ict in kenya

8/6/2019 ICT in Kenya

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c r e a t i n g p r o s p e r i t y t h r o u g h i n n o v a t i o n

Kenya: a globally

competitive ict

outsourcing

destination

Kenya is Running


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The Ministr of Information and Communications

All Rights Reserved 2006.

Telsposta Towers, 10th Floor

P.O Box 30025-00100, Nairobi, Kenya

Phone: +254 0(20) 251152, 250517, 250978

Fax: +254 0(20) 249664

Email: [email protected]

Text, Editing & Proofreading:

Wanjiku Maina

Jay BhallaPeter Kimacia

John Gikanga

Access Leo Burnett

Cover Pictures:

Photos.com & Adobe Stock Photos

Other Photos:

Thirdworldmedia.com Imagebank

The Tea Board of Kenya

The World Agroforestry Centre

Stock photography from Photos.com

Design&Illustration: John Gikanga / Thirdworldmedia.com

Printing: Ramco Printing Works / Nairobi, Kenya

Printed on Scandia 2000 Paper

Tis book is published by the Ministry of Information & Communications.


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Te Government of Kenya has made IC a priority in its economic recovery strategy initiatives with the long-term commitment to have

Kenya develop into a globally competitive IC outsourcing destination, as well as a base for the development, production and sale of

information, knowledge, and technology products and services.

Te major force moving the IC industry is the power of the services sector, and more particularly the spread of international business process

outsourcing. As a recipient of this information booklet, we invite you to share with us the progressive belief that much can be achieved

when people, institutions and Governments work together.


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Contents


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Con

tents

01Kenya at a glance / page 12

Kenya at a Glance 12

The Kenyan Economy 14

Investment Opportunities 18

Agriculture, Tourism, Building & Industry,

Financial & Business Services, Energy,

Natural Resources, ManufacturingICT & the Knowledge Industry 44

02Why Kenya? / page 48

Political Stability 50

Dynamic Private Sector 51

Harmonious Industrial Relations 51

Preferential Market Access 51

Qualified Work Force 52

Convenient Time Zone 53

Frequently Asked Questions 54

03the emerging ict Sector / page 60

ICT Sector Overview 62

Current Market Structure 64

Kenya Fibre Network 66

Important Contacts 68

Abbreviations 70

. introduction

. foreWord

. preface


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Nations the world over have recognized the developmental opportunities as well

as the challenges brought about by the fast-paced information age whose hallmark

is information and communication technologies (ICTs). Evidence from developed

countries has shown that ICTs can play a dramatic role in enhancing economic and

social development by acting as a production sector for economic growth and an

enabler for social development.

The decisions and actions we take about the use of ICT will be critical in determining

which road we go down as a nation in our fight against poverty. The old debate, about

choosing between ICTs and other development imperatives, has shifted from one of

trade-offs to one of integrating the two approaches in order to harness the benefits of

sustainable economic and social development.

Kenya has reached a point to embrace a knowledge economy. The imminent upgrading

of the ICT sector in Kenya through the formulation of a National ICT Policy and Strategy

is signifificant because it has the potential and prospects to generate additional jobs

and employment opportunities for a growing youthful population. In setting out the

direction, the policy lays emphasis on the development, deployment and exploitation

of ICTs to aid the development of the Kenyan economy.

Introduction


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Nations the world

over have recognized

the developmental

opportunities as well as the

challenges brought about by

the fast-paced information age

whose hallmark is information

and communication technologies

(ICTs). Evidence from developed

countries has shown that ICTs can

play a dramatic role in enhancing

economic and social development

by acting as a production sector

for economic growth and an

enabler for social development.ICT applications have enabled

these countries make gigantic

improvements in both productivity

and quality in agriculture,

manufacturing, infrastructure,

public administration, and services

such as nance, trade, distribution,

marketing, education and health.

The decisions and actions we take

about the use of ICT will be critical

in determining which road we

go down as a nation in our ght

against poverty. The old debate,

about choosing between ICTs and

other development imperatives,

has shifted from one of trade-

offs to one of integrating the two

approaches in order to harness the

benets of sustainable economic

and social development.

Kenyas National ICT Policy (2005)

and ICT Strategy for Economic

Growth (2006) are the start of a

journey that represents our nations

vision in the information age. The

preparation of the two documents

was guided by the aspirations set

out in Kenyas key socio-economic

development framework documents

including: The Economic Recovery

Strategy for Wealth Creation andEmployment, 2003-2007; Poverty

Foreword

Reduction Strategy Paper; 2001;

Sessional Paper No. 2 of 2005

on Development of Micro and

Small Enterprises for Wealth and

Employment Creation for Poverty

Reduction. The development of this

ICT Strategy for Economic Growth

is a result of wide consultations

involving all key stakeholders in the

public sector, private sector and civil

society.

Kenya has reached a point when

she must shift from depending

on an agricultural base which is

characterized by a relatively weak

industrial foundation and embrace a

knowledge economy. The imminent

upgrading of the ICT sector in

Kenya through the formulation of a

National ICT Policy and Strategy is

signicant because it has the potential

and prospects to generate additionaljobs and employment opportunities


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policy and regulatory framework.

The Government recognizes that

skills and knowledge underpin

Kenyas goal of becoming a

knowledge economy and that the

economic future and the strength

of our communities will depend

on the extent of investments in thedevelopment of human capital. In

this regard, the development of

the right balance of ICT skills and

knowledge that are anchored in

collaborative partnerships between

the government and all stakeholders

in transforming a shared vision

into reality through programs and

policy response is now a national

imperative. The Government is set

to play a crucial role not only in

assisting local companies benet

from existing and arising market

opportunities, but also more

importantly in fostering the necessary

ICT infrastructure development and

for a growing youthful population. In

setting out the direction, the policy

lays emphasis on the development,

deployment and exploitation of

ICTs to aid the development of

other sectors of the economy. It

also provides a basis for facilitating

the socio-economic development

of the country in a globalization

era, dominated by information and

knowledge-based economies.

In developing the ICT Strategy for

Economic Growth, the Government

recognizes the broad challenges

involved in living in an informationage and knowledge economy, and

in harnessing the potential of

ICTs for economic growth and

poverty reduction. Faced with these

realities, the Strategy is based on

four guiding principles, namely:

infrastructure development, human

resource development, stakeholder

participation and appropriate

regulatory framework.

The Governments key objective is

to transform the Kenyan economy

through ICTs by promoting and

facilitating the private sector to

serve as the driver for economic

development through innovation in

the ICT sector. Another long-term

commitment is to have Kenya develop

into a globally competitive ICT

outsourcing destination as well as a

base for the development, production

and sale of information, knowledge,

and technology products and services.

To achieve these objectives, theGovernment will collaborate with

all stakeholders in maintaining a

favorable climate for investment in

ICT manufacturing and services as

well as Foreign Direct Investment.

Hon. Mutahi Kagwe MPMinster for Information and

Communications


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0

Preface

The strategic focus of Kenyas

ICT Strategy for Economic

Growth is to simultaneously

target the development of the

ICT sector and to use ICTs for

employment creation, poverty

reduction, as well as a broad-

based enabler for economicrecovery and the achievement

of national developmental goals.

Trends in a number of transition

economies such as India, Costa

Rica and Mauritius indicate that

one of the major forces moving

the ICT industry is the powerof the services sector, and

more particularly the spread of

international business process

outsourcing. The Kenyan services

sector remains under-exploited.

The import of this is that there

are numerous opportunities for

the development of a services

sector business hub that produces

and serves the local market and

exports to the region and beyond.

In this connection, the Kenyan

services sector can be expanded

through the Business Processing

Outsourcing (BPO) approach

given the number of advantages

the country has for providing such

services.

