Role of Government in Promoting andSupporting Private Sector Development -------- KENYA
Vision 2030 National forward looking development blueprint launched by His Excellency Mwai Kibaki in 2006 Covering the period 2008-2030, implemented in 5 year Medium Term Plans Aims to transform Kenya into a newly industrializing, middle income country with an annual average growth rate of 10% Anchored on 3 pillars – economic, social and political governance Growth momentum has been strong and underpinned by structural reforms, a new constitution and a dynamic private sector Social and political pillars to address necessary reforms to ensure realization and sustainability of economic goals
Economic Pillar Aims to improve the prosperity of Kenyans through an economic development programme, covering all regions of Kenya and achieving an annual average GDP growth rate of 10% per annum Sector based: Tourism Agriculture Wholesale and Retail Manufacturing Business Process Offshoring / IT Enabled Services Financial Services Sectors identified based on potential to make a widely inclusive economic impact and feasibility of unlocking potential for economic growth, employment and poverty reduction
Creating an Enabling Environment for PrivateSector Development Increased the ease of starting a business and obtaining licenses through ‘one- stop-shop’ process Incentives to encourage investment through corporate tax relief for investments , training subsidies, establishment of free ports and free trade zones Developing modern trans-country infrastructure Roads Railways Ports Airports Water and sanitation Telecommunications
Creating an Enabling Environment for Private SectorDevelopment Increasing energy supply by encouraging more private generation of power and separating generation from distribution Geothermal Coal Renewable energy- solar, wind Connecting Kenya to energy – surplus counties in the region Land reform Protection of property rights, computerization of land regimes, facilitating the process of land administration, establishment of national spatial data infrastructure to track land use patterns; enhanced legal framework for faster resolution of land disputes Public Sector Reform an efficient, well trained and motivated public service that values transparency Accountability to Kenyan citizens based on results based assessments
Creating an Enabling Environment… Reforming governance institutions and regulatory frameworks. Human Resource Development Training Subsidies Establishment of Technical Training Institutions Closer collaboration between industry and training institutions Security Police sector reform and training
SEZ Incentives- free ports, trade zone, agriculture and tourism zones, andscience and technology parks .. Top income and corporate 30% tax rates Fiscal Incentives 10 year corporate income tax holiday and a 25% tax rate for a further 10 years thereafter Dividend Taxation 10 year withholding tax holiday on dividends and other remittances to non-resident parties VAT Perpetual exemption from VAT and customs import duty on inputs including energy. VAT exemption also applies on local purchases of goods and services supplied by Kenyan companies. Other Incentives Perpetual exemption from payment of stamp duty on legal instruments. 100% investment deduction on new investment in buildings and machinery, applicable over 20 years Training incentives Entire cost of training with (DIT certified trainer) can be reimbursed. Registration with Department of Industrial Training(DIT) is required
Infrastructure DevelopmentRoads, railways, seaports, airports, water, sanitation and telecommunications •30 berths, 18m deep, 1000 acres Lamu Port •Serve Kenya, EAC, Southern Sudan, Ethiopia, Central Africa Republic, DR Congo, Congo Brazzaville and Chad •Largest port on the continent serving as a trans African Port •Will also serve as a trade corridor to Juba after construction of standard gauge rail track Lamu-Sudan- •Shortest distance to the sea for Southern Sudan. Objective to export oil from Sudan. Ethiopia Record •Remote and dry Northern parts of Kenya to be opened for development. (Hola: irrigation; Transport (LAPSSET) Wajir: cement deposits; Lamu West: titanium; Mwingi & Matuu : coal & iron ore deposits . Corridor Project Lamu port to provide easy access to the mines for shipment. •Isiolo: resort city , free economic zone; intersection point for the three corridor routes. Ethiopia •Increased volume of Ethiopian goods transiting the ports in Kenya •Reduction of transport and shipment costs between Kenya & Ethiopia •Reduced transit time for imports and exports •Promoting trade & regional integration and increasing intra-regional trade between Ethiopia and Kenya Modernization of •Reduce inter-regional freight transport costs from 45-15% the EAC Railways •Meet increased transport demands that are projected to be in excess of 30 million tonnes. •Railway will be a high capacity and able to sustain trains hauling a minimum of 4,000 tons traveling at an average speed of 120 km/h.
Infrastructure DevelopmentRoads, railways, seaports, airports, water, sanitation and telecommunications Airports and Resorts International airports to be constructed in Lamu, Isiolo and Lokichogio; three important centers along the new transport corridor, whichwill also be made resort centers Upgrade of the existing Jomo Kenyatta International Airport Oil Refinery Oil refinery with a capacity to process 120,000 barrels per day to be constructed at Lamu Refinery to refine crude oil from Southern Sudan and other parts of the East African region. Power Generation •Kenyan electricity producer, Kengen, opened its 15 billion public infrastructure bond offer to investors in September 2009. •Kengen received subscriptions worth 335 million, meaning the issue was oversubscribed by 68 % •Funds from the bond will be invested in generation of diverse sources of energy. •80% of the capital will used in generation of thermal power •20% will go to upgrade of hydo energy e.g. Tana River Delta power plants.
