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Successfully investing in Kenya

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​​​last updated on 10 October 2025 | reading time approx. 4 minutes

 

    

   

How do you assess the current economic situation in Kenya?

Kenya’s economic growth grew by 4.6 percent in 2024. It is expected to grow by 5.3 percent in 2025 and retain the same momentum over the medium term. This will mainly be driven by services and household consumption, with agriculture remaining a key cornerstone of Kenya’s economy, contributing significantly to its GDP.
This growth will be significantly bolstered through a series of strategic government interventions and policies. In the last 2 years, Kenya has strived to stabilize its macro-economic indicators as follows:
  • Inflation: Inflation has decreased significantly from a peak of 9.6 percent in October 2022 to 3.0 percent in December 2024. This decline reflects the effectiveness of the Government's stringent monetary policy and the positive impact of a stronger exchange rate, which has helped lower food and energy prices.
  • Exchange Rates: The exchange rate of the Kenyan Shilling (Kes) to the US Dollar (USD) has stabilized within the Kes 128-130 range since January 2024, improving from an average of Kes 160.8 in January 2024 to Kes 129.4 in December 2024.
  • Foreign Exchange Reserves: Foreign exchange reserves have increased from 7.3 billion US dollars in December 2023 to 10.1 billion US dollars in December 2024, providing 5.1 months of import cover.
  • Interest Rates: Interest rates have started to decline due to the easing of monetary policy, which has reduced borrowing costs and created more fiscal space for growth-enhancing initiatives by businesses. The interbank rate fell from 11.7 percent in December 2023 to 11.4 percent in December 2024, in line with the easing monetary policy.
  • Tax Revenues: Tax revenues have grown by 11.5 percent in the year ending June 2024, indicating the success of the Government's measures to expand the tax base.


These measures not only enhance fiscal stability but also stimulate business activities, attract investments, and improve overall economic resilience.


The outlook is, however, subject to considerable risks, including global economic fluctuations, unpredictable climatic conditions, challenges in the implementation of government initiatives and high levels of public debt. Possible risk mitigation measures, such as diversifying exports and market destinations, enhancing domestic resource mobilization, deepening financial sector reforms and accelerating structural reforms, may be required.
Nevertheless, we are confident that the measures introduced by the government will have a positive impact on Kenya's economic growth.

How would you describe the investment climate in Kenya? Which sectors offer the largest potential?

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 core economic sectors and pillars where growth is anticipated: 
  • Agriculture to include the Green Economy Initiatives
  • Economy of micro, small and medium-sized enterprises 
  • Housing & Finance 
  • Healthcare
  • Digital Data Superhighway and Creative Economy 

It is also expected that the government will also invest heavily in these sectors with the aim of promoting their growth. The Government has continued to roll out fertilizer and seeds subsidies to farmers, enabling them increase key food value chains.

The Government has also replaced the National Health Insurance Fund with Taifa Care to meet the urgent needs of Kenyans especially those at the bottom of the socioeconomic structure by actualizing its purpose as a social medical insurance facility. 

Additionally, 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. 

To foster digital transformation the Government has expanded last-mile fiber-optic connectivity to some of the most remote and underserved areas in the country.

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.

What challenges do German companies face during their business ventures into Kenya?

Key challenges include:
  • Regulatory and bureaucratic hurdles
  • Weakening consumer spending power due to high commodity prices
  • Legal and policy uncertainties
  • Vulnerability of the economy to internal and external shocks
  • Market competition due to Kenya’s vibrant entrepreneurial landscape

Are there any developments for further investor-friendly regulations?

Kenya's fiscal incentives, ranging from tax exemptions to swift project approvals and licensing, are designed to create a favorable environment for both domestic and international investors, driving economic growth and development. 
This approach underscores Kenya's strategic efforts to boost investment, foster innovation, and support sustainable business practices within its vibrant economic framework.
A series of investor incentives are set to be introduced under the Finance Bill 2025, including reductions in tax bases and rates, as well as the standardization of rates for certain tax regimes. 
  • Preferential corporate tax rate of 15 percent for the first 10 years from the year of commencement of operations and 20 percent for the subsequent years for investors in the Nairobi International Financial Centre.
  • Reduction of Digital Asset Tax rate from 3 percent to 1.5 percent.
  • Introduction of Advance Pricing Agreements (APAs)

How do you think Kenya will develop?

The anticipated growth in 2025 and the medium term is expected to benefit from increased agricultural productivity and a robust services sector. Agricultural productivity is projected to be driven primarily by favorable weather conditions and government interventions aimed at enhancing productivity. However, growth in this sector is expected to average around 3.0 percent, consistent with historical trends. 

The services sector is forecasted to remain strong, with an average growth rate of 6.6 percent over the medium term. Reforms in the ICT sector are anticipated to spur growth in financial services, healthcare, and public administration. 

Additionally, the accommodation and restaurant subsectors will be bolstered by government efforts to revitalize the sector through the promotion of high-profile international conferences, cultural festivals, and wildlife safaris. 

The industrial sector is projected to grow from 0.9 percent in 2024 to 2.2 percent in 2025 and exceed 3.0 percent over the medium term. This growth will be supported by reduced production costs and alleviated exchange rate pressures. Furthermore, ongoing government initiatives to support value addition are expected to further stimulate growth in the industrial sector.​

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