Dr George Kimeu
Managing Partner, Kreston KM, Kenya

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Dr George Kimeu is the Managing Partner at Kreston KM in Kenya, a seasoned leader in the accounting sector. His expertise spans business planning, management, risk management, organisational development, and auditing. Dr Kimeu holds a PhD in Organisation Development from Cebu Doctors’ University, Philippines, underscoring his deep commitment to fostering organisational excellence

Kenya’s economic outlook: Africa’s Rising Economic Star

April 30, 2024

Kenya’s economic outlook looks strong, with East Africa fast becoming the continent’s economic powerhouse, with predictions of rapid growth in 2024 buoyed by tourism, a resilient supply chain and investment in infrastructure such as banking and telecommunications. We spoke to Dr George Kimeu, Managing Partner at Kreston KM in Kenya, to understand his perspective.

Kenya’s economic outlook

Kenya, located in East Africa, is a country known for its diverse culture, stunning landscapes, and vibrant economy. Over the years, Kenya has emerged as one of the key business hubs in Africa, attracting both local and international investors.

Kenya is strategically located as a regional hub for financial, communication, infrastructure, agriculture, and tourism with a fully liberalised economy.

Kenya, like many other countries, was on a recovery path in 2021 before the onset of the Russia-Ukraine war in February 2022. The war disrupted economic activity, leading to a slowdown in economic performance during the second quarter of 2022 onwards. Additionally, the prolonged drought adversely affected economic activity, causing downside risk to the medium-term outlook.

Kenya 2030

Despite these challenges, the country reported growth in GDP from 4.8% to 5%. This growth was attributed to macroeconomic and political stability and the implementation of the priority projects and programmes under the current government through the Bottom-Up Economic Transformation Agenda (BETA) under the leadership of President Dr. William Ruto, and the country’s long-term development agenda per Kenya’s Vision 2030. The current government’s focus on economic reforms, technology innovation, and diversification of key sectors are some of the key contributors to growth thus creating an enabling business landscape for investors.

Why invest in Kenya?

Various factors make Kenya the best strategic region for investors. These include:

  • Continuous reforms through various policies, regulatory frameworks, and incentives for business growth and investments
  • The strategic location of the country, with ports and airports
  • Skilled competitive labour force
  • Large domestic and regional markets have contributed to the growth of the tourism sector due to various agreements for visa-free entry to Kenya
  • Business opportunities in various sectors including Agriculture, ICT, Tourism, Construction, Energy, and Manufacturing sectors. Specifically, technology advancement through e-commerce and digital payments has revolutionised doing business in the country.

Business opportunities in Kenya

The digitalisation of government services has made registration of businesses easy through the Government e-citizen portal.

Kenya is famous for its wildlife and stunning landscape, making tourism a key sector of the economy that offers business opportunities in hospitality, tour operations, and ecotourism.

Kenya has and is investing heavily in infrastructure development, including roads, railways, ports, and energy which provides opportunities for investors in infrastructure development, construction, and engineering services.

Other key sectors for investors to consider include agriculture, manufacturing, and ICT. Kenya’s fertile land offers great opportunities for agribusiness, value addition, and agro-processing as the country is a leading producer of tea, coffee, flowers, and vegetables. There are manufacturing opportunities in sectors such as textiles and apparel, food processing, and construction materials. Kenya has a vibrant ICT sector with a growing demand for digital services and solutions which offers opportunities in software development, e-commerce, and cybersecurity.

Gateway to Asia

Kenya is a member of the East African Community (EAC) and the Common Market for Eastern and Southern Africa (COMESA), which has helped to promote trade and economic integration with neighbouring countries. Kenya’s strategic location in East Africa makes it a gateway to the region, offering access to a market of over 200 million people. The participation of Kenya in the new trade agreements such as the African Continental Free Trade Area (AfCFTA), gives the country a competitive advantage due to available opportunities to expand market reach and benefits from reduced trade barriers within the African Continent.

Tax incentives

Kenya offers several tax incentives to attract investors and promote economic growth. Some of the key incentives include:

  1. Investment deduction allowance: Investors can deduct a certain percentage of the cost of qualifying assets from their taxable income, encouraging investment in new machinery, equipment, and buildings.
  2. Investment deduction allowance for energy-efficient equipment: Additional deduction is available for investments in energy-efficient machinery and equipment.
  3. Initial allowance: Investors can claim an initial allowance on the cost of qualifying assets in the year the assets are acquired and installed.
  4. Investment deduction for investment in manufacturing: Companies engaged in manufacturing can claim an investment deduction of up to 150% of the cost of new machinery or equipment used for manufacturing.
  5. Tax holiday: Some investors, especially those in designated priority areas, may qualify for a tax holiday ranging from 5 to 10 years, during which they are exempt from income tax.
  6. Export Processing Zone (EPZ) Incentives: Companies operating within EPZs enjoy various incentives, including a corporate tax rate of 10% for the first ten years and 15% thereafter, duty-free importation of raw materials and capital equipment, and exemption from value-added tax (VAT).
  7. Double Taxation Agreements (DTAs): Kenya has DTAs with several countries to avoid double taxation on income earned by investors in both countries.
  8. Special Economic Zones (SEZs): Companies operating within SEZs are eligible for tax incentives, including a reduced corporate tax rate of 15% for the first ten years and 25% thereafter, among others.

These incentives are key to creating a competitive environment for doing business in Kenya. If you would like to speak to one of our experts in Kenya, please get in touch.