KENYA 20ICT 20FEDEARATION

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KENYA’S COMPETITIVENESS IN BUSINESS : 

KENYA’S COMPETITIVENESS IN BUSINESS BY JULIUS KIPNGETICH MANAGING DIRECTOR INVESTMENT PROMOTION CENTRE

AFRICA AT A GLANCE: 

AFRICA AT A GLANCE The continent’s size is to equivalent to USA China India Argentina Western Europe New Zealand Has a population of 740 million Is endowed with vast natural resources Has a huge debt Has a small GDP size 2/3 of the population is young and dynamic Its violent and turbulent past is coming to an end

Kenya at a glance: 

Kenya at a glance Has a GDP of $11 billion Population is 31.5 million Per capita of $350 16% of the GDP is savings 75% of employment is in agriculture, 24% of GDP Tourism earns Kshs. 24 billion, 12% of GDP Manufacturing accounts for 14%, largest base in COMESA ICT is the fastest growing sector in the economy Financial & diplomatic capital of the region Aviation hub of the region courtesy of Kenya Airways Busiest port of the region at Kilindini Best educated workforce in Sub-sahara Highest concentration of Olympians in the world

Kenya’s investment priority areas: 

Kenya’s investment priority areas Agriculture and agro-processing Tourism Manufacturing Professional services ICT Financial & Banking Medical Trade Knowledge-based industries Privatisation of state enterprises Mainly infrastructure parastatals

Main Types of FDI: 

Main Types of FDI Resource seeking FDI in natural resources FDI seeking low cost or specialised labour Market seeking FDI into markets previously served by exports or closed FDI by supplier companies following customers overseas FDI aims to adopt products to local tastes or use resources Efficiency seeking Rationalized or integrated operations leading to cross-border specialization Strategic asset seeking Acquisitions and alliances

Determinants of FDI inflows: 

Determinants of FDI inflows Political stability and predictability Labour conditions Legal environment Size of the market Openness of the economy Infrastructure and other support services Incentives Degree of globalisation

DISTRIBUTION OF FDI INFLOWS- 2001: 

DISTRIBUTION OF FDI INFLOWS- 2001 European Union 44% USA 17% Asia/Pacific 14% Latin America/ Caribbean 12% Africa 02% Japan 01% Others 10%

Africa’s top 10 FDI destinations ($ billions) - 2001: 

Africa’s top 10 FDI destinations ($ billions) - 2001 South Africa 7 Morocco 3 Algeria 1.2 Angola 1.1 Nigeria 1.1 Sudan 0.6 Egypt 0.6 Tunisia 0.6 Ivory Coast 0.25 Mozambique 0.25

Inward FDI flows for Kenya, Uganda, Tanzania & S. Africa ($ million): 

Inward FDI flows for Kenya, Uganda, Tanzania & S. Africa ($ million) Year Kenya Uganda Tanzania S. Africa 1998 42 210 172 561 1999 42 222 517 1,502 2000 127 254 463 888 2001 50 229 327 6,789 2002 50 275 240 754

Outward FDI flows for Kenya, Uganda, Tanzania & S. Africa ($ million): 

Outward FDI flows for Kenya, Uganda, Tanzania & S. Africa ($ million) Year Kenya Uganda Tanzania S. Africa 1998 14 20 - 1,779 1999 30 - 8 - 1,580 2000 29 - 28 1 271 2001 50 - 5 - - 3,180 2002 76 -14 - - 401

KENYA’S COMPETITIVENESS AS A PREFERRED FDI DESTINATION ( 1 ) denotes negative perception and ( 4 ) denotes no impact on deciding investment destination: 

KENYA’S COMPETITIVENESS AS A PREFERRED FDI DESTINATION ( 1 ) denotes negative perception and ( 4 ) denotes no impact on deciding investment destination

Kenya’s competitiveness as a preferred FDI destination: 

Kenya’s competitiveness as a preferred FDI destination

Kenya’s competitiveness as a preferred FDI destination Contd.: 

Kenya’s competitiveness as a preferred FDI destination Contd.

Kenya’s competitiveness as a preferred FDI destination Contd.: 

Kenya’s competitiveness as a preferred FDI destination Contd.

Kenya’s competitiveness as a preferred FDI destination Contd.: 

Kenya’s competitiveness as a preferred FDI destination Contd.

Kenya’s competitiveness as a preferred FDI destination Contd.: 

Kenya’s competitiveness as a preferred FDI destination Contd.

Kenya’s competitiveness as a preferred FDI destination Contd.: 

Kenya’s competitiveness as a preferred FDI destination Contd.

Kenya’s competitiveness as a preferred FDI destination Contd.: 

Kenya’s competitiveness as a preferred FDI destination Contd.

Average Score in competitiveness: 

Average Score in competitiveness

CORPORATE TAX RATES (%): 

CORPORATE TAX RATES (%) Kenya 30 China 30 Indonesia 30 Malaysia 28 Philippines 32 Thailand 30 Vietnam 25

TELECOMMUNICATIONS KENYA SELECTED COUNTRIES US$/minute to US: 

TELECOMMUNICATIONS KENYA SELECTED COUNTRIES US$/minute to US Private landphone (Local calls 0-60 km) US$ 0.02 per minute Trunk calls US$ 0.08 – 0.25 per minute International calls - US US$ 1.25 per minute Indonesia 1.00 Malaysia 0.24 Philippines 0.30 Thailand 0.56 China 0.25 Vietnam 1.30

WATER RATES KENYA SELECTED ASIAN COUNTRIES Water (US$/m³) : 

WATER RATES KENYA SELECTED ASIAN COUNTRIES Water (US$/m³) 0-10,000 litres US$ 0.16 per 1,000 litres 10,000 – 30,000 litres US$ 0.24 per 1,000 litres 30,000 – 60,000 litres US$ 0.36 per 1,000 litres Over 60,000 litres US$ 0.45 per 1,000 litres China 0.21 Indonesia 0.59 Malaysia 0.51 Philippines 0.21 Thailand 0.31 Vietnam 0.25

REASONS FOR KENYA’S LOSS OF FDI COMPETITIVENESS: 

REASONS FOR KENYA’S LOSS OF FDI COMPETITIVENESS Turbulent political environment in the last decade Stand-off with development partners especially IMF Low economic growth Corruption and insecurity Inadequate infrastructure supply Inefficient public service Low quality of life Lack of political will to change in the past Lack of enabling legal frame work Poor perception of Africa as a whole

Achievements since the Government took over : 

Achievements since the Government took over Smooth transition of power in 2002 Emerging positive image of Kenya worldwide Restoration of relations with development partners Increased confidence of the population and general optimism about the future Major review of govt policies in many sectors Facing the excesses of the past & zero tolerance for corruption Widening of the democratic space Conclusion of the constitutional talks Inclusion in NEPAD group of 4 Increased interest in Kenya as a trade, investment and tourism destination

What remains to be done: 

What remains to be done Reorientation of the entire public service Retooling & separation E-governance Process thinking Passing of 2 crucial bills Investment code Privatisation bill Reduction of the cost of doing business Electricity, oil & gas Roads, railways & ports Telecommunications Security & safety Privatisation of state enterprises Widening & deepening of the fight against corruption Debt restructuring & forgiveness Positioning Kenya as the premier black Africa nation

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