economic competitiveness. In

2010, Kenya promulgated Kenya Constitution 2010 and its implementation has greatly

improved governance, democracy is flourishing.

Large labor force; Population - 39.5 million and is projected to grow to 60 million people

in 2030.Kenya is a very young country with about 50% of Kenya’s population under the

age of 15.

A fully liberalized economy without exchange or price controls. There are no restrictions

on domestic and foreign borrowing by residents and non-residents.

The government has established a Business Regulatory Reform Unit to identify

unnecessary business licenses. Under the unit, the government is strengthening the

legislative framework to create predictable and enabling business environment such as

improving electronic filing of documents at the Lands Registry, the Companies Registry

and other key agencies involved in business registration. All these efforts are aimed at

reducing the cost of doing business and improve Kenya’s Rating on Doing Business

index, thus positioning our country as a referred investment destination

The government has established an Electronic e-registry which lists information on all

businesses. Under e-government, services such as tax returns and payment of custom

duties can be done online.

The government has implemented results based management and performance

contracting for all ministries and departments. This has enabled the public sector to be

able to more effectively support private sector business and investment.

The most developed stock market in the Eastern and Central African region i.e. the

Nairobi Stock Exchange (NSE) with market capitalization of about Kshs. 1.2 trillion

(approximately USD 14.6 Billion)

An attractive and comprehensive package of incentives offered to investors.

A strong and cooperative relationship between the government, the private sector and

development partners make it conducive to attracting investments.

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Membership to regional trading blocs of COMESA and the EAC, as well as a beneficiary

country under the preferential trade enhancing schemes offered by the AGOA

legislation of the USA and the ACP-EU Cooperation and various bilateral Cooperation

agreements. The EAC market has a total population of 133 million and the 20 member

countries of COMESA has a total population of 406 million US$ and a combined GDP of

735 billion US$ which offer important opportunities for business and joint ventures

using Kenya as a spring board to access the larger region market.

Proximity to Eastern Africa and Central African market. These two have a land mass

larger than China and a population larger than the U.S.

A relatively well developed manufacturing base in the Eastern African region.

Potential for exploration and exploitation of mineral resources. Kenya’s mineral

resources though limited, are attractive and a potential source of valuable materials

such as titanium. Kenya has recently discovered oil and other rare minerals in the

country.

Favorable weather/Climate as well as attractive and diverse social/cultural environment.

A relatively well developed infrastructure.

Kenya is currently connected to the world by 4 submarine optical fiber cables greatly

reducing data transfer costs while also increasing internet access.

Kenyan businesses encourage the use of mobile (cell) phones for doing business and

telemarketing. Kenya is the world’s market leader in mobile money where more than 80

percent of those with a cell phone use “mobile money” or “M-PESA”.

Fixed lines and wireless mobile lines are relatively inexpensive.

The electrical current in Kenya is 240 volts, 50 hertz (cycles per second)

A. Investment opportunities

Kenya has various investments opportunities available in the following areas/sectors; Energy,

information and communication, manufacturing, tourism, national heritage and culture,

transport and infrastructure, Nairobi metropolitan region development, agriculture, livestock,

fisheries, trade, watering and irrigation, education, environment and mineral resources,

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building and construction, integrated regional development programs, cooperative

development, land, and health.

(A detailed analysis is attached as Annex 1)

B. Incentives

The Government of Kenya provides a number of incentives to persons who choose to invest in

Kenya:-

INCOME TAX: Corporation tax on the taxable income of a resident company is levied at 30%

while that on non-resident companies is levied at 37.5%. It is also worth noting in Kenya there

is no time limit on the carrying forward of tax losses against future profits from an identical

source of income.

