Invest in Kenya
Local Business Intelligence ©Shutterstock.com
Agribusiness . Tourism . Financial Services
In partnership with: Invest sustainably, choose your sector
Why local business intelligence?
With company-level information on key sectors, this profile complements the wealth of market intelligence on the investment readiness of a country, i.e. the United Nations Conference on Trade and Development’s Investment Policy Reviews. It provides a snapshot of the investment readiness of Kenyan companies grounded in unique survey data. Firm-level data of this nature are relatively underexplored by the investment community, but can be a useful tool to help investors make informed decisions. This can help developing countries attract investment and integrate into international production and distribution networks. Selecting competitive sectors This profile focuses onthree key sectors – agribusiness, tourism and financial services – that have been prioritized in Kenya’s long-term development strategy. These sectors offer the possibility for investors to contribute to the Sustainable Development Goals while reaping good business returns.
Agribusiness: Kenya is a regional leader in agricultural productivity and sustainable agricultural certification. Why invest in Sustainable Development Strong growth in both production and exports signals Goals? exciting prospects for investment. Investors can promote the long-term profitability of their Tourism: Kenya welcomes a growing number of tourists portfolios by investing in sustainable development. every year. Investment in the sector has increased as This profile guides private sector investors on their journey a result, and is projected to exceed $1.3 billion a year to becoming stewards of sustainability, without sacrificing by 2028. returns in the process. Financial services: Kenya has the third-largest financial sector in sub-Saharan Africa and aspires to be the regional hub for financial operations. The sector is proactive in promoting impact investment and financial inclusion throughout Africa.
National ownership ‘We need to step up our efforts in developing innovative financing and in mobilizing private The International Trade Centre, in investment. Without the private sector and the partnership with the Kenya National business community, the goals are simply not Chamber of Commerce and Industry achievable.’ and the Kenyan Ministry of Industry, António Guterres, Secretary-General, Trade and Cooperatives, collected the data analysed United Nations and presented in these pages. This reflects efforts to strengthen information ecosystems. Invest in Kenya – Local Business Intelligence
Where can investment have the biggest impact? here can investment have the biggest impact
here can investment have the biggest impact
Sectors covered and their contribution to S s Sectors covered and their contribution to SDGs
Sectors covered and their contribution to S s
gribusiness Tourism inancial services
i hest as ricu tura pro ucti it isin num er o tourists rowin re iona hu in ast rica In estment e pecte to rise or inancia operations Stron gribusinesse port track recor a o e . Tourism i ion per ear inancia inancial institutions services that an rich potentia support impact in estin i hest ea er in as ricu tura sustaina e pro ucti it a ricu tura Inno ati e isin num er ema e e o tourists irms romotin rowin re iona inancia hu inc usion incerti ication ast rica In estment e pecte to rise in or rica inancia operations Stron e port track recor a o e . i ion per ear inancia institutions that an rich potentia support impact in estin ea er in sustaina e a ricu tura Inno ati e ema e e irms romotin inancia inc usion certi ication in rica
Source: See endnotes.1 Kenya agribusiness
A regional leader in agroprocessing, Kenya has the About 75% hold an internationally highest agricultural productivity level in East Africa.2 recognized certificate This is the result of active government support, favourable climatic conditions, availability of expertise, year-round Levels of certification among Kenyan international demand and direct air transport to Europe agribusiness firms are high by global standards. and the Middle East. Companies consistently point to high-quality, accessible processes and institutions for Agricultural exports constitute 70% of total defining standards and carrying out conformity assessments. Kenyan exports As a result, 75% of the interviewed enterprises in the sector hold at least one type of internationally recognized certificate The agricultural sector already represents 70% among safety, quality and sustainability certificates, enriching of Kenya’s exports and has been growing by them with better management practices and access to better almost 5% annually.3 The sector also shows markets. the highest export potential in the country, led by tea (such as value-added teas with special flavours) and Two-thirds report high skills match and flowers, where the export potential largely exceeds actual availability of skilled workers exports.4 Increases in productivity and exports affect the incomes of the small-scale farmers that dominate the Kenya is well known for its large pool of highly sector. educated and skilled workers. The agribusiness sector benefits from this, as confirmed by More than 80% of goods dispatched to Kenyan businesses themselves. More than clients arrive on time two-thirds of surveyed companies are content with the high availability of skilled workers in the sector, and many provide Logistics services are critical for agribusiness, particularly on-the-job training that fosters the empowerment of women for fresh products, vegetables and flowers. High-quality and youth. infrastructure is an important driver of both growth and efficient logistics services. Kenyan firms rate highly both the Generous government support quality of transport infrastructure and the quality of services to help grow your investment offered by logistics companies. As a result, on average 81% of goods dispatched to clients arrive on time (almost 90% The Government of Kenya offers incentives to encourage in central counties). production, investment and export in the agribusiness sector. These include tax incentives, value-added tax Over 40% of agribusiness firms participate refunds, subsidies, business allowances and investment in value chains deductions.
