Draft Kenya Investment Policy: Investment growth for sustainable development

Through the leadership of the Ministry of Industry, Trade and Cooperatives (MITC), an inter-ministerial task force has developed a draft Kenya Investment Policy. The policy is aimed at enhancing the conduciveness of the environment for investment growth, though a harmonized approach to investment promotion, facilitation and retention. In addition, the policy provides for revision of legislations affecting the overall investment network.

 

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Pic Credit: Mutua Matheka

The development of the Kenya Investment Policy has involved a consultative process covering the national and county governments, including the private sector stakeholders.

Executive summary

To achieve the twin targets of Kenya’s Vision 2030 – 10% growth per annum and middle income industrializing country status – the Government of Kenya recognizes the critical role played by private investment and has put measures in place to attract and retain foreign investment while encouraging the expansion of domestic investment, with the aim of increasing private investment to 24 per cent of GDP by 2030.

Up to now, Kenya has not had a single and clearly defined policy solely focusing on investment generation and retention. The Government of Kenya has however formulated various strategies and policies that focus on investment growth and support, stipulated in various policy documents such as National Development Plans, Sessional Papers and Master Plans, including the new Constitution 2010. These programs and initiatives have had limited impact. They also led to the adoption of various fiscal and non-fiscal incentives, changes in investment related regulations and the creation of several government agencies tasked with responsibility for investment promotion and facilitation, some with overlapping mandates leading to duplication of efforts and unnecessary strain on limited government resources.

To address the limited impact of investment and a number of other challenges relating to the entry and treatment of investment, the Government developed the Kenya Investment Policy. The policy development process took a holistic approach to gain an understanding of Kenya’s context as well as international best practices to inform the policy’s proposals. The policy is guided by six core principles, which emphasise the need for openness and transparency, inclusivity, sustainable development, economic diversification, domestic empowerment, and global integration.

The KIP addresses private investments at the national and county levels. It is a comprehensive and harmonized policy to guide attraction, facilitation, retention, monitoring and evaluation of private investment. The KIP further recognizes the central role of Kenya’s Constitution (2010) which clearly delineates the complementary roles that national and county governments play in investment promotion. The KIP also creates an institutional framework that fosters coordination for efficient investment attraction, facilitation, and a favourable investment climate. The policy actions proposed in the KIP are designed to support and stimulate private sector development and improve the overall ease of doing business and competitiveness in the economy, with the ambition that Kenya becomes the premier destination for at least 50% of multinationals establishing their continental headquarters in Africa.

The KIP addresses some of the fundamental requirements for establishing a well-coordinated investment environment that will attract high-quality FDI into the country while upscaling local SME capacity. These include: a harmonized regulatory and institutional framework for investment; an effective investment promotion and facilitation government function; an active focus on attracting beneficial, high quality foreign investment; building a critical mass of domestic investors including strengthening their capacities; a targeted approach to offering incentives by aligning them to development priorities; significant resources devoted to investor aftercare and increasing national savings.

These objectives are to be achieved through the implementation of critical measures stated by this Policy, including the following:

Investment oversight. Operationalization of the National Investment Council, which will be responsible for formulating the country’s overall investment strategy and implementing the KIP to ensure that investment contributes to the country’s development goals, and approving Bilateral Investment Treaties and investment related chapters in treaties.

Investment promotion and facilitation. The primary responsibility of investment promotion and facilitation falls on the Investment Promotion Agency. Counties, through County Investment Units play a major role by developing bankable projects, outlining their competitive positions, and preparing marketing materials aligned to their areas of strategic focus. Officials at the county level also play an important role in investment facilitation, including securing community approval, providing land where needed, and participating in investment promotion activities for specific investment projects in collaboration with the IPA.

Investment entry and establishment. Various government agencies are involved at different levels along the investment entry and establishment process. The IPA plays a facilitation role among these entities through the One-Stop Centre to minimize the administrative burden on investors and government agencies.

Investment retention and aftercare. Counties play a major role in ensuring that investments located within their territory are given the highest level of attention. The Government is responsible for ensuring that the overall investment climate remains attractive to potential and existing investors. The IPA is responsible for taking the lead to provide effective aftercare services by working with counties and national government actors.