CAPITAL INVESTMENT ALLOWANCES: These are offered on a reducing balance basis and

include;

a. Industrial Building Allowance (I.B.A): IBA is granted on capital expenditure incurred on the

construction of an industrial building and at a rate of 2.5% per annum to the qualifying cost

of the construction of an industrial building and 10% per annum on the qualifying cost of a

hotel building. These rates may however be varied upon formal application to the Kenya

Revenue Authority detailing the inadequacy of the rate provided.

b. Investment Deduction Allowance: This incentive is granted to encourage development in

manufacturing industries as well as the construction of a hotel certified to be an industrial

building and machinery (water pumps, electricity transformers, generators, machinery for

disposal of effluent and enhancing cleanliness of the environment).

c. Farm Works Deduction: This is granted at the rate of 33.33% per annum for three years to

the owner or tenant of any agricultural land who incurs capital expenditure on the

construction of farm works

d. Shipping Investment Deduction: This is granted at the rate of 40% on capital expenditure

and only one such deduction can be allowed in respect of the same ship.

e. Mining Allowance: This is granted at the rate of 40% in the first year and 10% from the

second to the seventh year. (More details are contained in the Mining Act)

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EXPORT PROMOTION INCENTIVES: These are tax incentives geared towards encouraging

exports with the basic idea being to allow exporters to get access to inputs at world prices. The

3 main schemes are the Export Processing Zones (EPZ’s), Manufacture under Bond (MuB) and

the Tax Remissions Export Office (TREO).

EXPORT PROCESSING ZONES (EPZS): Tax incentives are offered to investors that locate their

operations in Export Processing Zones under the Export Processing Zones Act (Chapter 517,

Laws of Kenya) and subsequent amendments thereto as follows: -

a. An initial 10-year corporate income tax holiday and a 25% corporation tax rate for a

further 10 years thereafter (except for EPZ commercial enterprises

b. 10-year withholding tax holiday on dividends and other remittances to non-resident parties

(except for EPZ commercial license enterprises)

c. Perpetual exemption from VAT and customs import duty on inputs VAT exemption also

applies on local purchases of goods and services supplied by companies in the Kenyan

customs territory or domestic market. As well as from payment of stamp duty on legal

instruments.

d. 100% investment deduction on new investment in EPZ buildings and machinery, applicable

over 20 years.

e. Exemption from any quotas or other restrictions or prohibitions on imports or exports with

the exception of trade in firearms and military equipment.

Procedural incentives are also offered to persons investing within the EPZ area together with

exemption from having to take out a number of licenses.

TAX REMISSION FOR EXPORTS: For investors operating outside an EPZ, the government

provides incentives through the remission of taxes incurred in respect of exports of taxable

Goods prior to attaining a security bond. This applies where a person incurs VAT on goods

imported under bond for manufacture of exports. This bond is cancelled after the exporter

satisfies the commissioner for VAT goods have been duly exported. VAT remission will also be

allowed in respect of capital goods (excluding motor vehicles) imported or purchased for

investment in industries such as oil exploration or prospecting for minerals.

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DOUBLE TAXATION TREATIES: Kenya has entered into such treaties with countries such as:

Canada, Denmark, Norway, Sweden, India, Zambia, United Kingdom and Germany. A double

tax agreement for the East African Region (Kenya, Uganda and Tanzania) has not been ratified.

However, Income Tax legislation allowing for unilateral relief operates in Uganda and Tanzania.

In Kenya, the benefit of such unilateral relief is restricted to the employment income of Kenyan

citizens.

INVESTMENT INCENTIVES SPECIFIC TO TOURISM

a. Import duty and VAT exemption: The Government, upon application, exempts import duty

and VAT on the following items and equipment for hotel construction and refurbishment:

washing machines, kitchen ware, cookers, fridges and freezers, air conditioning systems,

cutlery, televisions, carpets, furniture and linen and curtains. All other items and equipment

required by hoteliers is only VAT exempt upon application for construction and

refurbishment.

b. Exemption from VAT: All materials and equipment, excluding vehicles and goods for regular

repair and maintenance, the purchase or importation of which is approved by the Principal

Secretary to the National Treasury, for use in the construction or refurbishment of tourist

hotels, subject to the production of such evidence as the Commissioner may require as to

the quantity, quality and type of good required from the project.

GUARANTEES TO INVESTORS:-

a. Guarantee against Expropriation: The Constitution of Kenya provides guarantee against

expropriation of private property, which may occur for reasons of security or public interest.

In such a case, a fair and prompt compensation is guaranteed.

b. Repatriation of Capital and Profits: Capital repatriation, remittance of dividends and

interest are guaranteed to foreign investors under the Foreign Investment Protection Act

(FIPA) - Cap 518. Investors can repatriate: After tax profits, including retained profits which

have not been capitalized, the proceeds of the investment after payment of the relevant

taxes; and Principal.