Kenyan agribusiness companies are integrated into Kenya pulls in 20% of foreign direct domestic and international markets, often through tightly investment to the region coordinated value chains that boost the quality of inputs and sustain long-term relationships with overseas lead Investors have already identified the agricultural sector as firms. Some 43% of surveyed agribusiness firms say they a good opportunity in Kenya: agribusiness in the country are part of a value chain. has drawn 20% of total foreign direct investment to the East African Community region. Want to know more about investment opportunities in agribusiness? KenInvest can help (http://invest.go.ke/). Kenya agribusiness – Local Business Intelligence
ogistics companies o er outstan in ser ice ua it 81% of goods dispatched to clients arrive on time, Logistics ogistics companies companies o eroffer outstan in outstanding ser ice service ua it quality, 81% of goods dispatched to clients arrive on time, owing to ratin it as hi h or er hi h owing81% to of high-quality goods dispatched transport to clients infrastructure arrive on time, owing to 76% rating ratin it as hi hhigh or or er very hi h high high-quality transport infrastructure Sca e ow hi h. u e si e represents num er o irms high-quality transport infrastructure Sca e(Scale ow 0-low; hi h. 5-high. u e Bubble si e size represents represents numbernum er of o firms) irms
Overall 11% 31% 58% 81% Overall 11% 31% 58% 81%
West 18% 25% 57% 78% West 18% 25% 57% 78% South 26% 11% 63% 77% South 26% 11% 63% 77% North 75% 25% 78% North 75% 25% 78% o istics companies
Central 27% 73% 88% ua it o ser icies o ere Central 27% 73% 88% o istics companies ua it o ser icies o ere 0% 50% 100% 0% 50% 100% Low Average High Average % of goods or services delivered to clients on time ost o ser ices o ere o istics companies o a ri usiness ost o ser ices irms o ere ho an internationa o istics companies reco ni e certificate o a ri usiness irms ho an internationa reco ni e o a ri usiness irms ho an internationa reco ni e certificate o a ri usiness irms ho an internationa reco ni e certificate Among surveyed agribusiness firms, 75% certificate o er ofo agribusinessa ri usinesso an irms firms ho holdan internationa an internationally reco ni e internetiona o er o a ri usinesso an irms ho an internationa reco ni e Among43% are surveyed value chain agribusiness participants firms, 43% are value chain recognizedcertificate o er o an certificate internetiona certificate o erreco ni e o an participantsAmong surveyed agribusiness firms, 43% are value chain internetiona internetiona reco ni e certi icate participants o erreco ni e o an o erreco ni e certi icate o an internetiona certi icate internetiona certi icate o es reco ni e reco ni e o es certi icate o es certi icate o es ai a i it o o es in ormation ai a i it on o o es 43% ai a i it o in ormationstan ar s ai a i it an on o 43% in ormation on in ormationstan ar scerti icates an on stan ar s ai a i it an o stan ar s ai a i it certi icates an o in ormationcerti icates on 57% in ormationcerti icates ua it on o 57% stan ar s an stan ar s ua it testin an o certi icates ua it o inspectioncerti icates ua it testin an o testin inspectioncerti icationtestin an inspection ua it an o inspectioncerti ication ua it ser ices an o certi icationtestin certi icationser icestestin inspectionser ices an inspectionser ices an certi ication certi ication Part of value chain Not part of value chain ser ices Part of value chain Not part of value chain ser ices ow era e i h ow era e i h ow era e i h ow era e i h ow era e i h ow era e i h Skills match and availability of skilled workers are high, SMEs constitute 81% of firms surveyed in say more than two-thirds of respondents theSMEs agribusiness constitute sector o irms sur e e in the a ri usiness Skills match and availability of skilled workers are high, say sector Skills match and availability of skilled workers are high, say more than two-third of respondents more thanSkills two-third match of respondents Availability of within company skilled workers