Vision 2030 Sample Projects Development of five SME •Establishing processing parks in five strategic locations with raw materials hinterlands. Parks •47 Constituency Industrial Development Centers one in each county have been identified for upgrading to SME Parks. Creation of Producer •To create 1000 to 1500 Producer Business Groups countrywide Business Groups •PBGs at the producer level which will in turn feed large wholesale hubs principally in rural areas. Catchment area is Central & Eastern provinces and a total number of 465 producer business groups have been formed. •Increased wholesale business activities and increased efficiency through sharing production skills and resources will be achieved. Building Tier Markets •Tier 1 retail market build •Creation of jobs •Increased economic activity in area Deepening of Capital • Development of new products & services progress Markets •A SME segment is being established at NSE •A roundtable meeting held with Islamic community to chart way forward for development of Sharia capital compliant market products Development of Special •Will facilitate importation of necessary raw materials and exporting of finished goods Economic Zones •Project will include agro-industrial zone incorporating activities such as blending and packaging of fertilizers, teas and coffees, and a consolidated meat and fish processing facility to encourage growth of offshore fishing. Establish a major BPO park – •Establish a modern ICT Park in Nairobi with reputable local and International BPO suppliers info City •Promote Kenya as a BPO services from Kenya globally •Increase ICT talent pool to meet the increasing demand and provide a set of BPO specific incentives to attract investments.
Case Study : ICT Sector Establishment of Kenya ICT Board in 2007 to advance the development of the ICT sector and use ICT as an enabler in achievement of national development Goal for Kenya to become a top 10 global ICT hub by 2030; a top 3 BPO destination for Africa by 2012; and grow IT contribution to GDP from 3% to more than 10% in 3 years via: Governance BPO/ITES ( create a sustainable environment for investment in BPO/ITES Assume role of managing BPO parks Drive local industry development in ITES Communications Bill to liberalize IT sector and Data Protection Bill to address IT and IP security Application of PPP framework to encourage joint ventures with local and international invetors
National Optic Fibre Network has created world class telecoms infrastructureTerrestrial fibre network Undersea cables Foreign Name Owner/ operator landed terminal Seacom ▪ Seacom Intl. June France (65%) 2009 and ▪ Kenyan Egypt Investor (35%) Teams ▪ GOK (20%) Sept UAE ▪ Etisalat (15%) 2009 Nairobi ▪ Private investors (65%) Eassy ▪ Development 2010 SA Mombasa Bank of SA ▪ World Bank Central region Coast & North Eastern region Telkom Kenya network Western region 9
Three fibre optic undersea cables _Teams, SEACOM, and EASSY
Digital Villages- Pasha Centres Creation of “electronic centres” and upgrading of existing e-centres Hubs that provide a host of services to the public via computers connected to the internet, or by using and marketing other ICT-enabled applications Kenya ICT Board will also provide technical support to successful PASHA entrepreneurs An entrepreneur will obtain a loan from a local Bank for up to a maximum of KES 3Mm to set-up or expand an existing digital access centre Kenya ICT Board will provide a technical consultant to support the technical set up and management
Pasha cont’d… Branding and communication support in order to manage thePasha Brand and drive consumer interest and usage Management of the Pasha Community portal to allow collaboration and knowledge sharing among Pasha Managers Continuous training and skills development for Pasha Owners Liaison with public sector and local and international content providers who may want to access the public through the Pasha network
Tandaa- Development of National Digital ContentStrategy and Local Content development The Kenya ICT Board is Implementing a World Bank supported Content Grant disbursement program to support entrepreneurs in local content and applications development Specific focus to be given to software applications and e- government products that can impact delivery of social services and preserve culture A national campaign, TANDAA, has been launched to driving national awareness and capacity building
KNET and Wezesha Support to universities through bandwidth purchase through long term IRU on high capacity submarine fiber ‘Wezesha’ Is a Swahili word meaning ‘ to enable’ and is an initiative is to provide a financial incentive towards purchasing a laptop for registered university students in participating public and private universities and colleges The laptop initiative is funded by the World Bank and implemented by The Kenya ICT Board under the Kenya Transparency and Communications Infrastructure Project (TCIP), as part of a component to implement the Computers for the Communities Initiative
The Government is actively stimulating theprivate sector and the time to invest in Kenya is NOW!