Kenya attracts a number of our clients, thanks to its strategic location at the heart of the East African Community. Its increasing ties with China bode well for the country’s trade and investment. Kenya is also allied with the US as part of the Horn of Africa region. The country’s economy is broad-based, reducing its vulnerability to commodity price shocks. Technology stands out as a rapidly growing sector in Kenya.

We keep our clients informed of the latest market moves and political developments as part of our 'top-down' and 'bottom-up' perspective. Clients also benefit from in-depth analysis on 15 of Kenya’s most important industries. We provide interactive data and forecasting alongside detailed and risk-assessed analysis from our expert teams. We aim to keep you ahead of the curve, so you can do business with ease in Kenya.

Country Risk

Kenya Country Risk

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Core Views

  • The April 2 attack by al-Shabaab on Garissa University in north eastern Kenya highlights the country's perilous security outlook, which is unlikely to improve over the coming months.

  • The politicization of sharp ethnic divisions remains the key threat to Kenya's long-term political stability. Terrorism linked to Kenya's military involvement in Somalia is likely to remain a risk, but it does not pose a systemic threat to political stability.

  • Despite a tense security situation, we believe that a booming consumer story, a robust outlook for investment and lower oil prices will see real GDP growth in Kenya expand at around 6.5% annually over the next few years.

  • The Kenyan economy will receive an added boost from lower oil prices over the coming quarters. We believe that Kenya - a net fuel importer -...

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Kenya Operational Risk Coverage (9)

Kenya Operational Risk

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BMI View: Kenya's position as an economic and financial hub in East Africa is seriously threatened by rising levels of crime and terrorism, which the security services, crippled by rampant corruption, are struggling to contain. This poses a significant risk to the safety of foreign workers and business property, and has also had a severe impact on the Kenyan tourism industry, which previously offered one of the most promising opportunities for investment. In addition, businesses in the country are hindered by inefficient bureaucracy and high levels of tax. Consequently, at present the business environment in Kenya is not favourable to foreign investors. Nevertheless, bureaucratic reform and infrastructure developments should improve the ease of doing business in the country over the medium term, and further progress...

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Kenya Crime & Security

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BMI View: Since the mid-2000s Kenya has faced increasing levels of crime and terrorism, fuelled by ethnic and religious tensions, high unemployment and unrest in Somalia spilling over the border. Foreign workers and tourists in Kenya face a wide range of risks due to high levels of crime, violence related to terrorist activity and the lack of capacity within the security services. Kidnapping remains a threat to foreigners, and there is also the potential that they will be a target for other forms of terrorist attacks. Consequently, Kenya performs poorly in the overall BMI Crime and Security Risk Index, with a score of 23.5 out of 100 ranking it 39th out of 48 states in Sub-Saharan Africa (SSA).

High levels of...

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Kenya Labour Market

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BMI View: The main advantage for businesses in Kenya, in terms of labour market risks, is the quality and variety of options available in the workforce in comparison with two of its neighbours and closest competitors for investment, Uganda and Tanzania. Kenya benefits from better education, in terms of quality and enrolment rates, and more widespread literacy among the working population. This means that businesses in the country have less trouble finding adequately skilled staff, face lower costs in terms of training, and have to bring in fewer foreign workers than companies in Uganda and Tanzania. This makes Kenya an attractive location for investment in East Africa. However, we caution that substantial risks remain present in the labour force, mainly stemming from poor healthcare, high labour costs and powerful trade unions. In light of these considerations...

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Kenya Logistics

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BMI View: A well developed logistics network in comparison to its regional peers gives Kenya a significant advantage in its bid to become the primary trading hub in East Africa and bolsters its attractiveness to investors. The country's transport network is of relatively high quality and offers a variety of options for internal supply chains, including road, rail and air transport. Major investment in infrastructure projects is also underway, which will further diversify logistics options and allow the country to become the primary destination for international shipping in the region. That said, Kenya's logistics network remains beset by a number of risks which indicate that many improvements are still required. In particular, utilities infrastructure is inadequate and unreliable, resulting in frequent blackouts,...

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Kenya Trade & Investment

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BMI View: Although Kenya's economy is one of the best developed in Sub-Saharan Africa (SSA, we highlight that the country's investment and business environment is hindered by high levels of tax and bureaucracy, widespread corruption in state institutions, and poor enforcement of intellectual property protection. Therefore, while the government is open to foreign business ventures, and there are opportunities for investment, particularly in the manufacturing industry, potential returns may be limited. Consequently, Kenya performs poorly overall in the BMI Trade and Investment Risk Index, with a score of 37.8 out of 100 ranking it behind neighbours Uganda and Rwanda, but above Tanzania, in 16th place out of 48 countries in SSA...

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Kenya Industry Coverage (16)

Agribusiness

Kenya Agribusiness

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BMI View: Kenya will underperform its regional peers with regard to development of the agricultural sector. Despite COMESA granting a one-year extension to the sugar import safeguard, we expect the country's sugar sector to remain regionally inefficient and therefore to post very limited growth over the coming years. We continue to forecast steady coffee production growth in 2014/15 due to relatively high domestic prices and improvement in husbandry techniques.

