Investment Outlook The fDi Report 2016, which ranks countries based on investment outlooks, ranked Kenya as the 3rd best destination for foreign direct investment in the Middle East and Africa by project numbers. For a long time, investors have viewed Kenya as the focal point for trade and investment in East Africa and the natural entry point into the region. Its strategic location in East Africa, coupled with increased investment in infrastructure, has anchored the country’s position as a regional commercial hub. The World Bank’s latest Kenya Economic Update ( KEU ) projects a 6% growth in 2017 based on the country’s vibrant services sector, enhanced construction, a growing middle class and rising incomes. Nonetheless, the KEU report notes that the country remains vulnerable particularly with respect to uncertainties around the 2017 general elections (scheduled for August 8th) which could dampen investor confidence. The key sectors / growth industries in Kenya include: • Infrastructure / construction: The government has undertaken significant investment in roads, rail and sea ports. • Finance: Financial services for the transfer of money and payment for goods and services by telecommunication companies and banks have continued to record high growth rates due to significant financial innovation. • Information, communications and technology ( ICT ) : Under the Kenyan Government sponsorship, the ICT Authority undertakes the initiative to encourage investment in the ICT sector. • Agriculture: This sector constitutes a large portion of the generated revenue for Kenya. Tea and coffee are two of the most widely grown crops and a major contributor to the country’s GDP. • Energy: Breakthroughs in oil and gas exploration have brought more attention to this sector. With the recent discovery of profitable oil and gas deposits in Kenya, there is increased focus on petroleum and gas exploration. Forms of Corporate Structure The regulatory regime for Kenyan companies has recently been overhauled following the enactment of the new 2015 Companies Act (the Companies Act ). The Companies Act is viewed by many as a paradigm shift, drawing heavily on the UK Companies Act 2006. The Companies Act is intended to simplify the process of doing business in Kenya by reducing the bureaucratic
barriers for setting up companies and minimising compliance requirements for small companies. This has resulted in Kenya improving its ranking in the World Bank’s Doing Business report, jumping up 21 places and being listed as one of the 10 economies improving the most in 2015/16. Like many countries, the most common forms of corporate structure in Kenya are either a Kenyan company or a branch of a foreign company. Specific forms of legal vehicles used for business in Kenya include: • Private or Public Limited Liability Companies Companies for business purposes are usually incorporated as private companies limited by shares. • Sole Proprietorships A sole proprietorship is used where an individual carries on a business in their personal capacity. The business is registered under the Registration of Business Names Act. • Partnerships Partnerships are commonly used for associations of professionals and funds carrying on business for profit. Partnerships can take the form of general partnership (unlimited liability), limited partnerships (at least one general partner with unlimited liability) or limited liability partnerships (LLPs). • Unincorporated Joint Ventures Unincorporated joint ventures (contractual) may be used for commercial arrangements between two or more economically independent entities. • Non-Governmental Organisations (Public Benefit Organisation) Non-profit organisations may be registered as a non- governmental organisation under the Non-Governmental Organisations Co-ordination Act. This legislation is, however, expected to be repealed and replaced by the A company limited by guarantee is primarily used for non-profit organisations which are not required to be registered under the Non-Governmental Organisations Co-ordination Act. • Incorporated Trusts These are trusts registered under the Kenya Trustees (Perpetual Succession) Act and are used where the trust will acquire and hold land. Public Benefits Organisations Act. • Companies Limited by Guarantee
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