Kenya: New Blue Economy Investment Policy to Attract Capital

• Kenya is developing a new Maritime Investment Policy to attract local and foreign investment into its blue economy.
• The policy proposes fiscal incentives like VAT exemptions and non-fiscal measures such as infrastructure development.
• It aims to unlock potential in diverse sectors including fisheries, ports, shipbuilding, and green energy.
• Public consultations are underway across counties dependent on marine and inland water resources.
• The initiative seeks to leverage Kenya's extensive coastline and inland waters, which hold significant untapped resources.

The development of this policy is rooted in Kenya's strategic ambition to leverage its underutilized marine and inland water resources.

Kenya is advancing a new framework to draw both domestic and international capital into its maritime domain. This initiative, known as the Kenya Maritime Investment Policy and Incentives Regime, aims to unlock the full potential of the nation's blue economy.

A recent public consultation event took place in Kisumu on a Friday in November, where the draft policy was presented to various stakeholders. The State Department for Shipping and Maritime Affairs, in collaboration with the Kenya Maritime Authority (KMA), organized this forum as part of a broader engagement strategy. The overarching objective is to consolidate investment efforts across the maritime industry, offering a suite of incentives designed to stimulate growth in diverse areas from fisheries to green energy projects.

The proposed Kenya Maritime Investment Policy outlines a comprehensive set of inducements for investors. Fiscal incentives include capital allowances, exemptions from Value Added Tax, and relief from railway development levies and import declaration fees. Beyond financial benefits, the policy also incorporates non-fiscal measures such as enhancements to infrastructure, streamlined documentation processes, improved operational protocols, and reforms to the existing legal and regulatory framework governing maritime investments.

Joseph Kabeku, who serves as the Director of Maritime Trade and Development at the KMA, emphasized that the policy's design is intended to position Kenya as an appealing destination for both local and foreign investors by unifying various sector activities under a single, coherent framework.

The policy's scope is extensive, encompassing critical areas like fisheries, port operations, maritime transport and logistics, shipbuilding, ship repairs and recycling, container manufacturing, ship bunkering, maritime education and training, safety and security, and the development of green energy solutions.

The development of this policy is rooted in Kenya's strategic ambition to leverage its underutilized marine and inland water resources. Gideon Mwangi, the Director of Planning at the State Department for Shipping and Maritime Affairs, highlighted the blue economy as a key priority within the nation's broader development agenda. He noted that the maritime sector presents substantial opportunities across fisheries, transport, logistics, and related industries.

Kenya possesses an approximately 640-kilometer coastline and an expansive Exclusive Economic Zone, which are identified as significant investment prospects. Furthermore, the country's inland water bodies, including Lake Victoria, Lake Naivasha, and Lake Baringo, collectively span about 10,700 square kilometers and are rich in untapped resources such as fish and minerals.

The proposed Kenya blue economy incentives are designed to accommodate a wide spectrum of participants, from large-scale investors to small-scale operators, including fishermen requiring affordable equipment like nets. Ensuring access to financing is also recognized as a crucial element for enabling diverse stakeholders to engage effectively in the maritime economy.

The government is actively soliciting input from a broad array of groups, including women, young people, and persons with disabilities, as it moves towards finalizing the document. The Kisumu forum was part of a nationwide public participation exercise specifically targeting counties whose economies are reliant on marine and inland water resources.

Prior consultations have already been conducted in several other locations, including Lamu, Kwale, Mombasa, Kilifi, Nakuru, and Naivasha, with Kisumu being among the current stops before a final engagement in Turkana. Stakeholders are encouraged to submit written memoranda through official channels provided on the websites of both the State Department for Shipping and Maritime Affairs and the Kenya Maritime Authority. The feedback gathered during these extensive consultations will play a vital role in shaping the ultimate draft of the Kenya blue economy investment policy.

Lawyers should advise clients in the maritime sector to monitor the finalization of Kenya's Maritime Investment Policy, as it will introduce new fiscal and non-fiscal incentives for blue economy investments. This presents opportunities for new ventures and requires understanding of the evolving regulatory landscape, including potential tax exemptions and streamlined procedures.

Source: Reporting based on official statements