It is difcult to ignore Kenyas

uninterrupted political stability

since independence, its strategic

location with easy access to

regional and world markets, and

a substantial and varied private

sector. In addition, the country

has a highly educated, English-

speaking workforce with the

potential for turning Kenya into

a world-class player as a service

provider. Besides, the country has arelatively good telecommunications

infrastructure which is being

progressively improved, low labor

costs, and a very convenient time

zone to Western and Eastern

countries. When these factors

are combined with the countrys

extensive natural assets for tourism,

they open major opportunities

that can be exploited through the

deployment of ICTs.

We recognize that for ICTs to spur

economic recovery Kenya needs

to have depth of relevant skills,

a good work ethos, managerial

capabilities, entrepreneurial drive,

intellectual property protection

and establishment of linkages

between companies in the rst

world and those in Kenya.

Further, the modernization of

our ICT infrastructure is essential

in achieving higher rates ofinvestment and competitiveness in


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our economy. The Government

is currently working on

putting in place an enabling

telecommunications infrastructural

and regulatory framework. We are

conscious of the great potential

for job creation for our youth in

setting up ICT-enabled business

services such as customer, back-

ofce and professional services

to offshore, near-shore and

in-shore companies that are

keen on concentrating on their

core competencies and cutting

operational costs.

In order to take advantage of

this emerging trend, we shall put

some initiatives in place. These

include among other things:

adjusting our education and

training programs to enable our

youth cash in on new employmentopportunities; taking advantage

of existing and new marketing

networks and promoting local

and international partnerships;

and recruiting highly qualied

staff, motivating and retaining

them as part of the process

of building a critical mass for

emerging business opportunities.

In addition, collaborating with our

universities and the private sector,

we shall establish ICT business

incubators to support existing and

start-up businesses; set operating

standards in accordance with

international principles to ensurequality assurance; and provide for

decisive response based on market

intelligence and research. In order

to ensure a more broad-based

diffusion of ICTs and benets

from synergy, the Government

will link the ICT Strategy for

Economic Growth with other

national development policies.

The ICT Strategy for Economic

Growth will be implemented

through rolling plans initiated

by inter-sectoral Task Groups

(drawn from public, private and

civil society sectors) working

under the oversight of an ICTs

National Steering Committee.

With the right sets of action plans

it will be possible for Kenya to

embark on an alternative socio-

economic development path that

is guided by the development,

deployment and exploitation of

ICTs within the different sectorsof the economy without rst going

through an extensive and tedious

industrialization process.

Bitange Ndemo, PhD.

Permanent Secretary


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Location:Eastern Africa, on the East Coast

of Africa along the Indian Ocean

at 1 00 N, 38 00 E

Land Area:

569,250 sq km

Capital Cit:

Nairobi

Climate:

Varies from tropical along coast to

arid in the interior

Time Zone:

GMT + 3

Geography

Kenya at a glance

Population:33,829,590 million

Workforce Population:

11.85 million

Life expectanc

Male:

48.87 years

Female: 47.09 years

Literac rate age 15 and oer:

85.1%

Main Languages:

English (ofcial),Kiswahili (ofcial), numerous

indigenous languages

Student Enrolment:

Primary 7,384,800

Secondary 912,624

Universities 91,541

Demography


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Goernment:National Assembly 210 members

single-member constituencies,

plus 12 members nominated by

political parties on a proportional

representation basis.

The attorney general and the

speaker are ex-ofcio members of

the National Assembly.

Elections are held every 5 years,

the last one in 2002.

Head of State:

President

Head of Goernment:

President

Legal Sstem:

Based on Kenyan statutory law,

Kenyan and English common law,

tribal law, and Islamic law; judicial

review in High Court; accepts

compulsory ICJ jurisdiction,

with reservations; constitutionalamendment of 1982 making

Kenya a de jure one-party state

repealed in 1991

Government and Legal System

Local Connectiit:Fully Digital Network

Fixed Line Connectiit:

273,000

Mobile Connectiit:

4,295,000 in 2004

Internet Users:1,500,000

Data Serices:

Kenstream, Jambonet ,

ADSL services, Analog leased

lines(Kenline), Kenpac, Kensat,

ISDN

Satellite Serice:

International Broadcast, VSAT,

Voicecast

Global Connectiit:

Satellite links

Telecommunications


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The Kenyan Economy


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Kenya is strategically located

within easy reach of

various markets in the

region and the destination of its

exports has been the European

Community (EC) countries, USA

and other African countries. The

government of Kenya been very

keen to implement economic

liberalization and has institutedvarious reforms. This has led to

better economic performance

and an improved environment forconducting business.

The country has in the last

few decades tried to reduce

dependence on the traditional

agricultural export commodities

such as tea and coffee and has

made serious efforts to promotenon-traditional exports such as

TheKenyan

Economy

horticultural crops, manufactures,

and most recently the export ofservices. Services such as banking,

insurance and business have also

grown and the countrys currency,

the Kenya Shilling, remains fairly

stable.

Kenya is host to numerous multi-

national corporations, majorityof which are from USA, United


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Kingdom, Germany and the FarEast, and has for a long time been

viewed as a gateway to the wider

East African region.

The Government of Kenya

is taking a variety of steps to

create an enabling environment

for both foreign and domesticinvestment. This is in line with

the Governments Economic

Recovery Strategy for Wealth

and Employment Creation

(20032007), which is focused

on the promises contained in the

manifesto of the ruling party,

the National Rainbow Coalition

(NARC). Priorities are investment

in infrastructure and improving

access to education and healthservices. Also at the top of the

agenda are ghting corruption

and promoting good governance.

Kenyas economy showed signs of

recovery in 2003, after ve years

of poor performance, and posted

real economic growth of 1.8%, as

compared to 1.2% in 2002. At thesame time, however, the overall

ination rate increased from 2% in

2002 to 9.8% in 2003.

Agriculture remains the dominant

sector, it contributed 24% to

the GDP in 2003. Nevertheless,

other sectors like manufacturing,

tourism and business services

also make signicant contributions(Figure II.1). Growth in agriculture

increased to1.5% in 2003, up

from 0.7% in 2002, while the

manufacturing sector grew by 1.4%

in 2003, up from 1.2% in 2002 and

0.8% in 2001. This modest positive

growth was mainly attributable

to tight scal and monetary

policies, stable exchange rates, low

demand for imports, low food

prices and stable petroleum prices.

Considering sub-Saharan Africas

(excluding South Africa) GDP

growth of 3.6% in 2003.

Kenyas economic performance can

be said to be no more than fair.


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TheKenyanEconomy


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Investment Opportunities


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0

Economic Indicators Over a 3-5 year Period

2000 2001 2002 2003 2004

Population 30.2 30.9 31.8 32.7 33.6

GDP at market prices(Kshs M) 967,838 1,025,918 1,038,764 1,141,780 1,273,716

Real GDP Growth Rates (%) 0.6 4.4 0.4 2.8 4.3

Ination Rates - - - - 9%

Unemploment Rate - - - - 30-40%

Oerall Balance of Paments(Kshs M) - -13,072 -257 -31,385 -4,851

Net International Reseres(Kshs M) +7,833 +4,828 -12,292 +4,487 +383

Imports (Kshs M) 187 200 169 205 245.6

Exports (Kshs M) 191 204 226 260 296.1

Tourist Arrials (000) 1,036.5 993.6 1,001.3 1,146.2 1,360.7

S: Kenya Investment Authority, Central Bank of Kenya, Central Bureau of Statistics and Telkom Kenya


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AGRICULTURE

Horticulture

The horticultural sector is one of

the fastest growing sectors in the

economy and is the second largest

foreign exchange earner after tea.

Opportunities exist in production

and export of products such as cut-

owers, French beans, pineapples,

mushrooms, asparagus, mangoes,macadamia nuts, avocados, passion

fruits, melons, and carrots.