Investment assessment. Ensuring that investments are contributing to the country’s economic, social and environment sustainability objectives is important. Measuring investment impact with respect to community engagement, development objectives, and supplier linkages between investors and small and medium sized enterprises is a shared responsibility among the different actors. While the NIC will spearhead this process, it must work closely with other national and county institutions to ensure that the country continues to target and attract beneficial investment.

Establish a promotion and facilitation fund resourced by both the exchequer and grants from development partners, to be used for the purposes of targeted investment promotion and facilitation.

Establish land banks which could be used for large projects, including encouraging counties to establish a savings scheme where a percentage part of their budget allocation goes to purchasing land to be set aside for investment purposes.

» Download: Kenya Investment Policy, revised draft June 2017 (PDF, 1.08 MB)

 

Source: KEPSA

Foresight Africa: Top priorities for Africa in 2016

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Photo: Mutua Matheka Photography

Africa is at a tipping point in 2016. Despite all the success the continent has achieved in recent years, new and old dangers—economic, political, and security-related—threaten to derail its progress. With sound policymaking, effective leadership, and enough foresight, however—Africa can meet and defeat these challenges as well as the many more to come.

In this year’s Foresight Africa, the Africa Growth Initiative and its colleagues discuss six overarching themes that place Africa at this tipping point and give their view on what they perceive to be key areas for intervention to keep Africa on its current rising trajectory. This year’s format is different from years past, encompassing viewpoints from high-level policymakers, academics, and practitioners, as well as utilizing visuals to better illustrate the paths behind and now in front of Africa.

 Explore the full report »
Managing Economic Shocks: African Prospects in the Evolving External Environment

In this chapter, Amadou Sy explores the recent external economic shocks to African economies—including the economic slowdown in China, declines in commodity prices, and the likely continued U.S. Federal Reserve interest rate hikes—that have affected and will continue to affect growth trajectories in the region. With growth slowing across the continent in 2016, policymakers must take this opportunity to discuss and enact economic policy reform for both the short and long terms.

 Read chapter 1 »
Sustaining Domestic Growth: Structural Transformation Depends on Jobs, Industry, and SMEs

Growth in Asia and elsewhere has shown that industrialization is crucial to job creation, a value that is enshrined in the new Sustainable Development Goals. In this chapter, John Page provides recommendations on how African governments and their international partners can revitalize the region’s stagnating industrial development and spur structural transformation.

 Read chapter 2 »
Supporting Human Development: Triumphs and Challenges on the Continent

The region has witnessed remarkable improvements in poverty reduction in recent years, but persistent challenges in inequality, education, health, and violence, among others, still plague it. As the first year of the Sustainable Development Goals, 2016 provides the opportunity to be a jumping-off point for strong policies and efforts to accomplish these goals. In this chapter, Kathleen G. Beegle and Luc Christiaensen cover the assortment of opportunities 2016 provides for supporting human development efforts and argues for the central role that better data plays in addressing them.

 Read chapter 3 »
Capitalizing on Urbanization: The Importance of Planning, Infrastructure, and Finance for Africa's Growing Cities

With Habitat III in 2016, Jérôme Chenal takes the opportunity in this chapter to explore the consequences of Africa’s rapid urbanization. Africa is the second-fastest urbanizing region in the world, which historically has facilitated other regions’ transition from a reliance on agriculture to industry and jobs. However, without strong policies to deliver services, finance and build infrastructure, and support the urban poor, Africa’s rapidly growing megacities and intermediate cities cannot deliver on their potential.

 Read chapter 4 »
Maintaining Governance Gains: The National and Regional Agendas

2016 sees a number of governance milestones and obstacles, including elections across the continent (particularly in Uganda, in the Democratic Republic of the Congo, and for the African Union chairperson), as well as increasing regional integration and a seemingly stalled march towards good governance. In this chapter, Richard Joseph reflects on the region’s growth-governance puzzle and the complex institutional changes necessary to move from economic growth to economic transformation.

 Read chapter 5 »
Expanding African Trade: Creating a Comparative Advantage and Strengthening Regional Partnerships

In this chapter, Joshua P. Meltzer explores the impacts on Africa of the changing global trade environment. In particular, the Trans-Pacific Partnership Agreement will transform global trade architecture, likely to the disadvantage of Africa. However, our viewpoint contributors believe that, if African countries can successfully leverage regional integration and better utilize the African Growth and Opportunity Act, they might be able to maintain global competitiveness.