Agribusiness Market Value
BMI Market Value By Commodity (2011-2019)

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Autos

Kenya Autos

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We hold an upbeat outlook for the Kenyan automotive sector as a result of its accelerating private consumption rates, rising fixed investment and its status as the commercial hub of the fast-growing East African Community (EAC). In light of this, BMI forecasts that total first vehicle registrations growth over 2015-2019 will average 10.6%, with significant upside risks to our forecast.

BMI's Country Risk team continues to forecast strong growth in Kenya over our five-year forecast period to 2019. We currently forecast real GDP to grow 6.4% in 2015 and 6.3% in 2016, making Kenya the 10th fastest growing country in the Africa region, a significant milestone considering the much lower base from which other most other Sub-Saharan Africa countries are growing. We believe rising private consumption will account for the bulk of real growth, with consumption forecast to increase by 5.0% in 2015...

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Commercial Banking

Kenya Commercial Banking

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Commercial Banking Sector Indicators
Date Total assets Client loans Bond portfolio Other Liabilities and capital Capital Client deposits

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Food & Drink

Kenya Food & Drink

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BMI View: Consumer spending will be the key driver of economic growth in Kenya and we predict that spending by Kenyan households will rise in real terms by 5.0% in 2015 and 6.0% in 2016. This rise is the result of a growing population, rising incomes due to urbanisation and growing financial inclusion spurred by the boom in mobile financial services. The outlook for Kenya's food and drink industry continues to be positive, with strong growth expected over the short-to-medium term. The success of premium-chain coffee shops highlights the likelihood that premiumisation will play a major part in the growth of many segments of the Kenyan food and drink industry. Going forward, the mass grocery sector is likely to be a key growth area...

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Freight Transport

Kenya Freight Transport

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Although Kenya's real GDP grew 5.8% year-on-year (y-o-y) in Q2 2014, according to data released by the Kenya National Bureau of Statistics and reported by Reuters, the country's freight industry will nevertheless face headwinds in the form of the poor performance of Kenya's key export sectors over the coming years.

Kenya's key export sectors will continue to post relatively weak growth over the medium term, exerting a drag on the country's trade balance, as well as the freight industry. We predict that the deficit - and the wider current account deficit - will gradually narrow towards the end of our 2014 to 2018 forecast period due to slower import growth.

Figures from the Central Bank of Kenya (CBK) indicate that export revenues were, in local currency terms, 3.3% lower in the first six months of 2014 than in the same period in 2013. The falling value of the Kenyan shilling means that shipments fell by 5.0% in US...

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Information Technology

Kenya Information Technology

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BMI View: The oil-producing African nations draw a large portion of government revenues from petroleum exports, exposing them to the sharp decline in crude oil price in late 2014 and early 2015. BMI expects oil prices to remain depressed throughout our forecast period to 2019, with Nigeria to be among the most vulnerable markets to lower oil prices. This will weigh on public spending and private investment, including investments in new IT products and solutions.

Headline Expenditure Projections

Ghana

Computer Hardware Sales: GHS1.027bn in 2015 to GHS1.2bn in 2016, +16.8% in local currency terms. The government's ambitious Basic...

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Infrastructure

Kenya Infrastructure

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BMI View: Kenya's construction and infrastructure sector is forecasts to grow at 9% year-on-year in 2015 and will maintain positive growth over our 10-year forecast period to 2024. Insecurity in parts of the country as well as the devolution of fiscal powers will see delays in investments to infrastructure and the residential and non-residential sectors. The successful issuance of Kenya's eurobond shows long-term interest in the market is strong however and bodes well for the government's ability to fund infrastructure investment.

Key Developments

  • The governments of...

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Insurance

Kenya Insurance

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BMI View : Kenya's insurance industry presents both established domestic firms and international insurers, new to the market, with a range of opportunities for growth. The life insurance sector is growing from a low base, and with household income rising demand for life insurance is expected to increase steadily throughout our forecast period to 2019. The larger non-life sector is also benefiting from rising household income, and an increasing awareness of the benefits offered by a range of non-life insurance products such as personal accident and property cover.

Domestic economic growth is boosting demand for a range of life and non-life products, with rising rates of private financial consumption and a growing middle class indicating increased expenditure on health, motor, property and retirement related products in 2015. BMI is...

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Medical Devices

Kenya Medical Devices

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BMI Industry View: We expect the Kenyan medical device market to grow by a CAGR of 14.4% over the 2013-2018 period, alongside impressive GDP growth and strengthening imports. Almost all medical devices are imported, as domestic production is limited to basic consumable items, a situation that is expected to remain unchanged for the foreseeable future. Demand for medical devices remains high as many health facilities require modernisation.

