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Kenya presents an array of opportunities due to its growing economy, strategic location in East Africa, and substantial market size with over 50 million people. The government’s support through favorable policies and incentives further enhances the appeal for foreign investment. The country boasts abundant natural resources, which can support various industries, and its thriving tourism sector draws in a significant number of visitors. Additionally, Kenya’s improving infrastructure and access to finance, coupled with a young and skilled workforce, create an attractive environment for entrepreneurial ventures. Nevertheless, it’s crucial to conduct thorough market research and be mindful of cultural factors and potential challenges before embarking on a business venture in Kenya or any other country.
Kenya is the largest economy in East Africa, with a domestic market of over 50.92 million people (2022). The increasing need for quality goods and services among the urban middle class gives excellent opportunities for businesses to grow in the region by tapping the emerging market.
At the same time, starting a business in Kenya can help you run your company profitably because of the following advantages:
Undoubtedly, Vision 2030 has opened the doors for foreign direct investments in Kenya. Special Economic Zones Act, 2015 is one of the initiatives taken by the Kenyan Government.
Kenya has 10 Special Economic Zones (SEZs) that support private manufacturing firms and specified services with incentives.
PAYE is deducted monthly at the prevailing individual income tax rates, on or before the 9th of the following month.
Entrepreneurs advancing business ideas in the Kenya market should, first, choose the most suitable type of business entity as per their needs. In Kenya, the following types of businesses are most preferred:
Business name/ sole proprietorship: This is the simplest form of business entity that you can register in Kenya. A business name is a sole proprietorship where you and the business are one and the same.
Partnership: A business partnership requires a maximum of 20 directors to register the partnership business in Kenya. Any numbers higher than this and the company must be registered under the Companies Act of 2015
Private limited company. In a limited company by shares, the registrar treats the company as a separate entity, to which the subscribers get issued shares depending on the memorandum of association between them.
Company limited by guarantee: A company limited by guarantee or CLG is an entity registered as a nonprofit organization. This means that the directors cannot draw profits from the income earned by the company.
Public limited company: A public limited company is a business entity that allows the public to buy, or transfer shares even to non-members of that company.
Unlimited company: It is a hybrid company registered with or without a share capital but where the legal liability of the members or shareholders is not limited, that is, its members or shareholders have a joint and several non-limited obligations to meet any insufficiency in the assets of the company to enable settlement of any outstanding financial liability in the event of the company’s formal liquidation.
Foreign investors from all over the world have long been drawn to Kenya because of its advantageous location in East Africa. Kenya has placed a high priority on fostering economic growth that is driven by the private sector and improving business conditions for both domestic and international companies.
Author: Chandrawat & Partners
Topic: Doing Business in Kenya
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