Kenya embarked on a comprehensive programme of economic reforms designed to deregulate the economy and put it on the path of rapid employment generating growth.Sustained effort by the government to tighten fiscal and monetary policies since mid 1993 has been effective in stabilizing the economy and contributing to the revival of economic growth. Annual inflation has been contained to a single digit. Tight control on the budget has been accompanied by tax reforms aimed at reducing the tax rates and broadening the tax base.
On structural reforms, the government has since mid-1993 made significant strides. It has eliminated exchange controls including restrictions on inward portfolio investments and removed all trade restrictions, except for a short list of a few products controlled for health, security and environmental reasons.
Stable macro-economic conditions, liberalised markets, and more operations of the strategic public enterprises are expected to enhance the level and the efficiency of private investment, and result in increased income and job creation.
Regional Economic Affiliation
Kenya is an active member of the following:
- Common Market for Eastern and Southern Africa (COMESA)
- East African Community (EAC)
- Inter-governmental Authority on Development (IGAD),
while exports from Kenya enjoy preferential market access under the following arrangements:
- EU market under -ACP (EU Cotonou Agreement)
- US under African Growth and Opportunity Act (AGOA) and
- Generalised System of Preferences (GSP)
Business & Investment Environment
The government encourages investment and the Kenyan economy remains open to foreign investors. There are no restrictions on foreign investment, foreign ownership, and repatriation of profits or capital. Investment in the Export Processing Zones (EPZs) and Manufacturing Under-Bond (MUB) enjoys a 10 year tax holiday followed by 25% tax rate for the next 10 years and exempt from import duties, VAT, and Sales Tax.
Foreign ownership in listed Kenyan companies is generally restricted to 40% in the aggregate and 5% for each individual investors.
The Export Processing Zones Authority (EPZA) operates in 39 Zones, (37 private, 2 public).