5% 5% 15% 15% 18% 18%
17% 17%
68% 78% 68% 78%
Low Average High ar e e ium Sma icro Low Average High Kenya tourism
Kenya can cater to practically any type of 57% report high availability of tourist. It is home to more than 50 national skilled workers parks and wildlife reserves, contains East Africa’s largest and most populous According to businesses in the Kenyan tourism sector, city (Nairobi), and retains the cultural essence of the the availability of skilled workers depends on location. motherland in its wild regions. This variety has underpinned The central and western parts of the country have the the internationalization and diversification of the tourism highest availability of skilled workers, so firms in these areas sector, a trend that is set to continue. find it easier to hire appropriately skilled workers.
Businesses are betting on tourism About 70% rate the quality of internet and logistics services as high The number of tourists visiting Kenya is on the rise. And capital investments are pouring Quality and reliability of logistics are significant factors in as investors take advantage of this market when managing complex supply chains. Business survey opportunity. Investments totalled $880 million evidence suggests that the quality of logistics services in 2018 alone, and are projected to exceed $1.3 billion a across the country is high. The quality of the internet year by 2028.5 These investments help provide good jobs connection is also rated highly. in local businesses. What makes Kenya such an attractive destination for tourism? On the fence? These incentives will help
Nearly 90% of surveyed tourism firms have Tourism is one of Kenya’s most important sectors. As a result, sector-specific investment incentives exist. For a business bank account hotels, a 10% capital deduction applicable within the first 10 Kenya leads Africa in digital payment adoption and years of operation is offered. This, combined with wear and technologies. Nearly all enterprises in the tourism sector have tear deductions on business equipment as well as other a bank account, allowing quick and easy payments. capital deduction incentives, makes Kenya an attractive long-term investment. Close to 70% of the surveyed companies meet international standards Tourism in Kenya is gender-inclusive: women own about one-third of tourism firms Internationally recognized quality certificates signal to buyers that a company’s product Investing in Kenyan tourism is also investing in satisfies global expectations. About 80% women. Women own about one-third of tourism of land and air transport companies that firms surveyed. Women-owned businesses are were surveyed have international certificates. This share more likely to source their inputs locally. This, reaches 82% for travel agencies and tour operators. Many in turn, helps businesses build stronger links with the local companies are developing sustainable tourism firms that community. create jobs, promote local culture and demonstrate impact. Kenya tourism – Local Business Intelligence
er o the tourism irms ho an internationa re o ni e certificate 89% of surveyed tourism firms owns a business bank account 89% of surveyed tourism firms own Close an to 70%an of the tourism firms hold an international 89% of surveyed tourism firms owns a business bank account air transport a business bank account certificate er o the tourism irms ho an internationa ra e a enc re o ni e certificate tour opera... 11% an an ccomo ation 11% air transport ea estate ra e a enc acti ities tour opera... oo an ccomo ation e era es ea thersestate acti ities oo an e era es thers 89% 89%
