Trade & Export Middle East - Country Focus - Kenya

country

FOCUS KENYA

KENYA

BILATERAL TRADE

INVESTMENT OPPORTUNITIES

LOGISTICS

DECEMBER 2012

45

FOCUS Interview

The road to Kenya With the aim of improving bilateral trade relations, both, the UAE and Kenya have been actively pursuing trade and investment opportunities. We got the opportunity to talk to H. E Mohamed Gello, Ambassador of Kenya to the UAE, to know more about the history, present and future of trade relations between these two countries.

K

enya and UAE have enjoyed significant trade relations over the years. Last year bilateral trade amounted to USD 2.5 billion. Kenya’s exports have increased significantly over the last three years almost doubling from USD 120 million in 2009 to USD 220 million in 2010.

“Kenya’s exports to UAE include tea, meat products, fruits, nuts, fish, coffee and vegetables, while UAE exports to Kenya include petroleum oil, automated data machines, textiles, furniture, motor vehicle spares, electronics and processed 46

DECEMBER 2012

foodstuff among others,” according to Ambassador Gello.

Talking about how the trade relations have evolved over the years, he added, “In the past, trade relations mainly favoured UAE with little growth in Kenya’s exports to UAE. However, UAE has now emerged as one of the leading export market for Kenya and this trend is likely continue over the foreseeable future. This is because Kenya has comparative advantage in agricultural products for which it intends to position itself as a reliable source market. In this

context, Kenya has and will continue to participate in major food exhibitions such as the Gulf Food Exhibition in Dubai and SIAL Exhibition in Abu Dhabi to showcase its products to UAE and other regional markets in GCC.” When we asked him what advice he would give to UAE investors interested in Kenya, he was quick to point out, “My advice to investors in UAE is that Africa has emerged as one of the fastest growing regions in the world despite the weaker global economic environment. Kenya’s economy is projected

to grow by 5.6% in 2013 up from 5.1% in 2012. Kenya’s stock market is one of the best performing, globally driven by strong institutional demand. The Government continues to encourage the exploration of oil and gas and there is optimism that the recent finding of oil will be commercially viable for extraction.”

“With a population of 40 million people and a member of the East Africa Community and the Common Market of the Eastern and Southern Africa (COMESA) comprising of 21 countries with a combined population of 400 million people, Kenya offers a unique location for UAE investors to penetrate this important emerging market which according to recent reports, may enjoy renewed economic growth fueled by new oil and gas findings in the Eastern Africa region,” he added.

According to the Ambassador, for investors interested in Kenya, there are opportunities in oil and gas exploration and extraction, mineral mining, opportunities in food and agribusiness especially in irrigation, water harvesting and storage and food processing. There are also opportunities in infrastructure development, both national and regional projects including the planned road, rail, oil pipeline and new port that will link Kenya to Ethiopia and South Sudan billed to be the largest investment ever in Africa. Opportunities exist in the ICT and energy infrastructure development with special emphasis on the proposed development of an ultra-modern ICT city on the outskirts of the city of Nairobi.

Other areas that require investment include property development and in the tourism sector.

Talking about Kenya’s presence in the UAE, he opined that there are about 200 Kenya companies in UAE dealing mainly in logistics, printing and trading. “Kenyan companies are keen on exploring opportunities in UAE and the GCC region generally. They have been participating and attending almost important exhibitions in UAE with the aim of expanding their markets.”

There are incentives and benefits that are extended to foreign investors in Kenya and they include:

H.E Mohamed Gello, Ambassador of Kenya to the UAE

Investment Incentives • 100 to 150% investment allowance • Capital goods are zero rated • Duty exemption and VAT waiver for

Investment Guarantees • Foreign Investment Protection Act • Kenya Constitution guarantees against expropriation of private property except for purposes of public use or security • Removal of exchange controls guarantees investors repatriation of capital, profits and interests.

