Kenyan president Uhuru Kenyatta invited US companies to invest in the country’s multibillion-dollar infrastructure projects during the UN General Assembly in New York in September. He specifically highlighted the investment potential of the LAPSSET initiative: the Lamu Port – Southern Sudan – Ethiopia transport corridor, which links the region.

“I am here to tell you that Kenya is ready for business and we have taken necessary measures to make it easier for you to invest in Kenya,” Mr Kenyatta told international media at the assembly. The Kenyan government recently passed the Companies Act, intended to remove the hurdles that previously made it difficult to start and run businesses in Kenya, and hopes to undertake the LAPSSET initiative on a private-public partnership basis. Already several agreements have been signed with US companies, according to the US Department of Commerce.

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The LAPSSET project involves construction of highways, a port at Lamu, a railway and an oil pipeline. Tourist resorts and new airport facilities have also been planned. “About $24.5bn will be invested in the initiative,” says Dr Moses Ikiara, managing director of KenInvest, Kenya’s investment promotion agency.

“The corridor is going to be built in phases. The two projects that have started are the Lamu Port followed by the oil pipeline connecting Ugandan and Kenyan oilfields to Lamu.” Construction of the railway from Mombasa to Nairobi is planned to be finished by the end of 2017. Other aspects of the project are still undergoing feasibility studies – a completion date has not yet been set, but Mr Ikiara describes it as a “top priority” for the country.

Infrastructure investment has been low in Kenya in recent years. Long-term, large-scale projects such as LAPSSET are vital for Kenya’s economy and employment, which currently stands at 40%, according to Kenya’s National Bureau of Statistics. 

Other key sectors for investment include agroprocessing, energy and textiles. “Food security and energy are top priorities, the latter especially as oil prices are low,” says Mr Ikiara. Solar, geothermal and wind energy are projected to occupy a growing portion of Kenya’s energy portfolio, aided by the government’s new incentives targeting the energy sector.

Kenya is waiving corporate income tax for foreign companies generating energy for the national grid, with the aim of cutting generation costs and attracting offshore investment into the sector. Kenyan power company Greenmillenia Energy is already building a 40-megawatt solar energy plant that is aimed to start producing for the national grid by 2016 and the government has outlined a plan to raise power generation capacity by 5000MW from its current 1664MW by 2016 as electricity demands rise. The capacity will be developed mainly from geothermal power, natural gas, wind and coal through both government power utilities and private-public partnerships, according to Kenya’s Ministry of Energy and Petroleum. 

“It is like what companies are getting in export processing zones: a tax holiday for 10 years and another 10 years of concessional corporate tax rates,” says Mr Ikiara. “These incentives have been given to energy sub-sectors, exempting them from corporate tax to spur the sub-sectors we are developing into growing quite fast.”