The year is 2012 and it is time for you to get some Kenya in your portfolio.  Kenya has one of the most rapidly-growing GDPs.

Over the weekend the World Bank sent out a tweet about Kenya’s “tipping point” – by 2020, Kenya will be a full-fledged middle-class country.  Since 2001, many gains have been made in areas like sending electricity to households and other political and economic reforms.  Transportation times between major centres are decreasing and there are still significant gains in access to water and proper sewage.

Coupled with the fact of being an English-speaking country with a long history of connections to the London Stock Exchange, and the fact that Kenya is not dependent on foreign aid - and Kenya is hardly akin to investing in Zimbawbwe or Sierra Leone.

The Really Emerging Markets in 2012-2013

Invest in Kenyan Growth

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All that said, there are still structural problems holding Kenya back, such as prohibiting a more active export market.  I would be ahead of this game if I were you and concentrate instead on the direction of individual Kenyan companies.

Although the World Bank cites a lingering amount of political and business corruption in the country (despite good overall economic governance), it should be noted that labor costs in Kenya are lower than they are in China.  Repeat that, folks.  And then think again about the massive Chinese presence in Africa right now.  China signed an oil exploration contract with Kenya already back in 2006.

Kenya’s biggest industries include tea, tourism and horticulture – with a lot of growth potential in textiles, chemicals and telecom.  The following companies all trade on the Nairobi Securities Exchange, which is Africa’s 4th largest in terms of market capitalization.  Take a look at the NSE-20 for a full list of Kenya’s blue-chips.

Are You in These Frontier Markets Replacing Emerging Markets?

Kenya’s Blue-Chip Companies

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1. KenGen (Kenya Electricity Generating Company) (NSE: KEGC) – A state-owned corporation that trades on the NSE, KenGen provides the country with over 80% of its electricity.  The company is well invested in alternate sources of energy, including wind farms and geothermal plants.  Don’t confuse this one with the Kenya Power and Lighting Company, which was split off from KenGen in 1998 (although it also still trades on the NSE).

2. Safaricom (NSE: SAFCOM) – Founded in 1997, Safaricom is the leading internet and mobile solutions provider in Kenya, with an urban subscriber base of over 12 million and a workforce of 1500.  Vodafone now has a 40% stake in the company.  Main competition is Airtel Kenya.

3. Kenya Commercial Bank (NSE: KNCB) – Quite a long history, founded in 1896. Part of KCB Group, which is the largest network of branches in Kenya, KNCB is one of the three largest financial banking divisions in the country.

4. East African Breweries (NSE: EABL) – Founded in 1922 and declaring its first dividend in 1926, this fully-integrated beverage company was the first Kenyan company to reach a USD market capitalization of over $1 billion.  The company trades on every exchange in the East African region.

5. Express Kenya (NSE: EXPL) – Founded in 1918, this integrated service management company controls most of the logistics for transport in Kenya – land, water, air terminals, ports, customs documentation, warehousing, packing and removals, etc.

Cashing In On the African Gold Rush

As East and Central Africa’s largest economy, Kenya has maintained good levels of inflation and has kept its debt under control.  Coupled with lower labor costs than China and I think you would agree that Kenya is a smart place to look at for some direct investment of your own.

Tagged as: Africa, anglophone, Britain, chemicals, China, coffee, costs, emerging markets, frontier markets, growth, horticulture, invest in Africa, Kenya, labor, middle class, Nairobi, stock picks, tea, textiles, tourism, World Bank