ith certi icate ithout certi icate Have bank account No bank account era e share o certi icate ho ers Have bank account No bank account About 70% of firms rate the quality of internet and logistics ith certi icate ithout certi icate 74% testify high skills match within their company; AboutservicesAbout 70%70% as ofhigh of firms firms or veryrate rate thehigh thequality quality of internet ofinternet and logistics and services(Scale 0-low; as high 5-high. or very Bubble high era e size representsshare o certi icate number ho ers of firms) 57% state high availability of skilled workers for hire logistics services as high or very high testi hi h skills match within their compan state (Scale 0-low; 5-high. Bubble size represents number of firms) hi h testi a ai a i it hi h o skills ski e match workers within or their hire compan state (Scale 0-low; 5-high. Bubble size represents number of firms) hi h a ai a i it o ski e workers or hire testi hi h skills match within their compan state 5
hi h a ai a i it o ski e workers or hire 5 e e i r i e k e h i s r enter 3
i r k h s o
o enter
r e 3 e o s o
i r t orth r
i i
k i e h s s t enter orth
r
i k 1 r r i e a o o South o i k
r
a 1 a w s South o
t orth i r i by logistics companies a i e w est Quality of servicies offered k r a 0 1 2 3 4 5 by logistics companies South est o i Quality of servicies offered a w 0 1 2 3 4 5 Cost of services offered by logistics companies est Cost of services offered by logistics companies n i
h n t i i h
w enter t i
n 5 h
w enter a n
i c n p t h h
a orth 5 a t c i m p t m o orth w
a enter
m c n s h m o 3
a South
c i c p s t k South
orth a 3 i m S k m o est
S c s connection South est 1 i k connection Quality of internet
S 1 est i h era e ow i h era e ow Quality of internet 0 1 2 3 4 5 i h era e ow 0 1 Cost of 2internet connection3 4 5 Cost of internet connection
SMEs make up o sur e e irms in the tourism sector SMEs make up o sur e e irms in the tourism sector WomenWomen owned owned businesses businesses constituteconstitute 34% 34% of of respondents respondents SMEs make up 92% of surveyed firms in the tourism sector andand are are more more likely likely toto sourcesource theirtheir inputs inputs locally locally
Not women owned women-o Not wn 78% ed ; 6 7 % 22%
Women owned 83%
W 17% o m e 0% 50% 100% n- ow ne d; 34% Domestic inputs Foreign inputs ar e e ium Sma icro ar e e ium Sma icro Kenya financial services
Kenya’s financial services sector is the third largest in More than 70% report a high degree of sub-Saharan Africa.6 Healthy fundamentals have ensured innovation and collaboration steady growth and a strong performance over time. By end- December 2017, the total net assets of the banking sector Innovation is the key word to explain the reached $39.5 billion, an impressive growth achievement of success of the Kenyan banking sector. More 8.3% from the previous year.7 than two-thirds (78%) of surveyed financial services firms frequently develop or apply new A thriving telecom sector ensures or improved processes or products, and 71% collaborate the success of mobile money with research networks. This is no surprise in a country where the M-Pesa mobile money system is the largest The success Kenya has enjoyed in mobile mobile money service, holding roughly two-thirds of the money makes the country an example for mobile market.11 other African markets. In 2018, 1.7 billion mobile money transactions valued at $38.5 billion Complementary business opportunities were carried out, equivalent to 44% of the country's GDP.8 The system has been successful in reducing inequality by Investors looking into the Kenyan financial increasing access to financial services, thereby promoting services sector may be interested in the economic inclusion of all. The high quality of the internet complementary investment opportunities. connection complements this access, according to most The high rate of technology adoption in the surveyed firms in the sector. The extensive reach of the sector creates room for the development of compatible mobile money network is a crucial input to other elements of ICT-enabled services, as well as for further investment in the Kenyan financial services sector. cybersecurity, monitoring and record-keeping. Kenya’s pool of well-educated and multilingual professionals can support 62% of respondent financial services firms diversification into innovative business. offer high quality and tailored products A regional hub for financial operations Among surveyed companies, 62% compete by offering