Chapter 1: Doing Business In Kenya
Market Overview Return to top
- Kenya’s market-based economy enjoys some of the strongest industries in East Africa, including the financial and manufacturing, and the ICT industries. Nairobi and the Port of Mombasa are respectively the biggest city and port between Cairo and Johannesburg, making Kenya the commercial and transportation hub in East Africa.
- Although Kenya’s mineral resources are limited, the country has a potentially important source of high-value mineral commodities such as titanium. The larger East African region is now one of the fastest emerging oil and gas frontier regions in the world, with Kenya expected to become an oil producer in the near future.
- Kenya has a young, well-educated and English-speaking human resource pool (especially in the urban areas). Almost 70% of the 44.3 million are under 35 years old.
- Kenya achieved 4.7% growth in 2013, with an optimistic projection of 6% growth in 2014. Inflation fell to 9.4 percent in 2012 and further down to 5.7 percent in 2013. According to the Kenya National Bureau of Statistics 2014 report, Kenya’s volume of trade fell by 2.2 percent in 2013. While Kenya’s domestic exports fell by 3.0 percent, imports grew by 2.8 percent mainly due to purchases of petroleum products, capital goods, food products and chemical fertilizers, which accounted for 58.4 percent of the total import bill. Kenya’s current account deficit grew from USD 4.31 billion in 2012 to nearly USD 4.495 billion in 2013.
- The recent general elections and new constitution in 2013 have ushered in a new type of governance system that provides hope for political stability.
- The agricultural sector is the largest employer in Kenya, contributing 25.3 percent of GDP. The tourism industry in Kenya is not only the third largest industry, but is also one of the most successful of its kind in the world.
- The information communications technology (ICT) is one of Kenya’s fastest growing business sectors. The most noteworthy advancements include some of the highest Internet access rates across sub-Saharan Africa, as well as their leading value-added mobile services.
- At the same time, businesses operating in Kenya face a number of challenges associated with corruption, unemployment, ethnic tensions, land titles, insecurity, crime and poverty. With an unofficial estimate of 40% unemployment, 50% of Kenya’s people still live below the poverty line, and the country's GDP per capita is approximately USD 1017.
- In 2013, Transparency International, which monitors perceptions on corruption, ranked Kenya 136 out of 177 countries (a rank of #1 is the best rating). Claims of corrupt dealings, particularly in land purchases and large government contracts persist.
- The recent security concerns over terrorism and crime have had a negative impact on economic growth especially in the tourism sector.
- Other challenges in Kenya include the high cost of skilled, educated labor, the underdeveloped infrastructure, and lengthy shipping times
- Despite the many challenges that Kenya presents, there are a good number of opportunities locally and regionally. In fact, with the stabilization of the Kenyan Shilling (Ksh), trading between Ksh 84-87 to the dollar, US exports increased by over 14 percent in 2013.
- Chapter 4 in the Country Commercial Guide provides more information on best prospects for U.S. companies looking to do business in Kenya, and by extension East Africa using Kenya as a hub or gateway.
Market Entry Strategy
- A traditional entry strategy is to first appoint an agent or distributor, and then to enter and register as a US Company after sales have grown sufficiently. See Chapter 3 of the Country Commercial Guide for more information on working with agents and distributors.
- Companies that create jobs and implement strong Corporate Social Responsibility (CSR), education and training programs are appreciated. Capacity building to create employment is needed to support Kenya’s economic development goals and to reduce political instability.
- The Commercial Service in Nairobi provides a variety of services to assist U.S. firms with market entry. Please refer to Chapter 10 of the Country Commercial Guide for further information on our services.
To access the Country Commercial Guide, click here
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