Oeriew

Agriculture is the mainstay of the

economy, providing livelihood to

approximately 75 per cent of the

population. There is considerable

scope for diversication and

expansion of the agricultural sector

through accelerated food crop

production and increase of non-

traditional exports. There are also

opportunities for improvement

in technology infrastructure

such as packaging, storage, and

transportation. Intensied irrigation

and additional value added

processing are marketable areas forinvestments.

Agricultural Support

Investment opportunities exist in

seed production, manufacture of

sprayers and pesticides, veterinaryservices, construction of dams and

bore holes, installation of irrigation

systems and services. Opportunities

also exist in support services, such as

cold storage facilities and refrigerated

transport for horticultural and other

perishable products.

Agriculture


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considerable potential for the

expansion of chocolate and

confectionery products for export.

Opportunities for investment exist

in the production and processing

of sugar, tea, meat and dairy

products.

Poultr Products

Hatcheries for the production of

chicken for both domestic and

regional consumption are under-

exploited.

Fisheries

Kenyas water resources of the

Indian Ocean and Lake Victoria

provide vast shing potential.

At present, deep sea shing,prawn and trout farming are in

their infancy but growing rapidly.

Opportunities also exist in sh

processing (lleting and sh meal

production), as well as sheries-

support infrastructure (refrigerated

transport, cold storage, etc.).

Leather and Leather Goods

Most hides and skins are processed

up to the wet blue stage for export

while investment opportunities

exist in production of nished

leather, offering potential for the

manufacture of shoes and other

leather products.

Liestock

Investment opportunities exist in

the rearing of livestock for meat

and dairy products. The dairy

industry has been liberalised,

providing new investment

opportunities in milk processing

for local and regional markets. Non

conventional livestock farming, for

example, of ostrich and crocodile

farming, represent an exciting new

area of investment. Bee keeping

and honey processing are untappedpotential in Kenya.

Agro-Processing

Numerous investment

opportunities exist in this sector.

Edible and other oils produced

locally include butter, ghee and

margarine as well as sunower,

rapeseed, cottonseed, sesame,

coconut and corn oils, while a large

quantity of palm oil is imported.Investments to develop substitutes

for palm oil imports are welcome.

Kenya produces excellent beer,

utilising locally grown barley. The

country has recently developed

papaya and grape wines that

can be exported to regionaland international markets.

Opportunities exist in coffee

roasting and grinding, with a

further potential such as in the

production of decaffeinated coffee

for export.

Sugar production, at 402,000tonnes per annum is below the

domestic demand estimated

at 600,000 tonnes per annum.

Molasses, a by-product of sugar

production, is processed into

power alcohol, potable alcohol,

and bakers yeast. There is also

Agriculture


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The tourist sector is one of

the most important sectors

of the Kenyan economy.

The sector provides employment

to thousands of people directly

and many more indirectly. It is the

second highest foreign exchange

earner after agriculture.

The tourism sector has been

performing well over the last

one year, becoming the leader in

service sector. During the rst

three quarters of 2005, visitors

by air and sea increased by 28.2%

to 605,969 from 476,471 in the

corresponding period of 2004.

The robust growth in the tourism

sector was attributed to the

stepped up marketing particularly

Oeriew

TOURISM AND LEISURE

in non-traditional markets such

as China, Japan, India and the

domestic market, and also the

widened area covered by Kenya

Airways. Some of the newly

inaugurated Kenya Airways routes

include Cairo-Istanbul, Bamako-

Dakar, Harare-Maputo and Dubai-

Guangzhou.

The success in marketing beneted

from the negative effects of the

Tsunami in the Asian and Indian

Ocean Islands markets and

Tourism improved security in the

tourism circuits. The diversication

away from traditional beaches and

wildlife tourism to new circuits in

the western and northern parts

of Kenya also contributed to the

improved performance. Looking

forward, tourism is expected to

remain buoyant in the medium term

following the stepped up marketing

campaigns. The World Cross

Country Championship that is to

take place in Mombasa in 2007, the

delayed negative effects of bird u

and the effects of the Tsunami in

Asian markets is also expected to

help boost tourism.

Tourism is Kenyas third largest

foreign exchange earner. The

tourism industry is growing as a

result of the liberalisation measures,

diversication of tourist generating

markets and continued Government

commitment to providing an

enabling environment, coupled

Tourism


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with successful tourism promotion

and political stability. Enormous

opportunities exist for investment

in lm production; recreation

and entertainment facilities in the

following areas:

Conference Tourism

Cultural tourism

Cruise ship Tourism

Aviation/tour and travel

Tourism

Eco-tourism

Potential investors can take full

advantage of these opportunities

through direct investments or

joint-ventures with Kenyan

entrepreneurs. Opportunities

also exist in this sector in theconstruction of tourist hotels and

game lodges all over the country.

Kenya is a vast country with a

wide range of potential tourist

attractions, which have not

been fully exploited. Currently,

the tourism industry is mainly

concentrated at the countrys

coastal area and in the National

Parks and Game Reserves. As a

policy matter, the Government

of Kenya is strongly committed

to the regional diversication ofthis very important industry to

other areas for some good reasons.

Similarly, the potential for the

domestic market has not been fully

exploited. There is also need to

identify other tourist attractions

besides the existing National Parks,

Game Reserves and the Beach.

In order to extend the length of

stay of safari tourists in Kenya,

emphasis will be put into the

development of inland resorts

situated close to the national parks

and game reserves. It is noted

that the main constraint to thedevelopment of such resorts has

been lack of sufcient investment

capital. Participation in such

investment ventures will, therefore,

be very much encouraged by the

Government of Kenya in order

to exploit the tourism potential in

those areas.


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TourismThe tourism industry is

mainly concentrated at

the countrys coastal area

and in the National Parks

and Game Reserves.

As a policy matter, the

Government of Kenya isstrongly committed to the

regional diversification of

this important industry

Tourism


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0

BUILDING ANDINDUSTRy

Oeriew

Development of infrastructure is

one of the key pillars in achieving

the economic recovery and has

been identied as a priority area

in Economic Recovery Strategy

for Employment and Wealth

Creation. In 2003,the building

and construction sectors key

economic indicators recorded

improved performance. Cement

consumption went up by 4.5

per cent from 1,212.3 thousand

tonnes in 2002 to 1,267.0 thousand

tonnes in 2003 partly due to use of

cement in road construction and

maintenance.

The index of government

expenditure on roads increasedfrom 62.7 in 2002 to 68.5 in 2003.

The total value of building plans

approved increased by 2.7 per cent

from Kshs 10,607.4 million to

Kshs 10,892.6 million in the years

2002 and 2003 respectively. The

total estimated cost of new private

buildings completed registered an

increase of 2.2 per cent from KShs

1,395.6 million in 2002 to KShs

1,426.2 million in 2003.

The overall construction cost

index recorded an increase of

7.1 per cent in 2003 as compared

to 1.4 per cent in 2002. Wageemployment increased marginally

from 76.5 thousand persons in

2002 to 76.6 thousand persons in

2003. E/N/no emergency Fund

reconstructed several roads spread

across the country at a total cost of

KShs 522.2 million. Commercial

banks loans and advances to the

B


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sector went down marginally by

1.8 per cent from KShs 17,298

million in 2002 to KShs 16,995million in 2003. The Kenya Roads

Board disbursed a total of KShs

6.92 billions to the various roads

agencies in 2003

Road Construction

Rehabilitation of Airports

Rehabilitation of port facilities

at Mombasa, which is ongoing

Rehabilitation of inland port

facilities

Development of a Second Port

at Lamu

Kenya - Uganda & regional

pipeline extension (Petroleum)

Construction of upstream

renery

Construction or upgrading

of storage, distribution, andproduct handling facilities

(Petroleum)

Solar / wind energy plants

Urban housing development by

private and public sector

The overall construction cost

index recorded an increase

of 7.1 per cent in 2003 as

compared to 1.4 per cent in

2002

Wage employment increased

marginally from 76.5 thousand

persons in 2002 to 76.6

thousand persons in 2003

The Kenya Roads Board

disbursed a total of KShs 6.92

billions to the various roads

agencies in 2003

7.1%

employment

disbursed

Buildingand

Industry


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and Business Servicesfinancial

F


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Oeriew

In 2003 the Central Bank pursued

a prudent monetary policy stance

aimed at sustaining a stable

macroeconomic environment.