high-quality products or services. This statistic is telling in a Kenyan banks excel at home and abroad: country where the key driver of growth among banks is their about 10 already operate in other countries ability to tailor products to meet the needs of customers. in East Africa and in South Sudan. The stable This attitude enabled Kenya to reach an 82% rate of financial business environment in the country can inclusion in 2017,9 one of the highest rates in the developing serve as an anchor to stimulate investment in the region. world.10 With this in mind, the Government is setting up the Nairobi International Financial Centre as a regional hub for financial Over 80% have high-quality, low-cost operations. information about their clients Tailoring is only possible if enterprises have sufficient knowledge about their customers. More than 80% of surveyed companies say they have access to good- or excellent-quality information about their customers. Most importantly, obtaining this information is not expensive, according to more than half of the firms. Kenya financial services – Local Business Intelligence
73% of financial services firms regard the quality of their 73%internet73% of of financial financial connection services services as high firms firmsor regardvery regardhigh the quality the ofquality their of their 62% of financial services companiescompete by offering internet(Scaleinternet 0-low;connection connection 5-high. asas Bubble high or sizeor very very represents high high number of firms) high-quality products or services (Scale 0-low; 5-high. Bubble size represents number of firms) 62% of financial services companies compete by offering (Scale 0-low; 5-high. Bubble size represents number of firms) high-quality products or services 5 5 3% 4 8% 4 Offering high-quality Supplying large 3 10% 3 quantities Offering flexible 2 2 terms of delivery 62% 1 17% Having exclusive 1 rights to sell its
Quality of internet connection products or services
Quality of internet connection 0 0 Offering low prices 0 1 2 3 4 5 0 1 2 3 4 5
Cost of internet connection Cost of internet connection
More than 80% of firms enjoy high-quality and low-cost erOver 70% o of irms firms in inancia in financial ser ices services in icate indicate hi h e tent high o innovation an collaboration market ore than information o irms en o hi h ua it an ow cost innovationextent of innovation an collaboration and collaboration oremarket than information o irms en o hi h ua it an ow cost market information ustomers in ormation ustomers in ormation comp eteness comp eteness
Market information Market information ai a i it ai a i it
ua it ua it ost ost mp o new or impro e o a oration with process pro ucts research networks ow era e i h ow era e i h are Sometimes ten
Skills match within company and availability of skilled SMEs represent 63% of surveyed firms in the financial SMEs represent o sur e e irms in the inancia workers o forsur e e hire are ser ice high irms o ten intro uce servicesSMEs represent sector o sur e e irms in the inancia o sur e e ser ice irms o ten intro uce ser ices sector ne or improved pro ucts or processes ser ices sector
ompan has ompan has esta ishe esta ishe hirin process hirin process
ai a i it o ai a i it o ski e workers ski e workers
Ski s match Ski s match within compan within compan
ar e e ium Sma icro ow era e i h ar e e ium Sma icro Key Macroeconomic Indicators – Kenya
Key indicators Location of surveyed firms in Kenya ey indicators (darker ocation colours of surveyedcorrespond tofirms higher in densities) enya arker co ours correspon to hi her ensities
apita airo i rea km opu ation tota . mm opu ation rowth . annua an ua e Swahi i an n ish an arua orkin a e popu ation . akuru iterac rate a e: . asin ishu uran a ears ema e: . achakos uman e e opment . isumu m u in e I a ue an i at current prices S . n Sia a eru ea rowth annua amira arissa per capita S at current prices issi ana i er urrenc en an Shi in S omet amu orei n chan e contro o howe er anks must arok report to the centra ank iam u itui a transactions a o e akueni S airo i om asa ccountin princip es Internationa inancia eportin Stan ar s I S wa e
