Are you considering investing some money this year? We take a look at the industries that are performing very well in Kenya.
Building and construction
The building and construction industry is the only sector in Kenya that has offered a guarantee for return on investment for the past five years. This is because of the unending demand for infrastructure and housing that has put contractors and cement makers among the wealthiest in the business community. The government has kept its promise to upgrade roads and contractors are currently constructing roads across the country under the 10,000km of roads tarmacking programme.
According to the economic survey 2015, the total government expenditure on transport infrastructure is projected to reach Ksh250.5 billion in 2015. Sakina Hassanali of the property consultant firm HassConsult says the huge demand for residential, commercial and industrial buildings will continue driving growth in real estate and the property sector in 2015 and 2016. Additionally, the manufacturing and supply of construction materials such as prefabricated components will also give good returns.
Oil & Gas
The next strategic sector to look at is oil and gas, especially with the establishment of the commercial viability of oil discovered in Turkana. The Energy Regulatory Commission’s statistics show the main sources of energy are wood fuel, petroleum and electricity which account for 69%, 22%, and 9% of use, respectively. The ERC is carrying awareness programmes to discourage consumption of wood fuel.
The Petroleum Institute of East Africa says the fall in global oil prices increased the uptake of liquefied petroleum gas (cooking gas), petrol and diesel since October 2014, giving marketers higher sales. Small retailers of cooking gas cut prices significantly to match the global oil market trends and they have been able to get 70% of market share that was previously held by major oil dealers like Total and Vivo Energy.
Information, communications & technology
Another sector that promises good investment returns going forward is the information and communication technology. ICT recorded a growth rate of 13.4% in 2014, which was attributed to increased uptake of data and voice services. A key indicator in ICT is the giant telecommunication firm Safaricom which posted Ksh31 billion profit in the financial year ended March 2015. Another indicator is the world’s biggest technology companies including Microsoft, Google, Cisco, Oracle, IBM and SAP which have set host regional offices in Kenya.
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The Communication Authority of Kenya’s Director General, Mr Francis Wangusi, says the migration to digital television broadcasting has also provides a bigger investment room due to increased need for broadcast content. “We will implement the broadcast content policy in 2015 which will ensure 60% of programmes aired in television are local. We want to encourage investment in content locally,” he says.
Securities market
Another investment to consider in 2015 is the securities market. This is because the government is buying debt (bonds) at attractive rates in order to finance infrastructure development. Indicators at the Nairobi Securities Exchange also shows a vibrant trend. Safaricom, Kenya Commercial Bank and Equity are the most actively traded stocks.
During the capital markets open day for the small and medium enterprises held on May 7, the Capital Markets Authority acting chief executive officer Paul Muthaura promised to ensure investors are reliably informed on merits and risks in the securities markets.
Remember to consult a financial adviser and expert to help you make an informed decision, before investing funds in any industry or sector.
Visit Biz4Afrika for more information and great tips for Kenyan SMEs.
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