Why Kenyan firms seek to open shop in Dubai

Dubai, United Arab Emirates. FILE PHOTO | SHUTTERSTOCK

Kenyan businesses are increasingly looking to set up shop in Dubai as the global business and investment hub continues to lay out progressive policies to attract start-ups.

Local companies in tech space, agribusiness, and the financial sector are pushing their way into the United Arab Emirates city at a time Kenyan investors are also snapping up apartments to make high rental returns.

The city’s chamber of commerce in Nairobi attributes the move to Dubai as being a haven from the instability of growing inflation, oil price fluctuations and stressed supply chains.

“One of the top target sectors we have seen that has high potential and particularly where Kenyan investors are putting an eye on is the tech and innovative solutions space. The reason behind this is that Dubai offers one of the most stable, business set-ups and start-up ecosystems. That is able to help companies sort of reduce certain shocks that are affecting them globally,” said Michael Gathu, chief representative, of Dubai Chambers Kenya Office.

Dubai’s economy has in the past year grown on the back of retail performance driven by the tourism and real estate sectors.

Favourable residency, immigration policies and regulations have helped firms set up shops in Dubai, allowing foreign nationals to have full ownership of companies undertaking business in the UAE.

With technology platforms allowing entrepreneurs to start businesses in five minutes under one platform, Mr Gathu said this supports entrepreneurs to get information on the kind of licence they need, procedures for starting and funding programmes available.

The UAE’s Economy ministry has reduced fees for 94 services, which has in turn helped reduce the cost of doing business, Mr Gathu adds.

Read: Why Kenyan investors are flocking to Dubai

Other advantages include a hustle-free entry and visa application process.

Dubai Chamber of Commerce and Industry Head of Kenya International Office Michael Gathu and other guests at a past event. FILE PHOTO | NMG

“When you look at all these combined factors they have contributed to making Dubai a very attractive economy, not forgetting the fact that government input in terms of ensuring very progressive policies and decisive actions when it comes to supporting the business community,” he added.

Dubai Chamber International Office Kenya is a representative office of the Dubai Chambers, an entity meant to support Dubai’s vision as a global player through businesses.

It supports Dubai’s companies’ expansion into East Africa by gathering market intelligence and helping grow the bilateral business between Dubai and East Africa.

The membership-based organisation office serves Kenya, Tanzania, Uganda, Rwanda, and Burundi.

This has seen businesses in sectors like logistics, ICT, construction, energy, agribusiness, education, healthcare and future technologies like artificial intelligence (AI) find an interest locally.

“Having Dubai Chamber go global was …to support the expansion of its companies and investors to external markets. This was an initiative by the government initially to connect with global markets by way of investment and trade,” Mr Gathu said.

Even as the Emiratis seek to extend their networks into Africa, Kenyan companies have marked the city for growth and market reach to the Middle East and the Gulf Cooperation Council.

This comes on the back of a support programme from Kenya Export Promotion and Branding Agency meant to cement the legacy of the Expo 2020 Dubai that allowed local small and medium-sized businesses (SMEs) setting up in Dubai to get a two-year rent-free workspace in the UAE.

The initiative also allows companies to benefit from two-year visas, subsidised urban living, service providers’ special rates and business setups, among other incentives.

The Dubai Chamber is also helping the star-ups identify the industry to put the investment in, Mr Gathu said.

“It’s two-way in terms of business expansion… We do what we call the hand-holding, in terms of which the right free zone to set up in is and taking them through the processes.’’

Free zones

Dubai offers different environments for setup – including free zones, mainland and offshore investment.

Setting up in the free zone does not restrict one to having an office and the company can be 100 percent owned by the partner and doesn’t need a local body for representation.

However, it is limited to operating within the free zone and cannot expand to the mainland.

For a mainland company, a local sponsor is needed to incorporate the business while the ex-pat partner can hold 49 percent of the shares while UAE local body holds 51 percent.

Read: Dubai drops Uganda from redlist as it retains Kenya

“More tech companies are setting up in the free zones in Dubai and the reason is that there are several of them with different functionalities and sector-based, so it becomes very easy for them to get tailor-made services.”

“The free zone in Dubai allows you to invest there cushioned from the local tax regime.”

Mr Gathu adds that other sectors within Dubai that Kenyan companies can leverage are hospitality and tourism.

“These are some of the sectors we have been trying to help expand into this market. But more importantly, we are also not lost on the fact that different governments and countries have got priority sectors. So we also try as much as possible to align ourselves with those sectors that are a priority given Dubai is abundant of most of these sectors.”

With a futuristic approach, Dubai has been investing heavily in technology from AI and ICT which is becoming a big leverage for other sectors such as energy, agribusiness and health care.

Kenya and the UAE are working on a Comprehensive Economic Partnership Agreement, the first bilateral trade deal that the latter seeks to sign with an African nation. The deal is 85 percent complete.

The agreement will deepen trade and investment ties between Africa and the Middle East and boost the total value of UAE-Kenya non-oil bilateral trade.

The value of imports from UAE jumped by 93.5 percent to Sh178.53 billion in 2021 from Sh92.28 billion in 2020, against export earnings to the country at Sh34.56 billion in 2021, a slight growth from Sh34.43 billion in the previous year.

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