Kenya Economy

 After disruption following the 2007 election violence, visitor numbers have bounced back. And the Kenyan economy as a whole has been recovering, growing 4% in 2010.

Most business is in private hands, with foreign investment supporting the agricultural and mining sectors.

Processing

Much of the country’s manufacturing revolves around food and beverages. Kenya also exports petroleum products from crude oil shipped into the country and refined near Mombasa.

Agricultural products such as tea, coffee, fruits, vegetables and fresh flowers make up the majority of Kenya’s exports.

Other important exports include limestone, salt, fluorite/fluorspar and soda ash (used to make glass), which is quarried at Lake Magadi in the Rift Valley. This is the second largest source of soda in the world. Kenya also has deposits of gold and precious stones

Kenya’s wildlife attracts many visitors to the country’s national parks and game reserves. Its sandy beaches and coral reefs are also a draw for foreign visitors. Tourism is therefore of key importance to the economy.

Tourism is Kenya's the second largest foreign exchange earner. The enduring appeal of the country's scenery, wildlife, climate and tropical coastline has allowed the establishment of a large hotel industry and a sound tourism base.

There is a fairly pronounced seasonal pattern with a majority of tourists visiting during the northern hemisphere holiday period (July/August/September) and during the northern winter months (December/January/February).

The rainy seasons in April/May and in November reduce the potential for visitors at these times.

Kenya has the best developed hotel industries in sub-Saharan Africa, offering on an average some 31,400 beds per night. This capacity is largely concentrated in Nairobi, the Coast ant the Parks.

The high standard of services in Kenya hotels is assisted by the Utalii College which offers training programmes in all aspects of tourism and catering. Its capacity is, unfortunately well below industry requirements and plans are in place to expand it.

The average increase of visitors outstrips the available infrastructure and significant opportunities exist for providers of more specialised resorts, health spas, water-sports facilities and novelty attractions which develop the appeal of spectacular but hitherto relatively little visited parts of the country.

Most foreign investment in Kenya is governed by the Foreign Investments Protection Act (FIPA). Under this law, investments from abroad in particular industries or economic sectors can be granted a Certificate of Approved Enterprises (CAE).

This allows for the repatriation of the initial capital investment and the remittance of dividends or interest.

Amendments made to the Act in 1988 provide that new investments and capitalized profits can be designated in foreign currency. On disinvestment, balances not available for immediate repatriation can be invested in Government securities for 5 years.

There are no legal limitations on the percentage of foreign ownership but general preference is given to those projects with Kenyan participation, guaranteed export markets , potential for employment of labour , or those with a rural base . Priority sectors are export-oriented ventures, intermediate industry, and agro-processing.

Protecting resources for the future

The future success of the economy depends largely on a stable political situation and the curbing of corruption and patronage, which limits companies’ willingness to invest in the country.

Massive population growth over the last four decades has also put huge strain on Kenya’s land and the environmental impact of deforestation is already being felt.

But with better protection of the environment and a reduction in corruption and mismanagement, Kenya’s trading culture, many entrepreneurs and strong industry sectors should afford the economy a favourable future.

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