The monetary policy adopted for

the calendar year 2003 targeted

to contain ination below the

5.0 per cent level and allow real

GDP growth to recover to 3.0 per

cent in 2003 up from 1.2 per cent

growth attained in 2002. The major

challenge in the implementation

of the monetary policy was the

expansionary scal policy due to

the -implementation of government

programmes such as the free

universal primary education scheme

for public schools that resulted in a

wider budget decit for the scal year

2003/2004. At the same time, the

government relied more on domestic

non-bank public sources of nance

as opposed to borrowing from the

banking sector in 2003.

FINANCIAL AND BUSINESS SERvICES

Some areas for inestment

opportunities:

Lease Hire

Micro-Financing on whole sale basis

Investment Banking

Insurance Services

Business Advisory services

trusteeship and Receiverships

FinancialServices


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ENERGy

Oeriew

Kenyas energy policy emphasizes

the need for sustainable energy

supplies in adequate quantities at

effective costs, so as to achieve

national development goals. The

policy also emphasizes delivery

of quality energy services so

as to ensure that Kenya willcontinue to attract investments

in those economic activities of

which energy inputs are basic to

production at competitive prices.

The country is dependent mainly

on three forms of energy namely:

petroleum, electricity and wood-

fuel. To a lesser extent wind, solar

and biogas are used as alternative

energy sources.

Petroleum is the major source

of commercial energy in the

country providing about 87% of

the countrys requirements. Thetransport sector consumes more

than half of the petroleum fuels

used in the country. Industry

consumes some 31% of petroleum

fuels.

Hydro electric power accounted

for 54.8% of electricity supplyin the country, while geothermal

and thermal sources accounted

for 18.8% and 26.4% respectively.

During the same period of 2004,

hydro-electric power accounted

for 60.4% of domestic power

generation while geothermal and

thermal sources accounted for

19.5% and 20.2% respectively.Electricity consumption grew by

5.9% during the period reecting

increased demand to support the

pick up in the economy. Average

crude oil prices remained high

with Murban Adnoc crude oil

from Saudi Arabia increasing

from US $ 41.4 per barrel in

September 2004 to US $ 61.1 per

barrel in September 2005. The

sharp increase in crude oil prices

continues to be associated with

political risks, rising global demand

and disruption in the US oil plants

by bad weather. However, pricesmay drop in the coming months

as the market recovers from

damaging hurricanes Katrina and

Rita in the USA in late August

and September. In addition, the

unseasonably warm weather in the

North eastern part of USA has

curbed demand for heating oil and

allowed reners to build stocks.

Presently, the Kenyan oil market,

whose total sales volume reaches

around 2.3 million cubic metres per

annum, is served by eight private

companies. The Government

of Kenya expects that, upon

deregulation of the oil industry, the

Kenyan market will open up to new

companies.

Moreover, potential demand for

Liqueed Petroleum Gas (LPG)

is expected to increase to twice its

present amount in the near future.

However, supply and distribution

of LPG have been constrained

by a number of factors including

limitation of production from

the Kenyan Petroleum Reneries

Ltd. (KPRL). LPG supply and

distribution thus represents an areawhere opportunities are available

for investment.

The Government also plans to

invest in the petroleum sub-

sector, embarking on projects like

oil exploration and oil pipeline

rehabilitation.

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87%Petroleum is the major

source of commercial

energy in the country

providing about 87% of the

countrys requirements

Hydro electric power

accounted for 54.8% of

electricity supply in the

country, while geothermaland thermal sources

accounted for 18.8%

and 26.4% respectively

Electricity consumption

grew by 5.9% during theperiod reflecting increased

demand to support the pick

up in the economy

growth

nergy


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Electricit sub-sector

The demand for electricity is

estimated to have increased at

the rate of 5.4% per annum

between 1994 and 2000. To meet

this demand, the Government,

in collaboration with the World

Bank, has prepared an investment

programme for the electricity

sub-sector. The National Power

Development Plan recommends

that during the next 15 years

geothermal generation should

increase to 280MW, partly due

to the predicted abundance ofgeothermal energy resources in the

country.

Transformers

Local investors intend to promote

a project based on joint ventures

with interested investors, to

manufacture transformers mainly

for electric power. Currently, all the

requirements of the country are

imported.

Petroleum

Following liberalization of power

generation by the Government

in 1994, projects earmarked for

development through least cost

development criteria have been

and will continue to be offered for

implementation on the basis of

international competitive tenders.

These projects include geothermal

energy, hydropower, oil based

thermal and any other economically

competitive source. Advertisements

for such projects will be made

both locally and internationallyfrom time to time. In addition, all

such projects will be screened for

their environmental impact and

mitigation cost weighed against

potential benets to ascertain their

economic viability.

En


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Water

The demand for water supply

and sewerage facilities has been

outstripping the development of

the same. While most urban centres

in Kenya have functional facilities,

the level of service has not been

at the expected level and most of

these systems are in dire need of

rehabilitation and augmentation to

meet the rising demands. One major

area that needs improvement is the

management of the water utilities,

and private sector involvement

would be welcome in order toimprove on the efciency and

accountability. There are still quite

a number of urban centres that

require the development of new

facilities, as the existing facilities can

no longer cope up with the demand.

However, with the new policy which

advocates for the adoption of the

user pays and the polluter pays

principles, development of these

facilities could be undertaken by

the private sector as viable business

ventures with the arrangement that

the developer will be granted water

undertaking.

nergy


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Env


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ENvIRONMENT ANDNATURAL RESOURCES

Oeriew

Sustainable exploitation of

natural resources for Economic

Recovery Strategy for Employment

and Wealth Creation is a majorchallenge for them Government

as it endeavors to put in place

policies to guide the process in all

environment and natural resources

sub-sectors. The Government is

in the process of reviewing and

implementing policies that govern

the natural resources exploitation,

management and conservation.

Water Suppl

The Government through the

Ministry of Water Resources

Management and Development

has the responsibility of ensuring

that all Kenyans have access to safe

drinking water within a reasonable

walking distance and in achieving

the set goals of the Millennium

Development Goals (MDGs). It

is estimated that about 75.0 per

cent of the urban population

and nearly 50.0 per cent of rural

population had access to safe

drinking water in 2003. However,

with the increasing population

coupled with inadequate resources

for expansion and maintenance of

water supply programmes, theseproportions are deteriorating. In

this regard, the Government has

put in motion a reform process in

the water sector and has embarked

on implementing the Water

Act 2002. The new legislation

encompasses commercialization

of the urban water programmes

and community participation

in the rural water supply. The

new policy details Governments

role, including, regulation and

supervision of water resources;

while welcoming stakeholders

and beneciary communities toparticipate in the implementation,

nancing, operation and

maintenance of water resources

and supply facilities. The purpose

is to attract investment in the water

sector and provide adequate water

and sanitation services to meet the

various sectoral demands.

Fisheries

Fish continues to play an important

role not only as a source of food

and income for local shing

communities but also for the export

market. The Government has

directly put in place a task force to

develop a comprehensive sheries

policy that will guide the sector

towards the MDGs. It will also take

cognizance of all environmental

issues and within the framework of

the Economic Recovery Strategy

paper.