Headline Industry Forecasts

  • In 2013, the Kenyan medical device market was estimated at USD122.7mn, or USD2.8 per capita. This market size is comparable to Oman; in per capita terms, the market is similar to the Philippines. The market is expected to expand at a CAGR of 14.4% over the 2013-...

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Pharmaceuticals & Healthcare

Kenya Pharmaceuticals & Healthcare

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BMI View: While the Kenyan government is focused on improving its population's access to healthcare, drugmakers and medical device companies looking for a rapid return on investment will face challenges. Inefficiencies such as the lack of suitable infrastructure and delayed completion of health facility upgrades, the lack of human resources such as nurses and doctors, and a slower than anticipated uptake of the national health insurance programmes will inhibit spending on healthcare and the success of initiatives such as the waiving of maternity fees, the achievement of healthcare-related Millennium Development Goals and the success of healthcare projects that are part of Kenya Vision 2030.

Headline Expenditure Projections

  • Pharmaceuticals: KES63.75bn (USD725mn) in 2014 to KES73.36bn (USD791mn) in 2015; 15.1...

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Power

Kenya Power

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BMI View: Kenya is investing heavily in expanding power capacity and generation and there are a large number of power infrastructure projects in the pipeline. The country is focusing on diversifying its energy mix, reducing the reliance on hydropower, introducing gas fired thermal plants and expanding the use of renewables, particularly geothermal, wind and solar power and a number of plants are expected to come online during our ten-year forecast period to 2024.

Kenya presents a generally attractive investment destination, with demand for electricity increasing rapidly, supported by a government programme to increase connectivity across the country. As a result many foreign power construction and investment firms are active in the market. Power generation is expected to almost double over the forecast period. However, we caution there are downside...

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Renewables

Kenya Renewables

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BMI View: The Kenyan government's push to improve electrification rates, expand renewable energy, improve electricity trade links and reduce its reliance on hydropower and diesel are strategically sound moves that will benefit the country both economically and socially over the coming decade. We hold a particularly optimistic outlook towards the country's geothermal industry, as capacity comes online and the government continues to invite proposals for the construction of new geothermal power plants.

Kenya's energy policy and efforts to promote renewable technology reflect the need to diversify the country's electricity mix away from expensive imported oil and unreliable hydropower. Kenya has the potential to generate electricity from almost all types of renewable energy resources - including geothermal, wind and...

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Retail

Kenya Retail

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BMI View: Increasingly sophisticated consumer lifestyles, urbanisation and double-digit economic growth are helping to drive retailing growth in Kenya. We are forecasting steady growth in household spending, which we expect to average a respectable 10.16% over our forecast period. Government initiatives are also helping support retail expansion, with infrastructural improvements making the country increasingly attractive to international retailers.

Kenya's economy has shown impressive year-on-year economic growth over the past few years. We currently forecast real GDP growth in 2015 to reach 6.32%, slowing slightly to 6.27% in 2016. The country has a relatively stable political environment, combined with rich natural resources and this is helping support our long-term outlook for Kenya's economy. Unsurprisingly, economic growth has started to benefit households with a rising,...

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Shipping

Kenya Shipping

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BMI View: Our outlook for the Kenyan maritime sector is in line with that of the region - strong throughput growth forecasts as a result of robust economic activity and large-scale port developments. The continued expansion of the port of Mombasa, coupled with the imminent completion of the Lamu port, bode well for the development of Kenya as a strategic East African trade hub.

For 2015, we continue to hold a strong growth outlook for Kenya's ports and shipping sector based on three main factors: strong domestic growth in Kenya itself, a dynamic East African region (important because Mombasa acts as a trade gateway for many of Kenya's neighbouring countries) and, finally, continuing signs that Mombasa port's ongoing congestion problems are easing.

BMI remains bullish about...

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Telecommunications

Kenya Telecommunications

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BMI View: Kenya's telecoms sector is set to mature significantly over the coming years, as consolidation in the mobile sector eases price competition and enables operators to focus more on higher quality and a broader range of services. In the wireline sector, healthy competition between several well-funded operators is resulting in continued investment in fibre networks, to cater to consumer, enterprise and government demand for broadband services capable of supporting data-intensive services such as video on demand and cloud computing. Although the wireless sector too is expected to exhibit strong growth over the forecast period, BMI notes that recent state intervention in the mobile sector is a worrying development. On the upside, investments into the 3G/4G sector are expected to bode well for the data services consumption.

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Tourism

Kenya Tourism

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BMI View: The Kenya tourism report looks at a range of key indicators in this well established, yet struggling, tourism destination. A decline in the security situation is impacting heavily on the tourism market, particularly along the coastline, and deterring potential investors and visitors alike. Although we expect to see a return to growth towards the end of the current forecast period, it will be some time before Kenya regains previous inbound tourism highs. In the meantime, the outbound tourism market offers more attractive growth prospects based on healthy domestic economic growth.

Kenya has long been established as a popular safari holiday destination and benefits from having diverse source markets including the United Kingdom, the Netherlands, the United Arab Emirates, India and South Africa. The country's tourism market has however been in decline for...

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