Contractor’s guide to contracting in Kenya
Continuing our overseas contracting break from the norm, and moving south-east from Nigeria, is Kenya; somewhere else in Africa that’s receptive to UK contractors and up and coming for temporary technology assignments, writes Nikolas Papageorgiou of Access Financial.
Kenya for contractors: in an economic nutshell
Just look at the figures. Kenya’s real gross domestic product is projected to grow by a solid 5.7% in 2019. That actually represents a tiny decrease from the estimated 5.8% growth experienced in 2018, (the new World Bank Kenya Economic Update tells us), but it hasn’t put off quite a few US corporations and brands which UK contractors will be familiar with.
On the contrary, Kenya, where services account for 52.5% of the growth, agriculture for 23.7%, and industry for 23.8%, boasts one of the most productive economies in Africa,
Due to its strong agricultural, manufacturing and real estate sectors, the country is increasingly the home to global businesses using the country as a hub for the larger East Africa region, including Google, General Electric, IBM and Coca-Cola. Contractors will want to note that the vast majority of high-paying job opportunities are in the capital, Nairobi.
What are the benefits of working in Kenya as a contractor?
The top three benefits of working in Kenya are:
- A fast-growing economy in Africa with the capital increasingly a regional hub for international businesses
- Low income tax
- Relatively low cost of living
Can I use my existing UK-registered limited company in Kenya?
It is possible to use your own Personal Services Company (PSC) in Kenya. However, the strict practice of creating a permanent establishment by a foreign PSC, and the Kenyan tax authority’s resistance to this method of working by foreign workers means that for most foreigners, this is a bureaucratic and not very financially-rewarding route to take.
What about take-home pay in Kenya?
The maximum salary retention you can achieve in Kenya can reach 67% of your gross income if you are an expatriate.
What are Kenya's levels of taxation?
To discover the answer to this question, please see the income tax rate table below:
Tax brackets on monthly income in Kenyan shilling / KES (GBP)
|0 - 12,298 (£97)||10|
|12,298 (£97) - 23,885 (£188)||15|
|23,885 (£188) - 35,472 (£279)||20|
|35,472 (£279) - 47,059 (£370)||25|
|Above 47,059 (£370)||30|
What are Kenya’s social security requirements?
Social security is obligatory for all UK contractors working in Kenya.
The social security (‘NSSF’) amounts to 12% of the gross salary, of which employer pays 6% and employee 6%. The maximum contribution is KES 200 (£1.6) per month for each party.
In addition, the employee will need to contribute to the hospital insurance (‘NHIF’) which is 1% of the gross salary, up to a maximum KES 1,700 (£13.4) per month. As with Nigeria, foreign workers should have sufficient health insurance coverage or travel insurance that will cover all medical expenses. Very often, multinational employers based in Kenya provide private medical cover for their expatriate workers.
If the individual makes social security payments in another EU member state, USA or another country with which Kenya has signed a Social Security Treaty, and can prove it through proper documentation, the contractor may be exempt from Kenya's social security contributions.
How do I register locally in Kenya? What local registration do I need?
To live and work in Kenya legally, you need a valid work permit sponsored by a local employer.
A foreign employee can apply for the tax number (PIN- Personal Identification Number) only when he/she has received the ‘Alien Registration Card.’
The Alien Registration card is also required at the time of registration with NHIF and NSSF.
Know before you go…
Kenya is a rapidly developing economy which is cementing its position as the leading hub for East Africa. The capital, Nairobi, is increasingly home to the regional headquarters of international businesses, which is fuelling demand for highly skilled workers. This is creating opportunities for foreign contractors, particularly those with a good command of English, which is the language of commerce in Kenya.
The tax rates are low compared to many European countries (the highest income tax band is 30% compared to 45% in the UK), and with multinational businesses often paying foreign workers equivalent to what they would be earning in their native countries, working in Kenya can be highly lucrative.
While Kenya is not culturally homogenous, as a former British colony there are many points of familiarity. It is a predominantly Christian country and English is widely spoken alongside other languages. For those with a taste for the exotic (Kenya is one of the best countries for wildlife watching!), and a willingness to spend some time adjusting, Kenya has a great deal to offer, particularly to those with tech or corporate sector experience.
Finally, while working in Kenya is generally a trouble-free experience, it is advisable to check the travel advice published by the Foreign Office before travelling to Kenya and regularly while working in the country.