Successfully investing in Kenya

Kenya is an economic powerhouse in sub-Saharan Africa. With its skilled workforce and good infrastructure, the country remains a very attractive location for international investors.

   

The above-mentioned BETA agenda focuses on the following five economic sectors where growth is anticipated: 

  

It is also expected that the government will also invest heavily in these sectors with the aim of promoting their growth. Measures have already been taken in the agricultural sector by making subsidized fertilizers available to farmers. The Government is also in the process of reforming the National Health Insurance Fund to meet the urgent needs of Kenyans at the bottom of the socioeconomic structure by actualizing its purpose as a social medical insurance facility. In addition, the government has continued to invest in the Hustler Fund and Financial Inclusion Fund providing low interest loans to individuals and small and medium-sized enterprises.

In addition, Kenya welcomes climate-resilient development initiatives and investments in renewable energy, including the production of green hydrogen. The country has set itself the goal of achieving 100 percent green energy by 2030 and increasing its grid capacity from the current 3 gigawatts to 10 gigawatts by 2040.

Key challenges include:

Despite the current administration’s focus on boosting revenue collection, a lot of measures have been put in place to enhance tax administration effectiveness and uniformity. The deployment of the eTIMS (tax invoicing) technology is set to assist the Government in the tax revenue target of 20 percent of GDP (Gross Domestic Product).

Nevertheless, a raft of investor incentives are due for enactment under the Finance Bill 2024. They range from tax base and rate reductions to levelling of rates for some tax regimes. The corporate tax rate is set to reduce to 25 percent from 30 percent. All withholding taxes for non-residents are also set to be aligned. There is also an effort to ease the pressure and burden of tax collection across the board by rationalizing tax exemptions for corporates and individuals and phasing out of preferential corporate tax rates.

Carbon tax measures are also expected to review taxes on electric powered vehicles and increase taxes on vehicles that use fossil fuels.

Finally, the residential real estate sector is set to benefit from a new 40 percent expense deduction under a new simplified tax regime. Currently landlords are subject to a 7.5 percent income tax on the gross rent collected. Kenya will also reintroduce the minimum tax requirement in line with the global trends under the OECD Inclusive Framework. Minimum tax was outlawed by the courts and it is expected that necessary remedies will be enacted in line with the court ruling.​

The focus will be on inclusive growth at all income levels. We can already see that this goal will be achieved through the implementation of the BETA agenda. 

  

Support should also continue being given to micro, small and medium-sized enterprises, as they are among the main drivers of the Kenyan economy. 

   

In addition, the government should encourage and support investment in sustainable agricultural enterprises. Investments should also be made towards averting the effects of climate change so that there is continued growth in the agricultural sector. International collaborations supporting good corporate governance also remain an integral part of Kenya’s economic growth.

  

Kenya is on the right track to achieve economic growth and further development.​