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Report | The Report: Kenya 2017

Even amid a broader downturn in many African markets, Kenya has consistently been one of sub-Saharan Africa’s most reliable performers.

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Chapter | Legal Framework from The Report: Kenya 2017

OBG introduces the reader to the different aspects of the legal system in Kenya, in partnership with Anjarwalla & Khanna. It also features a viewpoint with Karim Anjarwalla, Managing Partner, Anjarwalla & Khanna, on transforming Kenya into an international financial centre.

Chapter | Tax from The Report: Kenya 2017

In conjunction with EY, OBG explores the taxation system, examining Kenya’s investor-friendly environment. It also features an interview with Gitahi Gachahi, CEO, EY Eastern Africa, on creating an enabling environment for foreign direct investment in Kenya.

Chapter | Health & Education from The Report: Kenya 2017

Kenya’s current administration has placed a great emphasis on the health care sector. Given that the country has one of the youngest populations in the world by average age, Nairobi is aware that investment in social services will be a key component of supporting growth and development in the coming years. Yet while the health industry performs solidly in comparison to its regional peers, there are substantial obstacles standing in the way of rapid progress. With the burden on public services at an all time high, more still needs to be done as funding and financing remain key challenges. While insurance coverage is slowly improving, government funding remains low. If the country wants to push its standard of care up towards developed nations, significant investment and developmental policy will need to be a focus for the sector in the coming years. Kenya’s education sector is experiencing a period of increased investment and attention. With pressing demand created by a growing population, the government is focusing on improving access and quality across the system. The attention on the sector, and the desire to align the system with the needs of the labour market, is likely to lead to significant opportunities for private sector players, especially at the tertiary level. However, while the prospects for improvement and opportunity look strong, the sector is not without its challenges, especially surrounding financing, methodology and the day-to-day operations of institutions. That said, the sector is currently undergoing a comprehensive transformation. Indeed, the emphasis is moving from access to quality as the government looks to reform content and methodology in the primary and secondary system. With high demand for services and a focus on employability, there are increasing opportunities for private providers at the tertiary level. This chapter contains an interview with Paul Tiyambe Zeleza, Vice-Chancellor, United States International University.

Chapter | Tourism from The Report: Kenya 2017

Home to 60 national parks and reserves, a broad offering of cultural and historic attractions, and over 500 km of sunny coastline, Kenya has seen its tourism sector rise to become the second-largest foreign exchange earner in the country. However, a spate of terror attacks since 2011, the 2014 Ebola outbreak in West Africa and ongoing security concerns have weighed heavily on the sector, with 2015 marking the fourth consecutive year of declining visitor arrivals and earnings. However, 2016 saw a return to form for the industry, as the sector recorded 17% growth in earnings, on the back of increased international visitor numbers from a diverse array of countries, including the US, China and India. Recognising the critical role tourism plays in employment and earnings, the government has moved to support the sector with the launch of its tourism recovery programme, a 10-point strategy emphasising marketing, infrastructure development and private sector investment. Combined with rising numbers of regional and domestic travellers, and intensifying efforts to develop the meetings, incentives, conferences and exhibitions segment, the sector is expected to gradually recover in 2017, with ongoing marketing initiatives helping to boost it to full recovery by 2018.

Chapter | Construction & Real Estate from The Report: Kenya 2017

Kenya’s construction industry has been accelerating at a rapid pace and making a substantial contribution to the country’s strong GDP growth figures on the back of major public works projects and rising demand for mixed-use and residential developments. However, the market is not without its challenges, and the funding and financing environment at all stages of project execution is tough, creating negative cost implications and a potential obstacle to the industry’s long-term, sustainable growth. Given the strong growth in the sector and the number of projects in the pipeline, it is unsurprising that there is significant interest in penetrating the local market. While there are challenges in terms of funding for the government and financing and cash flow for contracting firms, there are also substantial opportunities. However, in the longer term, the sustained growth of the sector will be dependent upon the ability to bring more private funding into projects on the ground. As one of the major markets of sub-Saharan Africa, Kenya is of increasing interest as a real estate investment destination. The 44.2m-person country and its 4.2m-strong capital Nairobi act as a gateway to a regional East African market, which is approaching 150m people. Domestically, the economy has been outperforming much of the world, the population is expanding and incomes are on the rise. Given these basic demand trends, it is hardly surprising that Kenya, like much of the sub-Saharan Africa region, is piquing the interests of a range of international funds and institutional investors. While there is undoubted potential in Kenya, the ability to tap into it is somewhat constrained, and affordability remains a concern. At the higher end of the residential market, the dramatic growth of the past five years appears to be slowing down. Indeed, across all segments investors are likely to adopt a wait-and-see approach as the country enters election season. Moving beyond that, Kenya’s strong growth fundamentals are likely to bring more foreign capital into the market. This chapter contains interviews with Andrew Saisi, CEO, Nairobi Housing Corporation; and Ronald Ndegwa, Managing Director, Savannah Cement.

Chapter | ICT from The Report: Kenya 2017

Kenya’s telecommunications sector plays an important role in the country’s economy. The industry as a whole has been on an upward trajectory over the last decade, as a burgeoning, tech-savvy middle class drives demand for smartphones and data, helping companies offset slowing growth in the voice and messaging segments. Operator Safaricom holds the dominant market share but competition has been increasing, and the rollout of new spectrum and a push to expand data services is creating new revenue-generating opportunities. As Kenyan residents increasingly embrace mobile broadband technology and data demand rises, the country’s telecommunications industry is set to remain on a mid-term growth path, bolstered by a diversified portfolio of innovative offerings. Kenya’s IT sector has risen to become an important contributor to economic growth, as the expansion of mobile broadband, WiMAX and fibre-optic networks has driven internet usage and subscribership in recent years. Increasing internet usage has also driven growth in both the e-commerce and start-up segments, with Nairobi standing as East Africa’s most vibrant technology hub. Although access gaps remain and high-speed internet availability is largely constrained to major urban centres, the combined efforts of the public and private sector should see Kenya meet its ICT goals by 2030. This chapter contains interviews with Prasanta Das Sarma, Managing Director, Airtel Kenya; Bob Collymore, CEO, Safaricom; and Aldo Mareuse, CEO, Telkom Kenya Limited; James Mwangi, CEO and Managing Director, Equity Bank; Mike Macharia, Founder and Group CEO, Seven Seas Technologies.