The top sectors to invest in Kenya in 2022 present a lucrative opportunity for foreign investors. Kenya is ranked the 4th largest economy in Sub-Saharan Africa with a GDP of USD 60 billion. The World Economic Forum’s country competitiveness report ranks Kenya number one (1) in Africa in quality of human capital and availability of research and innovation. Additionally, Kenya has a favorable business environment and a strong economy. This has allowed many companies to reduce operating costs and thus grow their profit margin making it ideal for foreign investors.
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9 Top Sectors to invest in Kenya in 2022
The first sector to invest in Kenya is energy. According to the energy and petroleum report from 2021, Kenya has successfully adopted more Renewable Energy than any other in the region, with less than 20% of its electricity mix derived from fossil fuels. Additionally, competition in the petroleum sector has healthily attributed to an open tender system (OTS) for sourcing petroleum products.
2. Financial Services
The second sector to invest in Kenya is the financial sector. Kenya‘s Financial Sector continues its economic growth through the mobilisation of large savings to finance investment needs. In 2015, the country was ranked 1st in the world for leveraging technology to drive inclusion by Brookings Financial and Digital Inclusion Project (FDIP). Kenya also has an extensive and relatively well-developed banking industry serving the domestic, regional, and international markets. There are 44 banks registered in Kenya. They include global names such as ABSA, Citi Bank, and Standard Chartered Bank.
3. Information communication Technology
The third sector to invest in Kenya is information communication technology. Kenya has become the global technology hub of choice when it comes to attracting the strategic business activities of ICT companies in emerging markets. Kenya is the regional leader in ICT in East and Central Africa and is considered one of the top innovation hubs in sub-Saharan Africa. Further, Kenya is the top choice for Regional HQ. Several blue-chip tech companies operate out of Nairobi as the regional HQ for their East and Central Africa and African operations. Some of which include Microsoft, Samsung, Andela, Kaspersky, Cisco, and Airtel.
Manufacturing is a key sector in Kenya’s economic development. There is a wide range of direct and joint-investment opportunities in this sector, including agro-processing, garments, the assembly of automotive components and electronics, plastics, paper, chemicals, pharmaceuticals, metals, and engineering products for domestic and export markets. In addition to the high demand for locally manufactured goods, regional markets are accessible for Kenya’s manufactured goods owing to its membership in two key regional economic blocs the East African Community (EAC) and Common Market for East and Southern Africa (COMESA).
The sixth sector to invest in in Kenya is infrastructure. The Kenyan government is actively seeking bids to improve and expand infrastructure networks, domestically and across East Africa to improve trade flows in the region. Additionally, measures in the infrastructure sector will create a platform for investments in least-cost, clean power technologies, and enhance the legal and institutional setup for PPPs to attract more private investment. Aligning clean energy investments to demand growth and ensuring competitive pricing through a transparent, competitive auction-based system has the potential to generate savings of about $1.1 billion over ten years.
Kenya has one of the highest agricultural productivity levels in the EAC region. 70% of the country’s exports have an agricultural focus and the sector employs 85% of the rural workforce. The agriculture sector has continued to grow at almost 5% annually and has huge potential for further growth. Foreign investors in Kenya are encouraged to explore business opportunities across the Agri-business value chain from primary production to value addition and processing of food produce. Agri-business already attracts 20% of total FDI to the region which shows its huge investment potential.
8. Real estate and construction
Kenya has a well-developed construction industry with quality engineering, building, and architectural design services. In addition, Kenya has a rising middle class leading to a spike in urbanization, which contributes to an increase in consumer demand for high-value goods and services. This trend is forecasted to continue, with 50% of the population expected to live in urban areas by 2050. The country’s income per capita has also increased at a Compound Annual Growth Rate (CAGR) of 2 % over the past ten years.
With a fast-growing population and increasing demand for affordable housing, opportunities in the construction of residential, commercial, and industrial buildings are set to increase. Making the real estate and construction sectors one of the best investments in Kenya.
The ninth-best sector to invest in Kenya is the tourism sector. Tourism is one of Kenya’s most important industries and has strong linkages with transport, food production, retail, and entertainment. Furthermore, as one of the world’s most popular business and leisure tourism destinations, foreign investors in Kenya have the opportunity to leverage several Government-led programs to attract investment into the industry. These include the establishment of resort cities, branding of premium parks, development of high-value niche products and MICE tourism facilities, and the construction of new internationally branded hotels, among others.
Whether it’s investing locally or internationally, finding the right sectors to invest in can seem challenging and daunting. Hopefully, this short yet comprehensive post about the top sectors to invest in Kenya in 2022 provides you with a good place to start.