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Towards The Full Exploitation of The Investments by the African Diaspora: The role of IPC, Kenya By Frederick Owiti Investment Promotion Centre Migrant remittances Transfer of funds from migrant to relatives or friends in their country of origin They are important feature of the modern economic life Remittances are important source of global development finance They provide much sought after foreign exchange to recipient countries They supplement the domestic incomes of millions of poor families across the world Diaspora remittances......cont They are more stable source of capital than private capital hence used as collateral against which to borrow on the international capital market They have a direct impact on poverty reduction because they flow directly to poor households Diaspora are major source of FDI, market development, Technology transfer, philanthropy, tourism, political contribution and more intangible flows of knowledge, new attitudes, and cultural influence Organizing the Diaspora Diaspora is the creation of individuals and groups acting on their own initiatives rather than a product of government intervention Diaspora organization include associations, religious organizations, professional association, charitable organization, development NGO’s, investment groups, affiliate of political parties, humanitarian relief organization, school and clubs for preservation of culture, virtual networks and federation of association Remittances to developing countries In 2001 they stood at $72.3B, 42% of FDI In 2003 over $300B was estimated to have been sent from developed to developing countries Remittances is the second largest source behind FDI of external funding for developing countries. A recent survey indicates that only 6% of the remittances sent by the Diaspora is invested Obstacles facing African Diaspora The lack of awareness and information on investment opportunities Investment in Africa needs to be positively challenged to create economic growth for Africa Situation in Kenya Due to unemployment/underemployment of highly educated Kenyans many have migrated outwards in such of opportunities There has been an increase of remittance coming into the country from the Kenyan Diaspora There is significant potential for the optimization of remittance from the Diaspora through a number of initiatives by the government, the Diaspora themselves and the local community IPC interest in Diaspora remittance Remittance flows are second largest source behind FDI of external funding for developing countries They are one of the least volatile sources of foreign exchange for developing countries They are expected to rise significantly in the long term Mandate of IPC Promote and Facilitate investments in Kenya Assist foreign and local investors and potential investors by; • • • • issuing investment certificate assisting in acquiring any necessary licenses assisting in obtaining incentives providing information on investment opportunities, sources of capital, etc Promote investment opportunities both locally and internationally Review the investment environment and make recommendations to the Government • • changes to promote and facilitate investment changes to licensing requirements Vision “To be a world class agency in marketing Kenya as the first choice investment destination” Mission “To provide exceptional services to attract, facilitate and retain investments in Kenya” Investment Procedure Registration of business by the Registrar of Companies Under Companies Act or Business Names Act Application for approval of investments are submitted to Investment Promotion Centre (IPC) Investment procedure.... Cont Approval is based on security, health and environmental requirements Within ten working days after receipt of application, a written report on application is prepared. Within five working days after report is prepared, a decision with respect to the application is made. Within five working days after the decision is made, the applicant is informed in writing of the decision. Issuance of Certificate of General Authority If, in the unlikely event, the application is refused: Written reasons shall be prepared Within five days after the decision is made, the Minister is informed with a copy of the application, a copy of report on application and a copy of reasons Investment procedure... Cont Complaint • If the application does not receive response within twenty five days, he/she can make a written complaint to the Minister • The Minister shall investigate the complaint and within fifteen days inform the applicant of the results of the investigation Entry Permits (Work Permits) Approval by an Interministerial Committee • • • • IPC is a member of the Committee Three Class A (employee) Entry Permits Assured three Class H (investor) Entry Permits Additional Entry Permits on merit Licensing Trade License from the Ministry of Trade & Industry (free) Single Business Permit from Local Authority (fee payable) Restricted operations require licenses Under the National Environment Management Act, full or partial environmental impact assessment license Support to investors IPC will facilitate all the way • • • Approval Identification of licenses required Acquisition of the necessary licenses Investors are advised to go through IPC Government input Eradication of corruption and the institutionalization of clear legal protection thus sustain a robust climate for increased FDI Design policies to make the transfer of remittances more cost effective in poverty reduction Integration of members of Diaspora communities in the labour market Promote regularization of legal status, credentialing, training, language acquisition to build capacity of Diaspora community Government input......Cont Develop national programmes providing investment guarantees to the Diaspora Effort should be put on lowering transaction costs, improving data collection, extending the availability of financial services to the poor people and rural areas Encourage collective remittances to support community development and employment generation Sponsor research on patents and uses of remittances Government input......Cont Create a government body with a sole focus of acting as a liaison between Kenya and its Diaspora Kenya’s Investment Promotion Centre would be delighted to accomplish this role Introduction of legislation to grant dual citizenship to Kenyan Diaspora Introduction of international government bonds with central bank guarantee targeted at Kenyan Diaspora Government input......Cont IPC in conjunction with the government is in the process of formulating specific incentives to attract remittance from Kenyan/Africans abroad The investment code in Parliament will go along way to improving the investment environment in Kenya NEPAD peer group system, CCIA, EAC model investment code will improve the situation even further Several bilateral investment treaties have been signed between Kenya and other countries for the protection and promotion of investment Where can the Diaspora invest in Kenya? Stocks/bonds-safest but returns are a bit low right now Real estate-invest Kshs. 30 Million recoup your investment in 5-6 years Services- Education, Health, ICT, Insurance & Banking and Trade THEREFORE,in conclusion If one is now looking for and expecting a country where: investments are guaranteed there is good quality of life in Africa there is liberalized and stable economic atmosphere donor support is withheld and is still able to stand on its feet there are abundant natural resources there is readily available highly trained and affordable manpower there is access to regional and international markets there is fairly well developed infrastructure in the region there is ‘One Stop Centre’ facility for project processing. Then, KENYA IS IDEAL THANK YOU-KWAHERI-KARIBU KENYA! Contact us MANAGING DIRECTOR INVESTMENT PROMOTION CENTRE NATIONAL BANK BUILDING, 8TH FLOOR,HARAMBEE AVENUE P.O. BOX 55704 NAIROBI, CITY SQUARE, 00200, KENYA TEL: (254) (020) 221401 MOBILE: 0722-205424 / 0733-601184 FAX: (254) (202) 243862 E-MAIL: [email protected] Website: www.investmentkenya.com