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ROLE OF KEPSA

KEPSA is the National apex body of the private sector in Kenya founded in 2003, and that

provides a unified voice of its more than 100,000 members (BMO & corporate representation).

The primary objective of KEPSA is to influence the development of an environment conducive

to business thus, making Kenya more regionally and globally competitive as a source and

destination of investment. KEPSA engages the Executive, Judiciary and Legislature and is

constantly involved in public private dialogue to enhance the doing business environment,

which is a complement for businesses to grow.

CONCLUDING REMARKS

Africa’s economic pulse has quickened, infusing the continent with new commercial vibrancy.

Africa is the next frontier and I would on behalf of the Kenyan business fraternity and Kenyan

people wish to invite you to consider investing in Africa and in Particular Kenya. The role of the

private sector has been and continues being very instrumental in driving the necessary

economic, social and political reforms and thus creating wealth and employment.

ANNEX 1: INVESTMENT OPPORTUNITIES AVAILABLE IN KENYA

Kenya has various investments opportunities that are available in the areas/sectors

enumerated below:

I. Energy sector:

Kenya’s electrical power supply falls far below the demand which is driven by an accelerated

consumer connection policy calling for private sector investment in power generation for sale

to national grid. The recent discovery of oil in northwestern Kenya as well as coal in Kitui

County has opened up investment opportunities for export-led growth as well as in the area of

upstream and downstream, logistics, refining, coal exploration and exploitation. Geothermal

power provides a clean, renewable and affordable fuel of economic growth and Kenya is

Africa’s largest producer of geothermal power. By 2014, geothermal energy is expected to

surpass hydro power as top contributor to the grid. To achieve Vision 2030, Kenya will need

15,000 MW by 2030 and currently unexploited geothermal resources range between 7,000 and

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10,000 MW, which will require $30 billion to exploit. Transmission and distribution of electricity

also needs upgrading and expansion

The priority projects which present immediate opportunities for private sector include:

Transformer manufacturing.

Geothermal development.

Establishment of a 300 MW coal fired plant by the government.

Coal exploration and exploitation.

Small hydropower development.

Renewable energy which will promote use of environmental friendly technologies such

as solar electricity generators and wind power generation.

Bio-fuel production.

Exploration of hydrocarbons and petroleum.

Establishment of Mombasa petroleum trading hub.

II. Information Communication and Technology sector:

Kenya’s ICT sector plays a crucial role in social-economic development of the country and hence

the government is currently offering opportunities to the private sector for investment in it. The

investment opportunities include:

Establishing a data centre and disaster recovery centre.

Deploying of digital broadcast network.

Rolling out E-government services.

Establishing Multimedia Technology Parks (MTPs).

Software and hardware development

Establishing Business Processing Outsourcing Park (BPO).

Development of Konza technology city.

Development of international teleport (exchange point) in Mombasa-co-location facility.

III. Manufacturing sector:

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In recognition of the role of private sector in spear heading industrialization, the government of

Kenya has designed suitable incentive packages and export promotion programs to attract

investment in manufacturing industry. The investment opportunities available in Kenya’s

Manufacturing sector include:

Development of industrial and manufacturing zone.

Development of Small and Medium Enterprises (SMEs).

Establishing of Micro and Small Enterprises (MSE)

Establishment of tire manufacturing plant.

In the agro-processing industry there is processing of white refined sugar and fruit

concentrates.

Other opportunities are in horticulture, development of tanneries, textile and clothing

sector.

Chemicals industry, manufacture of cement and sheet glass production.

Production of salt, sulphur, lime, cement, plastics and rubber products.

Motor vehicle components manufacturing, iron and steel industry and manufacture of

aluminum cans.

The sector also allows for component manufacturing, manufacture of ductile iron rolls

and production of high strength reinforcement bars.

Production of casting sand or molding as well as machine tool industry.

Development and manufacture of medical equipment.

IV. Tourism sector:

Tourism is a main economic activity in Kenya which is seen as one of the pillars to drive the

economy towards vision 2030 targets. In 2012, there were 1.7million international visitor

arrivals and the tourism sector earned Kenya 96 Billion in revenue. Investments that present

opportunities for the private sector are therefore planned to improve its facilities and raise

quality of hospitality services. These investments include:

Development of Isiolo Resort city.