Forestr

The Department of Forestry has

continued to experience difculties

in discharging its mandate due

to limitations of the current

forest policy and legislation. Anemergency tree planting programme

is being implemented to address the

serious degradation and destruction

of the countrys forests.

vironment

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0

Mining

The Government through the

Department of Mines and Geology

in the Ministry of Environment

Natural Resources and Wildlife

has prepared a mining policy and

is in the process of enacting a new

mining law. The aim is to develop

a comprehensive policy framework

for regulating the mining sector

and an appropriate legal and scal

framework, which are in line with

the current global mining trends.

The proposed law once enacted,

will attract, guide and encourage

private investments into the sectoras well as tap the countrys huge

mineral potential. Under the

envisaged mining law, a new mining

licensing system is to be introduced

to provide for among others;

a simplied and harmonized

licensing of mining operations, a

considerably curtailed discretion on

the part of the Minister in charge

of mining and a greater security of

tenure for mining investors. The

new law also seeks to harmonize

mining with the Environment

Management and Co-ordination

Act of 1999 and requires a

restoration and rehabilitation of

mined out areas and cushioning of

local communities against adverse

effects of mining.

Kenya has well-developed

cement processing plants that

satisfy the domestic market and

exports to the regional market.

Approximately 1.2 million tones

of cement are consumed locally

each year. Opportunities exist in

the production of glass, as the

country is not self-sufcient. A

few manufacturing units produce

ceramic pottery and tiles, however,substantial quantities of ceramic

pottery, tiles, sanitary-ware,

and insulators are imported.

Investment potential exists in

prospecting and mining of other

minerals such as gold, precious

stones and petroleum.

Refuse Management

Accumulation of refuse in most

urban centers in the country

remains a serious health and

environmental problem. The

emergence of such substances

as mobile phone scratch cards,

polythene bags and plastic bottles

has raised concern about the

products effects on environment,

as they do not decompose. The

situation is more serious in major

towns of Nairobi, Mombasa,

Kisumu and Nakuru where the daily

refuse accumulation out-paces thequantity disposed. This is a result

of limited resources allocated to

most local authorities coupled with

inefcient waste disposal methods.

Fisheries

Kenyas water resources of the

Indian Ocean and Lake Victoria

provide vast shing potential. At

present, deep sea shing, prawn and

trout farming are in their infancy but

growing rapidly. Opportunity also

exists in sh processing (lleting

and sh meal production), as well

as sheries-support infrastructure

(refrigerated transport&cold storage.

Inestment in Forestr

In order to achieve sustained forest

management, there will be a need to

carry out a well-focused investmentin the following areas:

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Forest valuation

Capacity building in resource

assessment, planning

and management, impact

assessment, geographical

information systems, monitoring

and evaluation

Research in non-wood treeproducts to enhance their

economic potential

Development of credit support

to private forest investments

Improving data and information

for management planning

through regular surveys and

Forest inentories

Developing and improving

marketing of forest products

Modernisation of forestindustries to improve efciency

vironmentandNaturalResources


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MANUFACTURING

Oeriew

In 20022003, the manufacturing

sector contributed about 19%

of Kenyas GDP. Kenya has

traditionally been an exporter

of a variety of manufactures to

the East African region. More

recently, it has begun to exportgarments to the US market. A

wide range of opportunities for

direct and joint-venture investment

exist in the manufacturing sector,

including the manufacture of

textiles and garments, the assembly

of automotive components and

electronics, and the manufactureof tyres, plastics, paper, chemicals,

pharmaceuticals, and metal and

engineering products for the

domestic and export markets.

Textiles and apparel

Within two years of qualifying

for the African Growth and

Opportunity Act (AGOA), Kenyas

exports of clothing and investment

in the textile sector have

experienced a remarkable growth.

There is a cotton-textile-apparel

supply chain in place, but only

the apparel part of it can be said

to be thriving or competitive.Cotton production is insufcient,

and the capacity to produce

high-quality fabric is lacking. The

option of sourcing fabric from

other AGOA-eligible sub-Saharan

African countries is limited, since

the region does not meet the

fabric requirements of its apparel

sub-sector because of supply

constraints and poor quality.

For quality fabrics to be supplied

locally and competitively,

substantial capacity building in the

lower parts of the cotton-textile

chain would be required.

Metal, Steel and Iron

The country possesses a broad-

based metal products industry with

various independent engineering,foundry and metalwork shops.

Opportunities exist in the

development of a nucleus foundry

making precision castings that can

then be processed into precision

components, aluminum cans, high-

strength reinforcement bars, ductile

iron rolls, and so on. Vehicle parts

19%


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and assembly The number of new

motor vehicle registrations has

been increasing, with about 34,000vehicles registered in. Products

such as tyres, tubes, batteries,

springs, radiators, brake pads,

cables, rubber components and

lters are now produced locally,

with a number of rms fabricating

bodies for commercial vehicles.

General Motors East Africa

has a supply chain development

programme and buys close to $20

million worth of local supplies.

There are opportunities in the

manufacture of components for

use by local assemblers and for

export to regional markets.

Electronics and electrical

equipment

Although Kenyas electronics

industry is still in its infancy,

a number of rms in theassembly, testing, repair and

maintenance of electronic goods

are in operation and are rapidly

increasing their scope to meet the

growing demands of the industry.

Investment potential can be found

in the production of motors,circuit breakers, transformers,

switch gears, irrigation pumps,

capacitors, resistors, insulation

tape, electrical ttings, integratedcircuit boards, and a wide range of

other electronic goods.

Plastics, chemicals and

pharmaceuticals

The plastics industry is welldeveloped and produces goods

made of polyvinyl chloride (PVC),

polyethylene, polystyrene and

polypropylene. A number of

pharmaceuticals are produced

locally in the form of tablets,

syrups, capsules and injectables,

but the bulk is imported. Many

opportunities in the manufacture

of chemicals, pharmaceuticals

and fertilizers remain unexploited.

These include the production of

PVC granules from ethyl alcohol;

formaldehyde from methanol;

melanine and urea; mixing andgranulating of fertilizers; cuprous

oxychloride for coffee bean

disease; caustic soda and chlorine-

based products; carbon black;

activated carbon; precipitated

calcium carbonate; textile dyestuff;

ink for ballpoints; and gelatincapsules.

19%The manufacturing sector

contributed about 19% ofKenyas GDP

The country possesses a

broad-based metal products

industry with various

independent engineering,

foundry and metalwork

shops

Some pharmaceuticals are

produced locally in the form

of tablets, syrups, capsules

and injectables

metal

medicine


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Informationand Communication

Infor


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rmationandCommunication


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Kenya is


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INFORMATION ANDCOMMUNICATIONSECTOR

The Government of Kenya

has made ICT a priority in its

economic recovery strategy

initiatives. With the incentives and

benets of other Countries that

Kenya has to offer, the following

areas can be investment in:

I.T. Enabled Service

Call Center for both inbound

and outbound calls

Wide range of Business Process

Outsourcing activities

Disaster Recovery

Software Development

Education and Training

ICT Habitats

Development of Broadband

Infrastructure

KNOWLEDGEINDUSTRy

To complement all the above

sectors, Kenya aspires to

attract internationally reputable

educational institutions,

Universities and training centers.

The following areas exist for

investment:

Science and Technology centers

IT Centers of Excellence

Training Centres for the

Hospitality industry

School Fashion and Design

R&D Institutes

Schools for Business and

International Marketing

Kenya isprogressively improving

an existing relativelygood telecommunications

infrastructure

low labor costs, and avery convenient time zone

to Western and Eastern

countries

extensive natural assets

for tourism that are being

exploited through the

deployment of ICTs

working to establish ICT

business incubators to

support existing and start-up

businesses

we offer

we have

we are


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WhyKenya?

Invest


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Strategically located in the

Eastern part of Africa, bordering

the Indian Ocean, Uganda,Tanzania, Ethiopia, Sudan and

Somalia, Kenya is poised to be an

outsourcing powerhouse. With

a population of slightly over

30 million people, an improved

business environment, easier

investment environment and aconvenient time zone (GMT +3),

Kenya positions itself as a leading

destination for call center, Business

Process Outsourcing, software

development and other related

activities.