 Read chapter 6 »

Article Source: Brookings Africa Growth Initiative

About Foresight Africa

The Foresight Africa project is a series of reports, commentaries and events that aim to help policymakers and Africa watchers stay ahead of the trends and developments impacting the continent. Since 2011, the Brookings Africa Growth Initiative has used the occasion of the new year to assess Africa’s top priorities for the year.

 

 

An Alternative Perspective on Africa Rising

Listen again

Is Africa’s growth trajectory overhyped? Is it as Omidyar Network’s Ory Okolloh call, ‘a fetishisation’ over some of the continent’s development achievements at the heavy expense of turning a blind eye to the weighty issues? As she concernedly asks, “will technology ‘save’ the continent from its poorly run resources, bad leadership and ineptitude?” Is Africa really rising? And if she is indeed rising, who are the beneficiaries? This was the subject addressed by Winnie Byanyima, Executive Director of Oxfam International when she spoke at LSE on 12 October 2015.

Credit: Africa at LSE

“As I prepared to come here to give my views on this topic, I promised myself I would not be an Afro pessimist,” she announced. “My job has me talking about poverty everyday but being an African girl, I can say that I am proud of what Africa has achieved. I am proud of my country, the continent and her people and at the grassroots especially, you see a true reflection of the resilience of her people.”

“Africa has witnessed four centuries of slave trade, one century of colonialism totalling five centuries of domination with just 60 years of independence,” she continued. “Growing up in Uganda, I know what it feels like to have false freedom and false independence. I grew up with a leader, Idi Amin, who would decide overnight new legislations pinning them to what he claimed lucid dreams; dreams of women without make-up, skirts, and more aggravating, education. But regardless of this, we took on the risk of getting an education with the support of ordinary people who inspired resilience,” she reminisced.

Today, African economies are growing at an average rate of 5% per year and Foreign Direct Investment has expanded by over 30%. Fewer mothers die in child birth and the rate of child mortality has decreased tremendously. The continent boasts several of the fastest growing economies in the world and is posited to leapfrog in development through its ever growing innovation and technology. “The universities are hotbeds of innovation,” the speaker stated with a smile. “However, despite all this, one in two Africans lives in extreme poverty. Women are the hardest hit earning 30% less than men.”

“The most important question I would ask you today is, Africa is rising but it is rising for whom?” she poses.

“Jane is my mother’s god-daughter. She was married at 16 years old and not out of choice but for labour. She was a successful farmer tilling her husband’s land. She lost three of her children to curable diseases but due to poverty, she had to bear the burden of burying her own. Her husband too passed on. I am helping her to build on her husband’s land but now she wants to leave it to her son. Under Ugandan law, she can claim the land but as a second wife, the land belongs to the son of the first wife. When she came to ask for money to buy the land from her son, I challenged her to claim what was rightfully hers to which she opposed.” Through this poignant story, Winnie Byanyima unmasks the reality of Africa, her people and the challenges they face on a daily basis; challenges of legacies of discrimination regulated by traditions and custom.

“Increasing the income share of the poor and middle class increases growth; illicit financial flows alone make Africa a net creditor to the rest of the world,” she informs. “Tax reforms need to be fit for purpose.”

“I have worked in several positions but none compares to working at Oxfam International where I feel that I can challenge elite capture. I love this job because I can speak truth to power,” she affirms. “Power lies with organised citizens because it is through solidarity that power shifts. Africa is the youngest region yet the oldest and by the year 2030 we will see a demographic dividend. My hope is that we will have halved the tax gap and these resources will be channelled to health, education and social protection thus investing in Africa’s true wealth, her people.”

This article is based on a LSE Public Lecture with Winnie Byanyima, Executive Director of Oxfam International. Follow this link to listen to the full lecture.

Article Originally posted on Africa at LSE 

Book Reviews

Credit: Columbia University Press

Columbia University Press is pleased to announce the publication of Industrial Policy and Economic Transformation in Africa, edited by Akbar Noman and Joseph E. Stiglitz.

•       Makes the case that governments should expand their thinking about industrial policy to include learning, technology, supervision, climate change, global trade, and other aspects.
•       Highlights successful African countries that have improved their economic performance and the lessons to be learned.
•       Shows how Africa’s recent economic revival is built on a fragile foundation and gives solutions to strengthen the continents growth going forward.