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Development of a Marina at Shimoni, Mombasa that will provide berthing for over 50

vessels and be built to recognized international specifications & safety standards.

Development of various projects including: Bomas of Kenya Tourist project, Bomas of

Kenya Amusement Park project, Health spas project and cruise-ship project on Lake

Victoria.

Other projects are Mombasa port cruise-ship, Tana River primate, Kora, Sibiloi and Kerio

Valley lodge projects.

Development of a water sport and a business and conference tourism initiative.

V. National heritage and culture sector:

Kenya being a multi-cultural society endowed with a rich diverse cultural heritage, there exists

investment opportunities in the heritage and cultural area. The investment opportunities to

promote the sector include:

Development of international culture and art centre which promotes education, skills

and talents development, research and cultural enjoyment to Kenyans thus marketing

the country.

Building new exhibition galleries for Nairobi National Museums where by holding the

block buster exhibition events, having innovative and creative events around the

exhibition, return to investment will be positive.

Sports facilities and stadia which generate income to investors and create employment

opportunities for Kenyan youth.

VI. Transport and infrastructure sector:

Since infrastructure investments require enormous financial resources that cannot be

adequately met from public sector, the government is seeking private capital support for

investment thus creating opportunities in the following areas:

Development of duty free ports or special economic zone at Dongo Kundu.

Development of cruise ship facilities.

Development of airport infrastructure and services.

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Development of a dry dock port and a car bazaar.

Construction of a second port at Lamu and a new port corridor which offers a good

opportunity for investment.

Development and construction of Malindi jetty, proposed Ngomeni jetty and sea wall.

Construction of the standard gauge railway line from Mombasa to Malaba.

There exists also opportunities in Nairobi metropolitan mass transport program, modern

commuter rail service for Nairobi city and road sub-sector which can concession for

Nairobi urban toll road and privatization of weighbridges.

VII. Nairobi metropolitan region development:

Nairobi being a national regional and international strategic centre for education, commerce,

transport, regional cooperation and economic development and that it connects Eastern,

Central and Southern Africa countries it provides several areas of investment. These areas

include:

Disaster management which involves improving the fire fighting, ambulance services

and street lighting.

Nairobi Metropolitan mass rapid transit program.

Development of a modern financial services hub.

Development of a regional trade and business services hub.

Provision of non-motorized transportation.

Development of Closed Circuit Television (CCTV).

Geographical Information Systems (GIS) planning and mapping.

VIII. Agricultural sector:

This is the mainstay of Kenya economy with a great potential for growth. Its vision- to be

innovative commercially oriented and modern, it offers several investment opportunities.

These include:

Production infrastructure which involves development of multi-purpose dams and

irrigation infrastructure.

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Market infrastructure dealing with harvest management facilities, grain storage and

warehouse receipting.

Value addition which involves setting up small scale industries.

Investment opportunities in this sector can also be figured out in terms of specific crops:

Sugarcane development, processing and cogeneration,

Branding tea into various types, decaffeinated, flavouring and packaging it.

Establishing a national coffee roasting and branding plant for Kenya coffee and

marketing cooperatives

Research on cotton, seed production, ginning and value addition.

Capacity building and infrastructure development and expanding land under rice.

IX. Livestock sector:

It contributes 10% of the GDP with its potential is far below due to a number of challenges, key

interventions will be needed creating investment opportunities with the main key areas being

in abattoirs and beef processing units. The various opportunities include

Development of disease free zones to promote milk and meat production and

processing and marketing of products.

Development of meat industry by poultry and pig processing as well as deep-sea fishing.

Development of animal feeds and mineral supplements.

Development of the dairy industry by processing milk into milk powder for local and

export markets and also goat milk processing.

Improved breeding programs which involves breeding materials in poultry productions

and superior livestock breeding services.

X. Fisheries sector:

It is an important social-economic activity and major source of livelihood which promotes other

auxiliary industries for example boat building and repair, transport, sports and recreation

investment opportunities. The opportunities provided by this sector include;

Development of marine capture fisheries.

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Development of inland capture fisheries.

Development of aquaculture through fish feed and leather industries and value addition

in fisheries products.