Kenya is making great stridestowards becoming an outsourcing

giant in Africa. The practice of

outsourcing is evolving from

simply a cost cutting measure toa core strategic activity, aimed at

enabling companies to focus on

their core business. The internet

has created opportunities for

rms to outsource some functions

to companies outside their own

countries, taking advantage ofvarious benets such as different

time zones and lower labor costs.

Outsourcing to companies in

developing countries gives US &

European rms access to highly

skilled, well educated staff able to

provide high quality services at a

reasonable cost.

Investment Opportunities

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portunities


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0

Political Stabilit

Since independence, Kenya has

maintained remarkable stability

despite changes in its political

system and crises in neighboring

countries. Particularly since the

re-emergence of multiparty

democracy, Kenyans have enjoyedan increased degree of freedom.

A cross-party parliamentary reform

initiative in the fall of 1997 revised

some oppressive laws inherited

from the colonial era that had been

used to limit freedom of speech

and assembly. This improved

public freedoms and contributed to

generally credible national elections

in December 1997.

In December 2002, Kenyans held

democratic and open elections,

which were judged free and

fair by international observers.

The 2002 elections marked an

important turning point in Kenyas

democratic evolution in that power

was transferred peacefully from

the single party that had ruled the

country since independence to a

new coalition of parties

Under the presidency of MwaiKibaki, the new ruling coalition

promised to focus its efforts on

generating economic growth,

combating corruption, improving

education, and rewriting its

constitution.

Dnamic Priate Sector

The Private Sector has played an

important role in the economic

development of the country. It

has participated extensively in

the Manufacturing, Agriculture,Tourism and Financial Sectors of

the economy, and is now looking

towards ICT sector.

Harmonious Industrial

Relations

Kenya has enjoyed decades of

stable and harmonious industrial

relations in all sectors of the

economy with trade unions

existing in every sector.

Preferential Market Access

Given its Geographic position in

Africa, Kenya is a hub to the rest

of Africa and the World. A market

outlet of over a billion people

can be reached from Kenya, and

Kenya is an active member of most

regional and International tradeagreements.

Kenyas major trading partners

are the COMESA and EAC

members, the European Union,

Japan, the United Arab Emirates

and the United States. It is the

largest single exporter to the EAC

and COMESA. Geographically,

Kenya is well placed to be the

nancial and air transport hub of

the region, making the country an

ideal investment destination for

investors targeting regional markets.

The countrys strategic locationprovides easy access to the EAC

market, with a population of over

93 million, and COMESA, with a

population of 385 million.

In March 2004, Kenya, together

with Tanzania and Uganda, signed

the East African Community


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Customs Union Protocol, whichcame into force in January

2005. This agreement is a major

breakthrough in establishing the

region as a single market and

investment area. The Protocol

makes provisions that bind

Kenya, Tanzania and Uganda toremove existing barriers to trade

(tariff and non-tariff) in order

to move towards the institution

of a full free trade regime in ve

years. The Protocol provides

for a three-band external tariff

(0% for raw materials, 10% for

intermediate goods and 25% fornished goods). Membership in

the African, Caribbean and Pacic

States (ACP) and the Generalised

System of Preferences (GSP)

enables eligible agricultural

products Kenya to qualify for

preferential tariffs on exports tomember countries. Kenya also

has access to the US market,

provided by the African Growth

and Opportunity Act (AGOA).

Kenya is also a member of

the World Banks Multilateral

Investment Guarantee Agency

(MIGA), which offers insurance

against non -commercial risk, andof the International Centre for the

Settlement of Investment Disputes

(ICSID) between foreign investors

and the Government. The

countrys legal system is exible,

and investors have a choice of

entry mechanisms. The mostcommon methods of investing

in Kenya include the setting up

of a new corporate body, a joint

venture with existing investors, and

the acquisition of the whole or

part of an existing local company.

Conenient Time Zone

With a very Convenient Time

Zone (GMT +3), Kenya positions

itself as a leading destination

for call center, Business

Process Outsourcing, Software

development and other related

activities.

Reasons whyyou should

invest in

Kenya?

1. Qualified Work Force

2. Dynamic Private Sector

3. Harmonious Industrial

Relations

4. Preferential Market Access

5. High Returns

6. Convenient Time Zone

7. Political Stability


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Investm


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Why the Kenyan

Professionals?

1. Very good English and otherinternational languages

2. Well-trained in recognized

institutions of higher

learning locally and

overseas3. Highly-skilled, college

graduate staff

4. Highly computer-literate

5. Up to 40% lower

professional fees than in

Europe and North America

6. 24 hour availability

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FrequentlyAskedQuestions

Frequen


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What are the procedures ofestablishing a business in Kena?

Registration of a company in Kenya

with the Registrar of companies.

This could be:

A branch ofce of an overseas

company, or

A locally incorporated company

Registration could also be done

under the Business Names Act.

What are the approal and

licensing procedures of newinestment?

The Kenya Investment Authority

(KIA) will process and grant

approvals of new investment,

once proposals are submitted on

a prescribed application form.

Proof of company registrationmust be attached to the

application.

Where the investment may

have adverse impact on security,

health or environment, clearance

from the competent authorities

(such as, National Environment

Management Authority(NEMA), Public Health

authorities, etc) will be required

before approval is granted.

Also, clearance is required from

parent ministries for investments

in restricted areas before IPC

approval is granted. Theseinvestments comprise:-

Investments to produce

excisable goods (clearance from

Customs and Excise is a pre-

condition.

Investments in forest productsand mining (clearance from

Ministry of Environment and

Natural resources).

Investments in energy and

petroleum products (clearance

from Ministry of Energy)

Investments in the manufactureUnder Bond Programme (MUB)

(authority to manufacture under

bond must be obtained from

Minister for nance).

Investments in the tourism

industry (clearance from the

Ministry of Tourism).

Are there an restrictions to

doing business in Kena?

Equity restrictions are only in

telecommunications sector (a

minimum of 30% must be local).

Investments in the insuranceindustry must have local

participation.

Ownership of agricultural land by

foreigners is restricted.

Engagement in petty business by

foreigners is also restricted.

How are the liing conditions?

Securit

Security situation in Kenya is

satisfactory and not worse than that

prevailing in many parts of the world.

Health

Adequate health facilities of

international standards are available,

particular in urban areas.

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EducationHigh quality educating for investors

locating in Kenya is available for

their families. Overseas curricular

is available in most of the

international schools.

Entertainment

There are adequate world classentertainment facilities for the

comfort of the investor and his

family.

Communication

Adequate communication channels

by air, road, sea, postal and

telecommunication are available toany destination in the world.

What are the immigration

requirements?

Investors are given work

permits Class H for directorsand Class A for expatriate

employees. KIA can facilitate

Entry into Kenya will require

visitors to obtain business visa or

visitors visas.

Expatriate professionals,

engineers or technicians who are

required to install machineries ortrain local employees for a short-

period are issued with special

passes.

Health certicates are required

as proof of inoculation against

yellow fever from some

countries in Asia. This includescholera and malaria

For those issued with work

permits, passes are issued to

their dependants.

What opportunities are aailablefor inestment in Kena?

Kenyas economy is basically

agricultural 24% of GDP

is derived from agricultural

activities. Capacity is required

to boost production such as

in irrigation, better inputs andbetter technologies

Value-addition of agricultural

materials.

Infrastructure and utilities

Further investment required to

open up new areas and reduce

costs of production. This willbe done through occasioning

building

Housing 150,000 units need to

be build annually

Further private investments

required in health and education

sector

Investments in ICT and other

knowledge based industries

Research & Development

Exploration of natural resources,

petroleum and minerals.

Does the Goernment grant

incenties to inestors?

Incenties

MUB Program

100% investment allowance

Duty and VAT exemption on

machinery, equipments and raw

materials.

