KENYA Law and Practice Contributed by: Mary Waithiegeni Chege, Mary Anne Wachira and Joy Odhiambo, EMSI & Asssociates
General Incentives Kenya provides a range of general incentives to attract investment, particularly through the Investment Pro- motion Act and the work of the Kenya Investment Authority (InvestKenya). Investors who obtain an Investment Certificate benefit from: • facilitation of licensing processes across govern- ment agencies; • support in securing work permits for expatriate staff; and • access to incentives under specialised regimes such as the Nairobi International Financial Centre (NIFC). The NIFC framework offers significant advantages, including: • protection against nationalisation and expropria- tion; • free repatriation of profits and capital; • flexibility in hiring foreign personnel; and • 100% foreign ownership of qualifying entities. Energy Sector Incentives In addition to general incentives, Kenya’s energy sec- tor provides targeted fiscal and regulatory support. Renewable energy projects benefit from: • VAT exemptions and zero-rating on certain equip- ment under the Value Added Tax Act; • import duty relief under the East African Commu- nity Customs framework, reducing capital expendi- ture; and • regulatory certainty through EPRA’s approval of tar- iffs and contracts. The Energy Act supports investment by establishing a clear licensing regime and enabling instruments such as PPAs and feed-in tariffs, which provide long-term revenue certainty. Recent policy developments also include incentives for emerging sectors. For example, electric mobility initiatives, supported by discounted electricity tariffs and the National Electric Mobility Policy, 2026, offer additional opportunities for investors, including tax incentives and infrastructure support.
mandatory thresholds, including 60% local sourcing of goods and services and 80% local employment. It also emphasises technology transfer and support to local enterprises. While these measures are expected to boost domestic economic participation and indus- trial growth, they may increase compliance costs and affect project timelines, particularly for capital-inten- sive energy investments. Land Ownership Foreign participation in energy projects must also comply with Kenya’s land ownership framework. Under Kenyan law, foreign nationals and foreign- owned entities may only hold land on a leasehold basis, with a maximum term of 99 years, and only in respect of non-agricultural land. For energy projects such as solar or wind farms, developers must obtain: • development permission under the Physical and Land Use Planning Act; and • where applicable, a change of user approval to convert agricultural land to industrial or energy use. These requirements ensure proper land use planning and alignment with national and county-level develop- ment priorities. Protection From Expropriation The Constitution of Kenya provides strong protections against expropriation, safeguarding property rights for both domestic and foreign investors. Property may only be compulsorily acquired in limited circumstanc- es, such as for public purpose, national security or infrastructure development, and must be accompa- nied by prompt and full compensation. These protections are reinforced under the Foreign Investments Protection Act, which guarantees that approved investments cannot be expropriated except in accordance with the law and subject to fair com- pensation. The Land Act (Cap. 280) further establishes the procedural requirements for compulsory acquisi- tion, including valuation, due diligence and compen- sation prior to possession by the state.
196 CHAMBERS.COM
Powered by FlippingBook