XI. Trade sector:

Wholesale and retail trade being a key sub-sector in economic development, there is high

potential and vibrant wholesale and retail business in Kenya providing for both formal and

informal employment. Investment opportunities in this sector are:

Wholesale hubs and producer markets in major towns in Kenya which increase

wholesale business activities in the towns and its environs and promote activities like

banking, recycling facilities. It also involves building wholesale markets, operating cold

storage, ripening equipment and waste disposal facilities.

Construction of a model tier one retail market in Athi-river near Nairobi which is

expected to stimulate business activities within the region, with the investors once the

projects are completed, expected to run them through Build Operate and Transfer (BOT)

scheme.

XII. Water and irrigation sector:

As the Kenya’s economy expands, all sectors require huge supply and efficient use of water

offering good investment opportunities. These includes,

Water storage and building which involves capacity building of national water

conservation and Pipeline Corporation.

Mzima II pipeline project which provides opportunities for turnkey arrangement

involving provision of finance, engineering design, construction services and joint

ventures.

Tana delta irrigation, rehabilitation and expansion where investors team up and

actualize the project.

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Maragua dam for Nairobi water supply. Its development and advertisement is done

internationally for interested and suitable engineering firms to submit proposals for

design, implementation and transfer.

XIII. Education sector

The government of Kenya is committed to provision of quality education, training and research

for all Kenyans. The sector has therefore undergone accelerated reforms which require heavy

investment in construction of educational infrastructure, modern machines and technical

training needs. The opportunities available are;

Construction of new schools and universities thus production of school learning

materials and laboratory equipment and long term concessional loans and grants to

local entrepreneurs carrying out investments in education.

Establishment of Technical Industrial Vocational Education Training (TIVET) centers of

excellence which provides opportunities for training equipment and infrastructure

manufacturing and also employment.

Skills for Business Process Outsourcing (BPO) through manufacture of software to supply

the industry and train human resources for skills in the industry.

Establishment of science and technology parks.

Construction and rehabilitation of facilities of TIVET.

Opportunities in higher education which involves construction of private universities,

supply of equipment and teaching facilities and construction facilities.

Research where partnerships are involved in research and development.

Establishment of the computer supply program which involve partnerships that target a

diversity of areas in the broad sector of ICT integration in education.

XIV. Environment and mineral resources:

Sustainable management of environment and natural resources is critical for economic growth

and development of any nation. The Kenyan economy provides a wide range of priority

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investment areas under the environment and mineral resources for instance climate change

prediction and forest catchment protection. These investment opportunities include;

Mining sector; there are opportunities in mining exploration and exploitation, value

addition through direct and joint venture partnerships and ecotourism by rehabilitation

of disused mines.

Carbon trading schemes for investment in carbon markets to promote conservation and

compensation for environmental services, energy based investment and agricultural

based.

Climate change programs. Involves construction works for dams, drilling boreholes,

establishing a center of excellence in climate change issues, promotion of education

training and public awareness relating to climate change.

Integrated waste management where there are activities like waste disaggregation,

sanitary landfills, supply of wheeler bins and supplying and operating of waste

compactors.

Resources assessments which involves environmental resource assessment through

appropriate state of their development technologies and data and information sharing

for planning objects.

Space technology for ICT and resource management through mineral surveys and

disaster predictions.

Meteorological services which include modern laboratory, e-learning system

establishment, climate data recovery and modernization and human capacity building.

XV. Building and construction industry:

There is a very high unmet demand across the Kenya for housing development which is largely

expected to be met by private sector thus creating opportunities. These include;

Construction of low cost houses where investors can partner with National Housing

Corporation to put up houses on their parcels of land.

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Other opportunities are, building walk up flats, town houses, commercial centers and

open recreational facilities through; Kibera, Pangani, Starehe, Park road and Shauri

Moyo Housing schemes.

Police housing where the government is involving investors to construct 48,000 housing

units.

XVI. Integrated regional development programs:

Due to abundance and variety of unexploited resources in Kenya, the Kenyan government has

seen the need for integrated programs that yield both social and economic benefits and offer

an opportunity for public private partnership. This is being done through electricity sales, water

sale, fishery and tourism investments, hotel businesses and agro-processing products. The

areas for investment opportunities include;

Gum Arabic and Gum resins development programs.