Frequent


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EPZ Programme

10 year tax holiday

Duty and VAT exemption

Single license

Exemption from stamp duty

Exemption for withholding tax

25% corporate tax for 10 years

after the rst 10 years expire

100%investment allowance

Dut Remission

Exemption on duties and VAT

on raw materials utilized to

process conrmed exports

orders.

Liberal Depreciation Rates

Loss-Carry forward

Business must recover previous

losses before paying corporate

tax.

Capital expenditure

Duties paid for capital

expenditure in excess of US$

70,000 can be recovered from

corporate tax.

Capital goods and basic raw

materials are zero-rated.

Tourism

Investments in tourist hotels can

apply for waiver of duties andVAT on

Foreign investors are allowed

to bring in cars for personal use

duty free

100% investment allowance

for new investments inmanufacturing and tourist hotels.

25% corporate tax for

companies issuing initial public

offers in the Nairobi Stock

Exchange.

Computers are duty free

What taxes are leied b the

goernment?

Income Tax

Corporate tax 30% for local

companies, 37.5% for branch

overseas of foreign companies

Withholding tax 5%

Pay-as-you-earn: graduated up to

a maximum of 30% of income

Customs Duty

4 bands from 0 35%

Excise

Tax applicable to cigarettes,

alcohol, petroleum,

confectionaries

VAT - 16% Standard Rate.

Do Kenan produced products

hae access to other markets?

Unrestricted entry into USA

market under African Growth

and Opportunity Act (AGOA) for

specied Kenyan products.

Market access to the COMESA

market of 400 million people.

Market access to the EAC market

of 80 million.

Market access to the European

Union under the Lome Cotonou

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Agreement.

Many Kenyan products have

access to other markets in

Europe, USA, and Japan under

the GSP.

Are there double taxationsagreements and Inestment

Protection Agreements between

Kena and other countries?

Kenya has concluded agreements

with EU, Germany, India, Belgium,

Switzerland, etc. Other earlier

agreements are being revised andothers negotiated.

What has the goernment

done to reduce corruption,

dilapidated infrastructure, and

insecurit?Declared zero-tolerance to

corruption

Established an anti-corruption

police unit.

Emphasized on the rule of law

To enhance transparency in

the licensing process throughenactment of an Investment

Act.

Streamline government

procurement procedures.

(Procurement act enacted)

Enhancing accountability in the

judicial system.

What customs procedures are

applied when goods are being

imported?

Import Declaration Form (IDF)must be completed in respect of

the consignment.

Proforma invoices showing the

value of the goods.

Specication of the goods and

packing list.

Bill of lading.

Inspection certicates in respect

of goods exceeding Kshs.

500,000

Do ou hae labour laws inKena ? What are the important

proisions these laws?

Minimum wages set by the

government depend on skills.

It is specic for different urban

areas. (for example in Nairobi,

Mombasa and Kisumu generallaborers should be paid a

minimum of Kshs. 3,905, while

artisans Grade 1 are supposed

to be paid a minimum of Kshs

8,813 per month.

Workers are allowed to join trade

unions related to their sectors ofwork

Wages are negotiated through

tripartite agreements (between

trade unions, government and

employers.

Disputes are settled through theIndustrial Court .

Are foreign inestments

protected in Kena ?

The constitution of Kenya

guarantees protection of life andprivate property.

Frequentl


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The Foreign InvestmentProtection Act guarantees

against expropriation of private

property by government. If

expropriation ever occurs, it will

be for public good and prompt

compensation must be given.

Kenya is a signatory to andMember of the Multilateral

Investment Guarantee Agency

(MIGA) an afliate of the World

Bank which guarantee investors

against loss of Investment

to political problems in host

countries.

Kenya is also signatory to

International centre for

Settlement of Investment

Disputes which is a channel forsettling disputes between foreign

investors and host governments.

Do ou hae adequate business

support infrastructure?

Banks, insurance, transport,

professional serices legal,

engineers, human resource with

adanced skills, international

languages, research institutions.

Kenya has a well developed

professional services sector with

some multinational professional

companies such as KPMG, E&Y

etc having regional ofces in

Nairobi. most major insurance

companies, Banks etc have a

presence in Kenya.

lyAsk

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0


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The Emerging Information&

Communication Technology Sector

ICT SECTOR OvERvIEW


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In the past decade, Kenyas hashad one of the largest and fastest

growing Internet sectors in

Africa. Since the internet came to

Kenya in 1994, the country has

experienced phenomenal growth

in its use. There are now numerous

internet hosts, close to 100 licensed

Internet Service Providers and over

quarter million internet users in the

country.

Information Technolog

The country is also rapidly gaining

a reputation as one of Africas

forerunners in the development of

Information Technology. Kenya

has always been in the forefront

of developments in Information

Technology and is emerging as

one of Africas leaders in this area.

Indeed, Information Technology isone of the fastest growing sectors

in the country. In recent years,

there has been a considerable

drop in the cost of hardware and

software, and this has further led to

the growth of this sector.

In the past decade, Kenyas hashad one of the largest and fastest

growing Internet sectors in

Africa. Since the internet came to

Kenya in 1994, the country has

experienced phenomenal growth

in its use. There are now numerous

internet hosts, close to 100

licensed Internet Service Providers

and over quarter million internet

users in the country.

Kenya which has always been

in the forefront of Information

Technology developments in

Africa, establishing the rst public

Internet peering point for ISPs in

Africa (outside of South Africa).

The country also recently rolled

out its rst national Internet

backbone connecting six cities with

the use of digital switches, ber-

optic cable and satellite services.

Telkom (K) Ltd is also in theprocess of laying ber optic cables

to facilitate faster connections. The

effect of all these developments

will be to reduce further the cost

of internet access, thereby enabling

universal use of the medium in

most parts of the country

Information Technology is nowin use in various sectors of

the economy such as banking,

accounting, medical services,

transportation, mining, research,

defense, agriculture, and

communications. Key Kenyan

para-statal organizations and

some government institutions are

also progressively making use of

Information Technology and there

is a strategy in place to link all

Government departments, agencies

and service providers with a view

to providing efcient, effective and

citizen focused public services on a24/7 basis.

Telecommunications

Infrastructure

In July 1999 the government

ofcially liberalized thetelecommunications sector and

the Communication Commission

of Kenya (CCK) was formed to

regulate the sector.

It is felt that these initiatives will

highly improve the countrys

telecommunications infrastructure,

ICT SECTOR OvERvIEW

TheEmerg


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and ensure competitiveness ininternational markets

Successful use of information

technology in any given

country is driven by the state

of the telecommunication and

information infrastructure

available in that country. Kenyais one of the fastest growing

Mobile markets in Africa. Within

a 5 Year period Kenya growth

in the Mobile industry has

managed to connect 5 million

subscribers. Since the 1970s the

Kenya government has shown a

very keen interest in improving

telecommunications in the country,

and has in fact recently set a target

to increase Tele-density in both

urban and rural areas by about ve

times by the year 2015.

gingI

nformation&Commun

icationTechnologySec

tor

MARKET STRUCTURE


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1 . Facilit-based PublicTelecommunications Serice

Proiders

Regional Telecom Operators

(Regional Carrier)

Long-Distance Telecom

Operators (Inter-Regional

Carriers)

International Telecom

Operators (International

Carriers)

Local Loop Providers (Local

Loop Operators)

2. Land Mobile based radio

communication sericesCellular Mobile Telephone

Service Providers (Mobile

Operators)

Public Radio Paging Service

Providers (Paging Service

Providers)

Commercial Trunked Radio-

Communications Network

Operators (CTROs)

Private Radio Paging

Networks

Private Radio Trunking

Networks

Private Two-Way Radio

Networks

3. Fixed and mobile satelliteserices

Public Commercial Satellite

Uplink/Downlink Gateway

Services(Gateway Services)

