To find out how the COVID-19 situation is affecting trade in Kenya, visit Grant Thornton Kenya.
Perhaps the key to Nairobi’s past and current success as a regional hub is the geographical outreach it is able to provide. We connect high volumes of international trade for neighbouring land-locked countries, such as Uganda, Rwanda, Burundi and even the Congo, because of the access we have to the Kenyan port of Mombasa.
Since the late 1980s, Nairobi has also become an aviation hub for these economies, as well as much of sub-Saharan Africa. We have easy access to Europe and Asia; indeed, India and China are two of our largest trading partners. And there is a lot of maritime trading activity between Mombasa and Dubai, for example.
Nairobi, and for that matter Kenya, stands to benefit greatly from building its reputation as a regional hub and optimising its access to the wider region through cross-border activities. It will be one of the main beneficiaries of an improved trading relationship with the UK, post-Brexit, particularly following on from the inaugural UK-Africa Investment Summit, in January 2020.
While COVID-19 has impacted global economies significantly, the Kenyan government has implemented several fiscal, monetary and other policies to support the economy and avert long lasting economic shocks. In testing times like this, the Kenyan government has demonstrated the importance of supporting the economy through implementing such measures.
But its geographical position as a natural midway point across the continent and a gateway to east Africa is not the only reason for businesses to consider the city as an African base.
Nairobi and Kenya in general have a fairly open economy, certainly in comparison with many of our neighbours. There are very few government restrictions on setting up a new business in any sector. The World Bank’s ease of doing business index has shown Kenya moving steadily upwards in recent years.
Also, Kenya can boast the most stable currencies in Africa. At a time when the likes of South Africa, Nigeria, Tanzania and many of the larger economies have suffered devaluations against the dollar, the Kenyan shilling has remained fairly stable in the past three or four years.
As a result, a number of well-known multinationals now have African bases in Nairobi. These include Coca-Cola, Mastercard, IBM and Microsoft. We have also seen a huge influx of Chinese investment across Africa, and Chinese companies have been doing much more business in Nairobi. These are mainly in large-scale infrastructure projects, such as the new rail line connecting the city with the port at Mombasa.
The renewable energy sector is one of the fastest-growing parts of the Kenyan economy, with high levels of investment flowing through Nairobi. Renewable energy is big news right now. Kenya has abundant sunshine, and access to a lot of hydropower and geothermal power potential. And one of the clients of Grant Thornton Kenya, Lake Turkana Wind Power, is Africa’s largest wind farm.
Recent years have seen heightened interest in the healthcare sector, too. There are a number of private equity firms and multinationals that are buying up existing hospitals or setting up greenfield sites. Universal healthcare is a priority development goal for the government. A lot of people travel to Nairobi from all over east Africa for due to availability of world class healthcare facilities.
Foreign investors will also benefit from the skilled local workforce. In many of our neighbouring countries, it can be very difficult to find senior talent at a local level.
Part of the reason Kenya performs better is due to the country’s historical links with the UK and English-speaking population, availability of international schools, and hardworking ethos of Kenyans. A lot of our workforce is well travelled, in the US or Europe in particular, so they come back here with a great deal of experience. A tech-savvy population and good digital connectivity means Nairobi and the wider Kenyan market is often used as a testbed for tech firms looking to enter Africa.
For businesses seeking to relocate to Nairobi, the Kenya Investment Authority is an excellent support organisation that can assist with local planning, immigration and company formation.
Nairobi is a dynamic and entrepreneurial city. There is a large expat community presence which makes the city very cosmopolitan and vibrant. Combined with the local skills and the openness of the Kenyan economy, this is the ideal place to gain a foothold in Africa.
To find out more about establishing your business in Kenya and to discuss your international plans, get in touch with, Amaechi Nsofor.