“This impressive book is about how to generate decent jobs, reduce poverty, and achieve inclusive and sustainable structural transformation through industrialization in Africa. It should be read by anyone who hopes to transform or help transform Africa from a land of poverty to a land of prosperity.”
—Justin Yifu Lin, Peking University and former chief economist of the World Bank

The revival of economic growth in Sub-Saharan Africa is all the more welcome for having followed one of the worst economic disasters—a quarter century of economic malaise for most of the region—since the industrial revolution. Six of the world’s fastest-growing economies in the first decade of this century were African. Yet only in Ethiopia and Rwanda was growth not based on resources and the rising price of oil. Deindustrialization has yet to be reversed, and progress toward creating a modern economy remains limited.

This book explores the vital role that active government policies can play in transforming African economies. Such policies pertain not just to industry. They traverse all economic sectors, including finance, information technology, and agriculture. These packages of learning, industrial, and technology (LIT) policies aim to bring vigorous and lasting growth to the region. This collection features case studies of LIT policies in action in many parts of the world, examining their risks and rewards and what they mean for Sub-Saharan Africa.

Akbar Noman teaches at Columbia University, where he is a senior fellow at the Initiative for Policy Dialogue, co-chair of its Africa Task Force, and adjunct associate professor at the School of International and Public Affairs.

Joseph E. Stiglitz is University Professor at Columbia University, former chief economist and senior vice president of the World Bank, and former chair of the Council of Economic Advisers under President Clinton. In 2001, he was awarded the Nobel Prize in economics.

To find out more about this book, see here.

Credit: Goodreads

Fifty Five Shades of Political Economy….
“Economists are not all evil, few might have had good intentions. Most of recent economists’ bibles don’t bring anything new to the table other than beautiful tables. Instead of reviving the neglected debate around socio-economic inequality, their misfires add to the cacophony that already existed and their childish solutions to socio-economic injustice, either Robin Hood or Give a dog a bone approaches, make their books as useful as a paperweight.
Do we need an Economic Jihad? What can you say about the boring cock-fights between Capitalism deities of our time? You should be as disgusted as I am of these clown shows that chip away the substance of economic disparity dialogues. I have left to the class of economist sloppy cerebral sloths, to tiptoeing around of serious issues. Instead, you, the reader, and I will be swimming against the torrent current. Chapter one through six are exhibits of the case against the current status quo, Capitalism. And if I see you on the other side of chapter seven, please hold my hand tightly from chapter eight through ten. Take your time to digest chapter eleven and get yourself prepared for a big slap to your face. On the closing argument, chapter twelve follows through James Tobin’s recommendation: “Good papers in economics contain surprises and stimulate further work.” Jo Sekimonyo

See the book here and here.

I will be reviewing these two books in due course.

Towards another resource curse? Remittances and support for democracy in Africa

This article was originally published on The Conversation

Remittance recipients whose priority is the socioeconomic improvements of their lives were found to be less engaged with democratic processes.

Much has been written about the impact of remittance inflows on economic and social outcomes, including economic development, inequality and poverty. But little is known about the effect they have on the attitude of remittance recipients to democracy in sub-Saharan Africa.

Many countries in sub-Saharan Africa have recorded substantial increases in inflows of money from other countries. These include official aid and foreign direct investment. Remittances now exceed official aid in many. They also include remittances from relatives who have left their home country and resettled elsewhere.

A recent study finds that remittances have a different impact when it comes to support for democracy. Although similar studies have been done in Mexico, this is the first to use the priorities of citizens as the basis for studying the relationship between remittances and political engagement in sub-Saharan Africa.

The study relied on the Afrobarometer data. This contains a series of national surveys on the attitudes of citizens towards democracy, market, civil society and other aspects of development. The surveys are available for 36 sub-Saharan African countries.

Positive and negative effects

There is a wide body of literature on the impact of remittances on poverty alleviation and reduction of income inequality. These cash transfers can also help recipients survive periods when they have shortfalls in their other incomes. Remittances may under some circumstances also contribute to economic growth.

They have negative effects too. Remittances have been found to have a negative effect on the quality of institutions. This is because remittances can be seen as substitutes to government spending on public services. They do this by enabling recipients to buy services they would otherwise be entitled to demand from the state.

