Accountancy in Kenya

Country overview

Kenya is a sovereign state located in the region of East Africa. Its capital and largest city is Nairobi that prides itself with a river and a national park right in the middle of the city. Kenya is positioned on the equator right in the middle of 5 other countries and Indian Ocean in the south-east, that is Tanzania at the south, Uganda west, South Sudan to the northwest, Ethiopia to the north and Somalia on the north-east.

Kenya covers 581,309 km2 (224,445 sq miles) and had a population of about 49.6 million in 2017 census report according to (United Nations, 2018) estimates.

The stability experienced in the past few years is attributed to the new constitution 2010 which introduced a bicameral legislative house, county government and independent judiciary. Kenya has so far had 2 general elections since the introduction of the new constitution. The second election was held on August 8th, 2017 however, the Presidential Elections were nullified on September 1st, 2017 by the Supreme Court citing excessive irregularities by the electoral body, Independent Electoral and Boundaries Commission (IEBC). The repeat polls were later held on October 26th, 2017 where one of the major contenders of the then sitting opposition called for a national boycott, nonetheless, the polls were carried out by the IEBC; Uhuru Kenyatta was duly declared the elected president for a second and final term of 5 years. Presently, the country is poised towards achieving the big four agenda with the intention to push Kenya into a middle-income economy. These are President Kenyatta’s legacy development projects, they include; manufacturing, universal healthcare, affordable housing and food security.

Economic overview

Kenya is viewed as the economic giant of East Africa alongside prevailing political structural and economic environments. It has however, managed to create reforms which have largely resulted into a continual economic growth, socio-cultural development and political mileage in the past years. It is important to note that Kenya still experiences various development challenges including; poverty, inequality, climate change, corruption, and the vulnerability of the economy to internal and external shocks.

The Kenyan national and official languages are Kiswahili and English respectively. The Constitution promulgated in the year 2010 introduced the devolved system of Government which has been transformative and has strengthened accountability and public service delivery at grassroot levels.

According to the World Bank, (2018), while economic activity weakened following the 2008 global recession, growth recommenced in the last three years up to 5.8% in 2016 placing the country as one of the fastest growing economies in the continent. The economic expansion has been accelerated by a stable macroeconomic environment, low oil prices, tourism influx, substantial diaspora remittance inflows and a government led infrastructure development activities.

Based on the report by the World Bank, (2018), Medium-term GDP growth is expected to rebound to 5.8% in 2018 and 6.1% in 2019 respectively dependent on completion of ongoing infrastructure projects, resolution of slow credit growth, strengthening of the global economy and tourism.

In the long-term, adoption of sound macroeconomic policies will hasten the possibility to safeguard Kenya’s healthy economic performance. This includes execution of sound financial and lowering debt down to 4.3% by FY19/20 as per the Mid-term fiscal outlined estimates. The financial merging needs to avoid interrupting public investments in crucial infrastructure key to unlocking the economy’s ability and productive capacity.

Alongside fostering economic development through the country’s development agenda to the lasting development plan; Vision 2030, President Uhuru Kenyatta charted the “Big Four” development primary areas for his final term as President. The Big Four will focus on manufacturing, universal healthcare, affordable housing and food security. In this regard it is believed that Kenya has met some Millennium Development Goals (MDGs) targets which include reduction of child mortality rate, universal primary school education enrollment and reduced gender gaps concerning education. The introduction of free maternal healthcare has enhanced tremendously the benefits reaped by ordinary Kenyans in accessing health services.

Some of the opportunities that Kenya can capitalize on include; a growing youthful population, dynamic private sector which holds the backbone of its economic growth, highly skilled workforce, improved infrastructure, a new constitution, and its pivotal role in the East Africa as an economic giant.

It is worth noting that Kenya has been ranked as having the fastest internet in Africa. This is as per statistics released by Akamai, a leading Content Delivery Network (CDN). It also leads in Africa in terms of internet penetration in Africa where it is the largest internet user with approximately 43.4 million users according to the Communications Authority of Kenya representing 88% penetration rate. This is just above South Africa with 30.8 million internet users representing 53% penetration rate as at 2017 according to (World internet statistics, 208). Other countries ahead of Kenya are; Nigeria with 98.3 million users representing 50.2% pentration rate, Egypt with 49.2 million representing 49.5% penetrtaion rate and Morrocco with 22.5 million users representing 62.4% penetration rate.

Some of the benefits of the ICT integration in Kenya are embraced in the eCitizen platform that was launched in August 2014. eCitizen is an online Government portal through which Government services can be obtained online. This process of digitizing every function into the eCitizen platform enables citizens to obtain government services like immigration while applying for passports, ministry of lands, Kenya Revenue Authority (KRA) and National Transport Services Authority (NTSA) when renewing driving license among others at the touch of a button.

Transport infrastructure

Kenya enjoys an extensive infrastructure that spans across the entire nation. Nairobi is the transportation pivot of Eastern and Central Africa. It also connects many of the landlocked countries.

The Port of Mombasa is part and parcel of the important deep-water harbor in the region, providing the shipping needs of many countries surrounding Kenya despite glaring deficiencies in equipment, corruption and inefficiency. Because of these deficiencies, the Port of Mombasa has been earmarked for major expansion and rehabilitation; this is positive considering the recent introduction of the SGR construction which has a cash outlay of 327 billion shillings. The Government has contracted China Roads and Bridges Corporation (CRBC) to construct the railway line between Mombasa and Nairobi and the construction of this railway line has since been finalized. This is the first phase of the project with expectations to expand to other regions in East Africa. The passenger services of the train were launched on 1st June 2017 as Madaraka Express train services.

Major opportunities for investment are in five major sectors: ICT, energy, infrastructure/construction, agribusiness and medical. ICT, the computer and peripherals industry remain one of the fastest growing business sectors in Kenya.

The Government is building a Techno-city in in Kenya at a place called Konza. This will give the country an opportunity of growth in ICT reaching almost any country in the world.

Real estate is also booming market. As a result of creation of County Governments, new blue prints are coming up and the property market is responding to demand that has been created by an expanding middle class population.


Latest version updated 11th April 2019

Country Breakdown

51.9

Million

Population

KSh

Kenyan shilling

Currency

$ 76.32

Billion

GDP

582,644

km2