High grand falls multipurpose reservoir project in Eastern province.

Munyu multipurpose reservoir and Kibwezi irrigation project.

Kiambere solar integrated firm.

Magwagwa multipurpose project.

Nandi hydro power integrated development program.

Webuye Teremi multi-purpose project.

Ewaso Ng’iro North integrated natural resource conservation and development.

Integrated Mau catchment’s conservation and development.

Integrated Greater Mara Tourism development.

Coast development area investment.

XVII. Cooperative development:

Given the strategic role played by commodities and services dealt with by cooperatives in

overall economic growth and development of Kenyan economy and society, there are great

opportunities to partner with cooperatives in various areas. This includes;

Manufacture or blending of fertilizer for redistribution to farmer based cooperatives.

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Food, agro-processing and packaging to add value to primary agricultural products.

Secondary processing of cotton and pyrethrum into higher value branded final products.

Investments in cooperatives managed medium and large scale farming and housing

schemes.

Production and marketing of ICT software and hardware to encourage standardization

and use of tailor made packages.

XVIII. Land sector:

Land is the single most important resource. To ensure it is held, used and managed in an

equitable, efficient, productive and sustainable manner, government in partnership with

investors prioritize several opportunities which includes;

Development of national land and formation management system which involves

development of data bases, safeguarding and digitizing of land proper records all over

the country.

Preparation of national spatial plan through human settlement development, industrial

and infrastructure development, natural heritage and cultural and strategic resources

preservation.

Establishment of Kenya national spatial data infrastructure by digitization of land

registration maps, modernization of national coordinate reference network and

development of large scale spatial data framework.

XIX. Health sector:

The government in the process of finalizing health sector PPPs strategy, it provides a number of

investment opportunities involving a private sector partner having management control of

public hospital to get return on investment at a rate that does not hamper access. The

investment areas include;

Making Kenya a regional health services hub by improving delivery of health care in

partnership with public sector through health tourism which involves spa, gym and

physical exercises and treatment beneficial for health and rejuvenation.

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Pharmaceutical and medical equipment manufacturing under expansion of product

portfolio, search for new markets and support for medical research.

Health service promotion where opportunities are found in inpatient and outpatient

care, preventative care and diagnostic services.

Market incentives for investment in health care which include range of tax incentives,

business friendly reforms, large pool of skilled enterprise workers and improved physical

infrastructure.

ANNEX 2: WHY INVEST OR TRADE WITH NETHERLANDS?

i. A strategic location in Europe;

ii. A superior logistics and technology centre

iii. A conducive innovation environment

iv. An international business environment

v. A solid workforce

vi. An attractive quality of life

ANNEX 3: TRADE AND INVESTMENTS OPPORTUNITIES AVAILABLE IN THE NETHERLANDS

The Dutch tax system has a number of features that may be very beneficial in international tax

planning. These include;

A corporate income tax rate of 20 percent on the first €200,000 and 25 percent for

taxable profits exceeding €200,000.

In addition, the Dutch ruling practice provides clarity and certainty in advance on future

tax positions.

Furthermore, in respect of R&D, companies can benefit from the innovation box

resulting in an effective corporate tax rate of only 5 percent, as well as an R&D

allowance taking the form of wage tax and social security contribution deductions.

Dutch tax law also provides the participation exemption, which states that all benefits

related to a qualifying shareholding are exempt from Dutch corporate income tax, as

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well as the fiscal unity regime, designed to freely offset profits and losses among group

members.

There are also advantages in debt and loss structuring, and a wide tax treaty network,

resulting in reduction of withholding taxes on dividends, interests and royalties.

Additionally, there is the 30 percent ruling, which is a tax-free reimbursement of 30

percent of the employee's salary, provided that the employee has been recruited or

assigned from abroad and has specific expertise scarce in the Dutch labor market.

Finally, the Dutch Customs authorities are well known for their practical and pro-active

approach towards facilitating international trade and optimizing customs procedures.

This fact underlies the Netherlands’ preferred status as a country in which to base

importing activities.

ANNEX 4: INCENTIVES AVAILABLE IN THE NETHERLANDS

i. Trade; Expansion of current trade volumes on the current trade commodities from

Kenya to Netherlands

ii. Agriculture; Agric-food value chain