Page 31 Kenya’s economic outlook for the years ahead looks robust, despite recent challenges such as a trade deficit and rising debt. Following 2014’s GDP rebasing, the country is now East Africa’s largest economy and boasts a prominent profile in the EAC. According to official forecasts, growth is expected to be around 6.5-7% in 2015 and to continue at a similar level for the coming years. This follows on from growth of 5.3% in 2014 and 5.7% in 2013.
8 13 16 19 23 25 26 27 31 38 39 40 41 Kenya in figures A regional leader: With a youthful population and a growing economy, the country is set to benefit from recent resource finds Interview: President Uhuru Kenyatta, Commander-in-Chief of the Kenya Defence Forces Changing landscape: Although many challenges remain, recent reforms are likely to bring further growth A clear vision: Foreign policy emphasises strengthening regional integration and fostering bilateral relations Viewpoint: Barack Obama, President of the US Interview: Richard Sezibera, Secretary General, East African Community (EAC) Common goals: Increasing regional integration of East African Community member states should help to enhance growth Rising star: The economy is growing and moving full speed ahead Come closer: A new FTA holds great promise Interview: Henry Rotich, Cabinet Secretary, National Treasury Interview: Cecilia Malmström, EU Trade Commissioner Working together: PPPs are key to new projects 42 43 44 45 46 49 50 52 57 58 60 62 64 69 70 72 74 81 82 83 In the zone: A new plan for special economic zones should help to shake up the country’s offering for investors Interview: Moses Ikiara, Managing Director, Kenya Investment Authority (KenInvest) Interview: Carole Kariuki, CEO, Kenya Private Sector Alliance (KEPSA) Regional ties: The East African Community is creating new opportunities Staying busy: The 2015/16 budget is full of new proposals and plans for the year ahead Safety first: An increased emphasis on security is set to bolster investor confidence and tourism arrivals Running a tight ship: With the shilling dropping and a high deficit, the central bank is pushing for new solutions Further scope: The sector is robust and profitable, and there are growth opportunities at home and in the region Interview: Patrick Njoroge, Governor, Central Bank of Kenya (CBK) The big picture: Consolidation is likely in the crowded market Roundtable: Gideon Muriuki, Group Managing Director and CEO, Co-operative Bank of Kenya; James Mwangi, Group Managing Director and CEO, Equity Bank; and Joshua Oigara, Group CEO, Kenya Commercial Bank The way forward: Banks are joining the race for mobile banking customers Market movers: With the capital markets sector set for further reforms, the future looks bright Interview: Geoffrey Odundo, CEO, Nairobi Securities Exchange (NSE) Listing the benefits: Demutualisation of the exchange kicks off a round of reforms Bonding process: Secondary trading has been slowing, despite improvements in transparency and efficiency Building greater assurance: The insurance sector is in a state of flux, as both domestic and foreign firms consolidate and expand Banking on security: Collaborations between banks and insurance companies are on the increase and are helping drive growth in the sector Interview: Sammy M Makove, Commissioner of Insurance and CEO, Insurance Regulatory Authority (IRA) Shifting gears: A new regulatory framework is bringing the sector further in line with international best practices 86 91 92 93 98 104 105 106 107 109 113 An anticipated recovery in the upstream segment in 2017 could spur a new round of investment, and downstream demand is expected to continue rising, particularly as vehicle sales accelerate. While the forecast for 2015 is mixed, the industry’s long-term prospects remain bright, and the sector is likely to be a major economic engine over the next five years.
