2024: Doing Business in Kenya
Part 1: Doing Business in Kenya
What is the current business climate in your jurisdiction, including major political, economic, and/or legal activities on the horizon in your country that could have a big impact on businesses?
Kenya’s economy has been growing steadily, with a consistent annual growth rate of 5% between 2010 and 2019. As one of the most diversified and advanced economies in Africa, the country’s economy rebounded relatively rapidly from the COVID-19 pandemic. However, maintaining and increasing growth will depend on increasing private investment and productivity.
Following the August 2022 general elections, the country’s new administration is focused on attracting more foreign direct investment by adopting pro-business laws and implementing a series of tax and regulatory reforms aimed at improving the country’s investment climate.
The Nairobi International Financial Centre ("NIFC”) was established in 2021 and the Nairobi International Financial Centre (General) Regulations, 2021 (the "NIFC Regulations”) have been published under the Nairobi International Financial Centre Act, 2017 to provide a legal framework to facilitate and support the development of an efficient and globally competitive financial services sector in Kenya. The NIFC was officially launched in July 2022 and is currently operational. It has been established to provide a one-stop shop for incorporation and other services, improve the overall legal and regulatory ecosystem for financial services and as a business center, and offer a more predictable business environment with a stable tax and operating framework. It also focuses on improving the framework for dispute resolution for financial sector disputes through the establishment of a "fast-stream” within the courts to adjudicate financial services disputes and, through the NIFC Steering Council, provide a critical mechanism to resolve cross-sectoral challenges facing the financial sector and investors.
From what countries do you see the most inbound investment? What about outbound?
The main investors in the country over the last three years are the United Kingdom, Mauritius, the United States, South Africa, and France.
In what industries/sectors are you seeing the most opportunity for foreign investment?
Foreign investment opportunities are available in various industries/sectors, including information and communications technology, real estate, construction, agriculture and agribusiness, manufacturing, tourism, infrastructure development, energy, and financial services.
What advantages and pitfalls should others know about doing business in Kenya?
Local participation requirements for various sectors have been enforced, including the restriction of foreign ownership of equity in various sectors, such as insurance and telecommunications, to not more than two-thirds and 80%, respectively, and at least 30% local ownership is required in respect of companies providing information and communications technology services. The country has domestic anti-avoidance provisions that limit the benefits of the already limited number of Double Taxation Agreements in force.
Despite these pitfalls, Kenya has a favorable and attractive investment environment, drawing interest from foreign companies looking to establish local and regional operations. There are generally no restrictions on foreign investment. Nairobi is the de facto financial hub of East Africa, reflected by the range of financial institutions and banks operating in Kenya.
Having hosted the 25th edition of the Africa Energy Forum in June 2023 and the Africa Climate Summit alongside the Africa Climate Week in September 2023, Kenya stands as the regional leader in clean energy development, with renewable sources making up more than 90% of its on-grid electricity. Kenya has established policies and a regulatory environment to drive green investments.
Kenya provides various forms of tax and investment incentives to both local and foreign investors, including tax holidays, duty-free importations, and 100% investment deduction on capital expenditure for eligible persons.
What is one cultural fact or custom about your country that others should know when doing business there?
When greeting, it is appropriate to shake hands with each person present, starting with the most senior person in the group. One should address senior persons and those with academic or professional titles in the appropriate manner. Kenya’s business culture is governed by harambee, a concept involving mutual assistance, "pulling together", and a shared sense of responsibility and community.
Part 2: About Your Firm
What distinguishes your firm from others in your market?
With offices in Eastern, Southern and Western Africa, we have deep expertise and the capacity to solve all our client's legal, tax, forensics, and IP requirements and help them navigate regulatory hurdles, no matter where in Africa they do business.
Because we have many years of practical experience working on the ground throughout Africa, we have developed a proven track record and a solid understanding of local cultural, commercial and geopolitical contexts, as well as long-standing partnerships with trusted firms with whom we work.
Our practitioners are qualified to practice English law and French law and we have extensive experience in the legal codes of OHADA used in West and Central Africa.
Our tagline at ENS is 'Original Thinking,' meaning we thrive on ingenuity and producing the best solutions for our clients and their needs.
What are three words that describe the culture of your firm?
Smart, Open-minded, Caring.
How does your firm participate in Corporate Social Responsibility (CSR) and/or Environmental, Social, and Governance (ESG) initiatives?
We invest thousands of hours every year in a wide variety of pro bono work across the African continent. In South Africa, our efforts are focused on our two permanent pro bono offices—a first for a law firm. These offices are located in areas with difficult living conditions, including high levels of unemployment and numerous challenges.
Our pro bono project has a multipronged approach which consists of the provision of advice and assistance, as well as legal education and skills development, in order to equip community members with knowledge and vital skills, thereby contributing to access to justice and the fostering of entrepreneurship and the growth of sustainable small businesses.
We run annual business management training programmes and courses in human rights and constitutional law, with the aim of empowering leaders and activists with important information which will be shared in their communities.
Are there any new and exciting initiatives, practice areas, or industry focuses in your firm?
We have recently introduced our Public Law practice, showcasing our experience in providing opinion and advisory services, administrative law services relating to the performance of public powers and functions, transactional services relating to public-private partnerships, drafting legislation supporting investigative and reporting work, and conducting judicial reviews of decisions by organs of state and public functionaries.
Our Public Law practice has advised clients from a number of industries, namely banking and finance, basic education, construction, electronic communications, early childhood development, energy, electricity, mining, port services, private and public higher education, transport and logistics, strategic oil reserves, telecommunications, human settlements, media, electoral issues, real estate, prisons, and pharmaceuticals.