Kenya on charm offensive to woo Chinese investors

By Remie OTIENO

Kenya will use various tax inducements to woo Chinese investors to help drive the country’s economic recovery agenda, a government official said Monday.

Pius Rotich, the General Manager of Investment Promotion and Business Development at Kenya Investment Authority (KenInvest) at a media forum said that the Kenya Kwanza Administration will extend ‘necessary’ priority to potential investors with over 300 local investment opportunities.

“As a government we will seek to remove all the bottlenecks that scare investors and tax incentives is always one of the best ways to attract investments, but that has to be undertaken with the help of the national treasury,” offered Rotich.

He was speaking ahead of this year’s edition of the Kenya International Industrial Expo (KIIE) slated for November 3rd in Nairobi – expected to attract over 130 Chinese firms and 20 Kenyan companies at Sarit Centre.

According to tax provisions by the Kenya Revenue Authority (KRA), an investor who incurs capital expenditure on building or machinery used for manufacture is entitled to an investment deduction equal to 100 percent of the cost.

The preferential tax terms include value added tax (VAT) exemption on all supplies of goods and services to enterprises, reduction in corporate tax to 10 per cent from 30 per cent for a period of 10 years of operation and 15 per cent for a period of 10 years.

Such cuts are meant to help investors cut down on key cost drivers such as transport, with the hope that surplus funds would go towards value addition. Enterprises at the SEZs enjoy several tax incentives under a tightly monitored set-up to avoid losses of government revenue.

Equally, for capital expenditures on building or machinery exceeding Sh200 million if the investment is outside Nairobi the investor can claim 150 percent allowance.

In 2020 the government promised to gazette more special economic zones (SEZs) in an effort to deepen its pitch for foreign investments – with the authority’s Chief Executive Moses Ikiara saying at the time that such a move would increase the number of SEZs by attracting investment into those zones.

As of December 2021, there were 15 gazetted SEZs in Kenya Special Economic Zones (SEZs) which are part of the flagship projects under the Economic Pillar of the Kenya Vision 2030.

Themed “Driving Growth in Kenya’s Manufacturing Sector through Technology and Partnerships” – the three day exhibition will for the first time see more Kenyan firms attempt to secure deals with Chinese firms at the expo compared to the previous editions.

“Afripeak has allocated a bigger space for Kenyan Pavilion that will accommodate 20 local companies presenting their products on this international platform and offering an opportunity to link to potential overseas buyers,” said Gao Wei, the managing director of Afripeak expo Kenya.

The latest development comes amid new data indicating that Chinese loans to Kenya have dropped for the first time in 15 years –an increasing concern from Beijing with a growing number of African countries facing the risk of defaulting on their borrowed loans.

Two weeks ago, the government denied media leaks that Chinese banks had fined the country $11 million for failing to pay back loans used to finance the Standard Gauge Railway, reports the outgoing CS Treasury Ukur Yatani vehemently denied, saying the country never defaulted on any of its creditors.

Kenya had borrowed $4 billion to construct the Standard Gauge Railway from the port of Mombasa to Naivasha town, some 100 kilometers from the capital.