Page 86 A challenging year: The weaker oil price environment and new legislation are bringing changes to the sector Interview: Donald Mahaga, Chairman, Kenya Oil and Gas Association Interview: Tim Carstens, Managing Director, Base Resources Relaying the foundation: New exploration efforts and reformed legislation set the stage for future projects Powering ahead: Major initiatives by both the government and the private sector are set to address energy shortfalls Trading up: Significant upgrades will be needed to meet the government’s ambitious targets for electrification Interview: Albert Mugo, Managing Director and CEO, Kenya Electricity Generating Company (KenGen) Interview: Andrew Herscowitz, US Coordinator, Power Africa The price is right: Affordability is central to efforts to expand access to electricity Steam powered: Geothermal power is a growing part of the energy mix, and is set to change the market in the near term Grand designs: Developments across all segments are set to fuel economic growth 123 125 126 128 133 134 135 136 142 147 148 151 154 156 160 161 162 167 168 170 177 Interview: Atanas Maina, Managing Director, Kenya Railways High flying: Airport upgrades boost passenger capacity and airline access Interview: Gichiri Ndua, Managing Director, Kenya Ports Authority (KPA) Forward march: Authorities push to raise standards as projects move ahead Build to last: Efforts to tackle the problem of low-quality construction Concrete surge: Despite high demand, profit margins in the cement industry are under pressure as competition ramps up Interview: Michael Turner, Managing Director, East Africa, Actis Store of value: Property price rises continue to hold steady despite relatively low rents and few mortgages A critical component: The introduction of 4G and efforts to upgrade infrastructure form a vital plank of telecoms growth strategy Mobile savings: The world’s first mobile-only sovereign bond is in the works Roundtable: Bob Collymore, CEO, Safaricom; Adil El Youseffi, CEO, Airtel; Vincent Lobry, CEO, Orange Telkom Delivering the goods: ICT is being integrated into public service provision as the sector continues to expand Interview: Jambu Palaniappan, Regional General Manager for Middle East and Africa, Uber Target for development: Despite challenges, the textiles, food processing and construction materials segments are seeing robust growth Interview: Adan Mohamed, Cabinet Secretary, Ministry of Industrialisation and Enterprise Development Increasingly competitive: New entrants have entered the cement sector while existing players are expanding capacity Bright outlook: Improving economic conditions and changing consumer preferences point to strong years ahead for Kenyan retail Interview: Darshan Chandaria, Group CEO, Chandaria Group of Companies Moving fast: The consumer goods segment is expanding thanks to a surge in demand Seed money: New investments and developments bode well for continued growth in the sector Palm of the hand: Modern technological solutions can help farmers boost output 178 179 180 183 189 190 191 194 199 200 201 204 206 213 214 216 222 223 226 228 231 232 Interview: Mohammad Abu-Ghazaleh, Chairman and CEO, Fresh Del Monte Produce A sweet deal: Privatisation should see the local sugar industry take off Green thumb: A vibrant horticulture segment creates a wealth of opportunity Changing tack: Sector setbacks are driving the tourism industry to diversify Interview: Mahmud Janmohamed, Managing Director, Serena Hotels Africa Interview: Robert Muriithi Ndegwa, Managing Director, Kenya Tourism Board (KTB) Business potential: Kenya looks to business tourism to drive growth Improving access and quality: Education has been promoted as a key sector for future development, and significant systemic reforms are under way Interview: Noah O Midamba, Vice-Chancellor and CEO, KCA University; and Professor of Defence and Foreign Policy Hand in hand: The government has reached out to the private sector to help meet Kenya’s rapidly expanding educational needs Strengthening health: The government and private sector are rolling out new plans to offer much-needed reforms The rise of e-health: New technology and expanded ICT use are transforming the health sector EY Duties in detail: A look at tax regulation and recent changes New procedures: Modernising the country’s tax processes Viewpoint: Gitahi Gachahi, CEO, EY Eastern Africa Anjarwalla & Khanna Modernising rules: Regulatory reforms across a number of sectors promise to stimulate new activity Private sector, public service: New rules for companies that work with the government Natural response: The government seeks to make the most of its resources Viewpoint: Karim S Anjarwalla, Managing Partner, Anjarwalla & Khanna Rest and relaxation: Hotels and resorts Listings: Useful numbers for embassies, government ministries and more Facts for visitors: Important information Despite a hefty infrastructure deficit, transport investment is seen as vital to realising the potential outlined in the Vision 2030 strategy. A key component of Kenya’s infrastructure plans is the LAPSSET corridor project, a $24.5bn development stretching across East Africa and northern Kenya. Equally significant is the Mombasa-Malaba standard-gauge railway. Kenya’s largest contributor to GDP faced significant hurdles in 2015. Exports were hit by a slowdown abroad, and the continued depreciation of the shilling led to a jump in production costs. However, rising demand both at home and regionally and increased production levels are contributing to greater foreign investment, enabling the sector to maintain its economic importance.
The tourism industry is going through a challenging period, as security concerns have taken a toll on the leisure segment.
The government and private investors are working to improve security, and in the meantime the sector is diversifying and focusing on areas such as business tourism and the domestic segment.
The telecoms sector continues to be a critical element of the economy, laying the groundwork for greater investment and performing well in terms of mobile money and ICT infrastructure growth.
As smartphone penetration and 4G coverage increase, new regulations are lowering barriers for tech imports and facilitating the expansion of e-governance.
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