Investment Potential

Agriculture

The major agricultural activities in Kenya are crop production, horticulture, dairy and livestock farming. The principle food crops include maize, wheat, beans, potatoes and rice, while major cash crops are coffee, tea, sugarcane, sisal, and pyrethrum. There area also opportunities for improvement in technology infrastructure such as packing, storage, and transportation. Intensified irrigation and additional value added processing are marketable areas for investments. This sector offers the greatest scope for investors and support services, such as cold storage and refrigerated transport for perishables and other horticultural products.

In the area of Coffee productions, despite the dramatic plunge in coffee production due to the severe drought in 2006, opportunities abound in coffee roasting and grinding. Another lucrative field lies in producing decaffeinated coffee for export. New regulations and technologies are also helping producers sell more efficiently and profitably.

Tea

Tea was introduced to Kenya over 100 years ago. Now a major tea producer with an annual production of approximately 350 thousand tons - 10 percent of the total global tea production - Kenya is the world's fourth largest tea producer and the largest exporter. Tea is not only the most important agricultural sub-sector, but the leading foreign exchange earner in Kenya. Approximately 10 percent of the population is employed by the tea industry.

More than 50 countries import Kenyan tea, which is considered by many to be the best in the world. The main buyers are Pakistan (which takes approximately 23 percent of the total exports), followed by the United Kingdom, Egypt and Yemen. There are many existing opportunities to explore in the tea industry market for such a highly valued beverage world over.

Currently, approximately 62 percent of the total crop in the country is produced by small-scale farmers who process and market through the Kenya Tea Development Agency (KTDA), the largest single producer of tea in the world with 53 tea factories. The rest is produced by large-scale tea estates in 39 factories operated on a private basis. Some of the famous names include Unilever Tea, Finlay Tea Solutions and George Williamson.

The success of this sector gives a strong example of how effective foreign investment in Kenya can be, and the excellent results it can yield. Investment opportunities exist in many areas, including tea plantations and processing and packaging plants (for export under the Manufacturing Under Bond or the Export Processing Zones programmes). Above all, consumption of green tea in some countries like Japan has stimulated interest in its production in Kenya where KTDA has instructed all the tea factories to introduce a line each for processing of green tea.

For more information on the Tea Industry in Kenya

Coffee

The coffee sub-sector in Kenya is one of the major employers and contributed approximately 5 percent of export revenue in 2003, with Germany, Sweden and Belgium being the main importers. The type of coffee grown in Kenya is known as Arabica, with Robusta only making up 1 percent of the market. Coffee farming is done mainly by small farmers (60 percent) organized into co-operative societies, the remaining 40 percent being controlled by large-scale farmers.

Investment opportunities exist in processing and packaging plants, instant coffee processing and Robusta coffee growing. There are new markets for Kenyan coffee to be explored, particularly the US, as well as opportunities to develop infrastructure in coffee producing areas. In terms of value addition an area with the greatest potential is the production of ready to drink - RTD coffee.

For more information on the Kenya Coffee Industry

Horticulture

The horticultural sector is one of the fastest growing sectors in the economy and is the second largest foreign exchange earner after tea. Opportunities exist in production and export of products such as cut flowers, French beans, pineapples, mushrooms, asparagus, mangoes, macadamia nuts, avocados, passion fruits, melons and carrots with Europe as the main market.

Agro-processing

Numerous investment opportunities exist in this sector. Edible and other oils produced locally include butter, ghee, and margarine as well as sunflower, rapeseed, cottonseed, seamen, coconut and corn oil, while a large quantity of palm oil is imported.
Kenya produces excellent beer, utilizing locally grown barley. The country has recently developed papaya and grape wines that can be exported to regional and international markets. Opportunities exist in coffee roasting and grinding, with a further potential in the production of decaffeinated coffee for export. There is also considerable potential for the expansion of chocolate and the confectionery products for export.
Opportunities for investment exist in the production and processing of sugar, tea, meat, and dairy products.

Fisheries

Kenya's water resources of the Indian Ocean and Lake Victoria provide vast fishing potential. At present, deep sea fishing, prawn and trout farming are in their infancy but growing rapidly. Opportunity also exists in fish processing (filleting and fish meal production), as well as fisheries-support infrastructure (refrigerated transport, cold storage, etc).

Livestock

Investment opportunities exist in the rearing of livestock for meat and dairy products. The dairy industry has been liberalized, providing new investment opportunities in milk processing for local and regional markets. Non-conventional livestock farming for example, of ostrich and crocodile farming, represent an exciting new area of investment. Bee keeping and honey processing are an untapped potential in Kenya. Other areas such as wood and wood products, pharmaceuticals and manufacturing also hold potential for investors.

Telecommunications

Although there are ownership limits in the sector, telecommunications offer foreign investors ample opportunities to make money. According to the Kenya Investment Authority (KIA), there is demand for: science and technology centres for both inbound and outbound calls, business processing outsourcing, software development and development of broadband infrastructure.

Tourism

Tourism continues to be a growth area although there is stiff competition from other tourist destinations worldwide. Niche markets and sub-sectors still offer investors value for money. KIA states that "enormous opportunities exist for investment in film production, recreation and entertainment facilities in the area of conference tourism, cultural tourism, cruise ship tourism and ecotourism".

Construction

Construction is another sector that is undergoing a boom and there is need for foreign know-how and expertise, as well as injection of foreign capital. Among recent or pending projects are: road construction and renovation, development of a rail link to South Sudan, rehabilitation of airports, development of a second port at Lamu, extension of a petroleum pipeline between Kenya and Uganda, and construction of solar and wind energy plants.

Current priority investment sectors

The government is welcoming investments in a number of key sectors that need growth and establishment. The following investment sectors are now a priority for the government:

Agricultural production: key areas that need improvement include irrigation, quality management and efficient application of agricultural inputs like seed and pesticides, as well as agricultural technologies.
Infrastructure and utilities: this sector includes access to water, sanitation, electricity and communication networks.
Housing sector: An estimated number of 150,000 units need to be built annually in line with the country's extensive housing reforms. There is need for further private investments for strategic advancements
ICT and other knowledge-based industries: In order to keep in line with the current progress and pave the way for self-sustained talent networks, investments are needed in these areas.
Exploration of natural resources, petroleum and minerals: These are the key factors in the country's national product.

Promising new investment markets:

Telecommunications, as mentioned above, is and will especially remain a promising field, since mobile phones play such an important role in Kenya's public life. As the first mobile phone subscribers in the world, millions of Kenyans without bank accounts are now able to make simple financial transactions with the help of their phones. The service turns a mobile phone into a bank account, cash machine, debit card and money transfer vehicle, all by using a new generation SIM card. Kenya is the first country in the world to be offering this kind of service.

Fibre optics: In order to stay in the loop in terms of computer communications, the government is funding moves to bring fibre optic links to Kenya in early 2008. This will also reduce connection costs, allowing Kenyan call centres to compete more equally with Indian call centres.

Tourism: Most areas in this sector need investment, as tourism continues to boom. Kenya's tourist diversification strategy includes greater use of the lakes and the ocean. Cruise ships, planned to operate from Mombasa and on Lake Victoria, seek funding. Looking ahead, government is scooping out other tourist attractions besides the existing national parks, game reserves and beaches.

Key Investment Opportunities

For more information, you can download "Summary of Key Investment Opportunities in Kenya" published in September, 2008.

Summary of Key Investment Opportunities in Kenya (PDF:360KB)

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