When remittance recipients buy pubic services such as education or health from the private sector, for example, this often leads to a decline in government effectiveness and accountability. It may also result in an increase in corruption.

Impact depends on where priorities lie

The impact depends on the priorities remittance recipients have chosen. Recipients who have chosen rights and freedom as their priority were found to be as supportive of democracy as much as non-recipients. But recipients who rank higher improvements in their standard of living were found to be less engaged with democratic processes.

The study’s findings strike at the core of democratisation theories which have singled the growth of middle income earners as one of the driving forces for democracy.

The umbilical cord between remittances and democratic processes is the provision of public goods, a role fulfilled by the state. Public goods include public services such as health, education and roads.

The incentive therefore for supporting democracy depends, among other factors, on whether the priority chosen by remittance recipients is a good that can be exclusively provided by the state. But it also depends on whether the state is willing and able to provide such a public good.

Remittances enable recipients to buy public services. This means they no longer have an incentive to hold government accountable for providing, or improving the quality of, pubic services.

Many citizens in sub-Saharan Africa rely on remittances from another country. Reuers/Omar Faruk

The effect of remittances on democracy

Recent studies have also explored the effects of these inflows on the behaviour and attitude of citizens to politics. Migrant remittances have the potential to lower political participation by recipients.

Yet little is known about the effects of receiving remittances on the legitimacy of democracy in Africa, a region where democracy is a relatively new concept. Legitimacy of democracy is defined as the degree of endorsement and support for democracy by the citizens.

Democracy has been posited as a universal value and then associated with many desirable features, among them development and social welfare. This has raised the question why some countries are democratic while others are not. Political scientists argue that the legitimacy of democracy is an important determinant of the level of democracy supplied in a nation.

Following this line, several researchers have done valuable analyses to determine the most prominent socioeconomic characteristics that may explain the degree of support for democracy of citizens.

Other researchers have explored the link between the level of educationand democracy. They tested to what extent the different levels of education may increase the likelihood that citizens support democracy.

The findings of the study on the impact of remittances on attitudes to democracy point to the risk of remittances hindering the development of democracy in sub-Saharan Africa. A lot depends on whether the balance of Africa’s population tilts more towards individuals who are more concerned about improving their standard of living than rights and freedom.

Disclosure statement

Maty Konte works for United-Nations University. She is affiliated with United-Nations University (UNU-MERIT).

The Conversation is funded bythe National Research Foundation, the Knight Foundation and Barclays Africa. The Bill & Melinda Gates Foundation is a Strategic Partner.

Women’s Rights and Illicit Financial Flows

FEMNET

FEMNET Head of Communications Nebila Abdulmelik caught up with Samantha Spooner of the Mail & Guardian to share her thoughts on Illicit Financial Flows and the linkages with women’s rights work:
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1. How do gender issues fit into illicit financial flows?

​Illicit financial flows further social, gender, spatial inequities and inequalities. Many of the factors that exacerbate IFFs, such as overeliance on natural resource extraction​ and the work of many multi-national corporations further environmental degradation and often workers in such industries operate in low-paying, unsafe and insecure working conditions with rampant human rights violations – which disproportionately affect women. It is estimated that 40-50% of workers in the mining industry (particularly in small-scale and artisinal) are women who are not receiving living wages, don’t have a right to unionise, don’t have access to benefits or social protection mechanisms.

If conservative estimates say that Africa loses $50 billion annually through IFFs, that…

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The Gender Equality, Tax Justice and Economic Growth Conundrum

FEMNET

By Nyaguthii Wangui Maina*

[This is a series of blog posts on the African Feminist Strategy meeting on Financing for Development & the Post 2015 Development Agenda, the first and second of which can be found here and here, respectively]

A sitting Head of State in Africa in one of the regional economic bloc meetings once made an argument for the ongoing investments in his country; his government was primarily focused on improving economic growth by investing in the ‘productive sectors’ whilst would deal with maternal and child health care issues thereafter. A disgruntled participant in the same meeting interjected and posed the following question to the Head of State.

“How does an economy grow with dead people?”

Principles of taxation depict that for a tax system to make any sense, it should be fair, equitable, transparent, accountable, efficient, effective and at the heart of it all, it should represent…

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