Private VSAT network

operator

Commercial VSAT Network

Operators

Global Mobile Personal

Communications via Satellite

(GMPCS) Gateway Services

Operator

Satellite-based Paging

Network and ServicesGlobal Mobile Personal

Communications via Satellite

(GMPCS)

Interactive VSAT terminal

(station) licence

VSAT terminal for radio

determination and related

services

VSAT terminal for space

research and related services

VSAT terminal for amateur

satellite services

4. Enhanced Facilit basedcommunication networks and

serices

Public Data Network

Operators (PDNO)

Private xed

telecommunications data

networks

Broadcast signal distributor

Cable Television Networks

5. Other facilit based proiders

Infrastructure by utility service

providers, e.g. electricity, gas,

railways, oil, etc

6. Internet facilities and serices

Internet Service Providers

Internet Backbone & Gateway

Services(IB& GS)

Internet Exchange Point

Services (IXP)

MarketStru


65/72

7. value added sericesPremium rate service providers

Audio text service providers

Store and forward service

providers

Electronic data interface

service providers

Premium Rate Service Providers

Credit Card Validation Platform

Services Providers

Number portability Platform

Services Providers

Call Centre Operators and

Service Providers

Other new types of Value

Added Service (VAS) Providers

8. Resale serices

Bandwidth/leased circuit resale

service providers

National payphone service

providers

National telecommunications

Access Bureaux (including

cybercafs, Telephone Bureaus,

Multi-purpose Community

Telecentres (MCTs)

9. Telecommunications dealersand Contractors Licence

Telecommunications dealers

licence

Telecommunications

Contractors licence

10. Telecommunications

technical personnel licence

Telecommunications

Engineers licence

Telecommunications

Technicians licence

11. Electronic Commerce

Market Structure National Certication Service

Provider

International Certication

Service Provider

ucture

KENyA FIBER PORTION OF THE EAST AFRICA BACKHAUL TRANSMISSION LINK


66/72

Basic EADTS Conguration is a

SDH transmission system: from

Mombasa to Malaba (Kenya-

Uganda border) through Nairobi

with Spurs to major towns within

the country.

Phase 1 of the project consists

of system from Nairobi to

Mombasa.

Contract for this phase has been

awarded and work is expected to

nish by April 2006.

Project Status

Phase 2 of the project consists

of system from Nairobi to

Malaba (Kenya Uganda

border).

Telkom Kenya in partnership

with Kenya Power & LightingCo. Ltd are in the process of

jointly developing phase 2.

Project is planned to be

completed ahead of of the

EASSy System as it is one of

the regional backhaul linksupon which EASSy will heavily

depend.


67/72

Malaba

Bungoma Eldoret

TimboroaMuhoroni

Kisumu

KerichoLongonot E/S

Naivasha

Nakuru

Nairobi

Mtito Andei

Voi

Mombasa

Kenya Fiber Portion of The EastAfrica Backhaul Transmission Link


68/72

References & websites

Referencesan


69/72

www.information.go.ke - ministry portal

Ministry of Information and Communications

www.ict.go.ke - industry portal

Ministry of Information and Communications

www.tradeandindustry.go.ke - Ministry of Trade and Industry

www.foreignaffairs.go.ke - Ministry of Foreign Affairs

www.tourism.go.ke - Ministry of Tourism and Wildlife

www.planning.go.ke - Ministry of Planning and National Development

www.cbs.go.ke - Central Bureau of Statistics

www.investmentkenya.com - Kenya Investment Authority

www.nationaudio.com - Daily Newspaper

www.eastandard.com - Daily Newspaper

www.yellowpageskenya.com - Kenya Yellow Pages

www.ICTPark.com - One Stop Shop for Outsourcing

Useful Websites

nd

Websites

INSTITUTIONS DISCUSSED IN THIS BOOK


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0

Inestment Promotion CentreNational Bank Building, 8th Floor

Harambee Avenue,

P.O. Box 55704 Nairobi, City Square, 00200

Tel.: 254 20 221 401-4

Fax: 254 20 243 862

Websites: www.investmentkenya.com

www.ipckenya.org

Export Processing Zones Authorit (EPZA)

P.O. Box 50563-00200, Nairobi

Tel.: 254 20 271 2801/6

Fax: 254 20 271 3704

E-mail. [email protected]

[email protected]

Website: www.epzakenya.com

Ministr of Information and Communication

Kenya Bureau of Standards

P.O. Box 54974, Nairobi

Tel.: 254 20 502 210-2

Fax: 254 2503 293

E-mail: [email protected]: www.kebs.org

Ministr of Finance& Kena Reenue Authorit

Treasury Building, Nairobi

Times Towers, Haile Selassie Avenue,

Tel.: 254 20 310 900/315 553

Website: www.treasury.go.ke

Nairobi Cit CouncilCity Hall, City Hall Way, Nairobi

Tel.: 254 20 224 2 82

Fax: 254 20 218 291/214 780

Ministr of Planning and National Deelopment

Treasury Building, Nairobi

Tel.: 254 20 338 111Website: www.planning.go.ke

Principal Immigration Ofcer

Immigration Department

Nyayo House, Nairobi

Tel.: 254 20 333 531

Registrar of Companies

Sheria House, Harambee Avenue, Nairobi

Tel.: 254 20 227 461

Ministry of Trade and Industry

Teleposta Towers, Nairobi

Tel.: 254 20 315 001-7

Website: www.tradeandindustry.go.ke

Telkom Kena Ltd

Telposta Towers, Kenyatta Avenue

Tel.: 254 20 323 2000

Fax: 254 20 243 338

E-mail: [email protected]

Website: www.telkom.co.ke

ABBREvIATIONS

Institutionsdi


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Central Bank of Kena (CBK)P.O Box 60000, Nairobi,

City Square, 00200, Kenya

Tel: (254) (20) 226431 / 246000

Fax: (254) (20) 216945 / 340192


Website: www.centralbank.go.ke

Kena Inestment Authorit (KIA)

P.O Box 55704, Nairobi,

City Square, 00200, Kenya

Tel: (254) (20) 221401 /4

Fax: (254) (20) 336663


Website: www.investmentkenya.com

Capital Markets Authorit (CMA)

P.O Box 74800, Nairobi, City Square, 00200 Kenya

Tel: (254) (20) 221910 / 221869

Fax: (254) (20) 216681

Email: [email protected] or

[email protected] or [email protected]

Website: www.cmake.org

Nairobi Stock Exchange (NSE)

P.O Box 43633, Nairobi GPO, 00100, Kenya

Tel: (254) (20) 230692

Fax: (254) (20) 224200


Website: www.nse.co.ke

BPOBusiness Process OutsourcingCSKComputer Society of Kenya

CSO Civil Society Organization

EassEastern Africa Submarine Cable System

EPCExport Promotion Council

EPZAExport Processing Zones Authority

EPZExport Processing Zones

FDIForeign Direct Investment

GDPGross Domestic Product

ICTsInformation Communication Technologies

IPCInvestment Promotion Centre

ITInformation Technology

KICTANETKenya ICT Action Network

MDGsMillennium Development Goals

NCSNational Communications Secretariat

NGONon-Governmental Organization

SMESmall and Medium EnterpriseTechnoParksTechnology Parks

TESPOKTelecommunications Service providers of

Kenya

voIPVoice-over Internet Protocol

vSATVery Small Aperture Terminal

isc

ussedinthisbook


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Kenya is Running

cs css K

Waiyaki Way, P.O Box 14448, Westlands, 00800 Nairobi, Kenya

Phone: +254 0(20) 4242209

Fax: +254 0(20) 315147


t ms i & cs

Telsposta Towers, 10th Floor

P.O Box 30025-00100, Nairobi, Kenya

Phone: +254 0(20) 251152, 250517, 250978

Fax: +254 0(20) 249664


ict in kenya

Documents