Kenya's rank in key business ecosystem indicators Growth trends in Kenyan economic sectors (lower rank is better except for government effectivness indicator, where higher rank is better) Kenya's rank in key business ecosystem indicators (Lower rank is better except for government effectiveness Growth trends in Kenyan economic sectors indicator,Kenya's rank where in higherkey business rank is better) ecosystem indicators Growth trends in Kenyan economic sectors (Lower rank is better except for government effectiveness 8 indicator,Logistics where higher rank is better) 8 68 160 7 performance index 7 Logistics 6 68 160 performance index Government 56 41 100 effectiveness 5 Government 4 41 100 effectiveness 34 ICT access 135 176 3
Annual growth (%) 2 ICT access 135 176
Annual growth (%) 2 Ease of starting 1 126 190 a business 01 Ease of starting 0 50 126 100 150 190 200 0 a business 2011 2012 2013 2014 2015 2016 2017 2018e 2019f 2020f 2011 2012 2013 2014 2015 2016 2017 Kenya’s Rank0 Number50 of 100countries in150 the ranking200 2018e 2019f 2020f Agriculture Industry Services Kenya’s Rank Number of countries in the ranking Agriculture Industry Services GDP growth GDP growth
Note and source: See endnotes.12 Endnotes
1 Kenya’s average performance by SDG (0 - worst outcome; 100 - target outcome). Figure adapted from 2018 SDG Index and Dashboards Report, Sustainable Development Solutions Network (SDSN) and the Bertelsmann Stiftung. 2 KenInvest website. Agriculture – Regional Leader in Agro-Processing. KenInvest. Retrieved from http://invest.go.ke/agriculture 3 Ibid. 4 ITC. Export Potential Map - Kenya. Retrieved from https://exportpotential.intracen.org 5 World Bank. TCdata360. Capital investment in Travel and Tourism. Retrieved from https://tcdata360.worldbank.org/ 6 KenInvest website. Financial Services – Innovation Leader in Fintech and Financial Inclusion. KenInvest. Retrieved from http://invest.go.ke/ financial-services/ 7 Central Bank of Kenya (2017). Bank Supervision Annual Report 2017. Retrieved from https://www.centralbank.go.ke/uploads/banking_sector_ annual_reports/1818825039_2017%20Annual%20Report.pdf 8 Central Bank of Kenya website. Mobile Payments. Retrieved from https://www.centralbank.go.ke/national-payments-system/mobile-payments/ 9 World Bank (2017). The Global Findex Database 2017. Retrieved from https://globalfindex.worldbank.org/ 10 This means about four out of five adults have access to a bank account or an account through a mobile money provider. 11 Oxford Business Group (2017). Op cit. 12 UNDESA’s World Population Prospects 2017; World Development Indicators database, Kenya Economic Update 2019, Logistics Performance Index, Worldwide Governance Indicators, and Doing Business, World Bank; World Economic Outlook database, International Monetary Fund; ICT Development Index, International Telecommunications Union.
© International Trade Centre, June 2021 ITC Document Number: RSE-21-80.E For more information: https://www.intracen.org/publication/SME-competitiveness-Kenya/ Research based on the Small and Medium-sized Enterprises Competitiveness Survey (SMECS), administered to 893 businesses across Kenya in 2017–2018. The survey was conducted by the International Trade Centre in partnership with Kenya’s Ministry of Industry, Trade and Cooperatives and the Kenya National Chamber of Commerce and Industry.
Printed by ITC Digital Printing Service on FSC paper, which is environmentally-friendly paper (without chlorine) using vegetable-based inks. The printed matter is recyclable. Invest in Ghana focuses on three key sectors: . Agribusiness . Tourism . Financial services
Street address SME Benchmarking Team Postal address International Trade Centre P: +41 22 730 0588 International Trade Centre 54-56, rue de Montbrillant E: [email protected] Palais des Nations 1202 Geneva, Switzerland www.intracen.org/SMEBenchmarking 1211 Geneva 10, Switzerland
The International Trade Centre (ITC) is the joint agency of the World Trade Organization and the United Nations.