• Member of the Multi-lateral Investment Guarantee Agency (MIGA), an affiliate of the World Bank that insures foreign investments against non-commercial risks • Kenya is a member of the International Centre for Settlement of Investment Disputes (ICSID) which arbitrates cases between foreign investors and host governments • The country is also a member of the Africa Trade Insurance Agency (ATIA) which insures investors against political risks When we asked him what, in his opinion, is the future of Kenya-UAE bilateral relations, he was extremely optimistic. “It is

There are also opportunities in infrastructure development, both national and regionally oriented projects including the planned road, rail, oil pipeline and new port that will link Kenya to Ethiopia and South Sudan billed to be the largest investment ever in Africa.

machinery and equipment • EPZ programme • 10 year tax holiday • Exempt from withholding tax and stamp duty

Tax Structure • Corporate tax is 30% (resident), 37% (nonresident) • Income Tax graduated upto 30% of income • VAT is 16% standard rate • Withholding tax 10% (non-resident) 5% (resident) • Duty ranges from 0– 25%.

instructive that Kenya-UAE relations have enjoyed very strong commercial ties to the extent that UAE has emerged as the leading trading partner of Kenya. We expect this trend to continue in the future and indeed expand as both countries consolidate their positions as regional trade, investment and aviation hubs. The two countries have signed several agreements to bolster bilateral relations; the last one on Avoidance of Double Taxation was signed in November, 2011.”

On that note of optimism, we hope that the coming years will witness growing trade relations between the two nations.

DECEMBER 2012

47

FOCUS Bilateral relations

Magical

Kenya!

Following up on H.E Ambassador Mohamed Gello’s interview, we bring you a synopsis of how Kenya has engaged the UAE and what opportunities await UAE businesses.

Political and Diplomatic Relations Kenya opened a Diplomatic Mission at the Ambassadorial level in Abu Dhabi in 1982 while the UAE Embassy in Nairobi opened this year. United Arab Emirates is among Kenya’s top five major trading partners with both countries encouraging intermittent interaction between the respective Chambers of Commerce, stakeholder meetings and participation in exhibitions.

The first Kenya UAE Joint Commission for Cooperation was held in Nairobi, Kenya in 48

DECEMBER 2012

2010 for broadening and strengthening bilateral ties which was given impetus by the recently signed bilateral agreement on avoidance of double taxation. The Consulate of Kenya further encourages regular diplomatic consultations on Consular matters, trade and investment, tourism development and joint measures in the fight against piracy in the Indian ocean and humanitarian assistance.

The opening of the Consulate General of Kenya in Dubai in October 2010 was a milestone in cementing these relations

as evidenced when the Kenyan President accompanied by five Cabinet Ministers and the acting Consul General visited and inaugurated the Consulate on 21 st November, 2011 In his endeavor to extend government services closer to Kenyans who mostly reside in Dubai, Sharjah and neighboring Emirates as well as support to the Embassy.

High level visits As a means to consolidating and expanding good relations between

the two countries, Kenya encourages the exchange of high level visits as evidenced by state level visits by Retired President Danial Arap Moi who visited the UAE in 1980 while the late Sheikh Zayed Bin Sultan Al Nahyan, former President of the UAE visited Kenya in 1984. H.E. Mwai Kibaki, President of Kenya paid an official visit in November, 2011, and both Ministers for Foreign Affairs visited Kenya and UAE respectively in 2009 to strengthen bilateral cooperation.

This is in addition to H.R.H. Princess Haya Bint Al Hussein, First Lady of Dubai, making a one-day visit to Kenya in 2010 and several symposia and stakeholder meetings taking place either way.

Trade and development Kenya remains an attractive investment destination for UAE while the UAE hosts

The Kenya Tourism Board in conjunction with the Consulate organised a one day road show focusing on Kenya as a preferred tourist destination and promotion of UAE as a target market and hitherto encouraged players in the industry to build new business relationships. Ten professionals from the UAE market were selected for a familiarisation tour in Kenya The Consulate has initiated the registration of a Kenyan Business Council in the UAE to harness the potential in export and re-export business flourishing between the two countries and enhance interaction with the various Chambers of Commerce.

In commemoration of the Kenyan National day on 12 th December, 2012, the Consulate is further planning to host a Kenyan food and cuisine day on the 13 th, and a Diaspora day coinciding with the launch of KEWA on the 14 th of December, 2012.

Kenya’s export commodities to UAE include tea, fruits, nuts, fish, coffee and vegetables while UAE exports to Kenya include petroleum, oils, automated data machines and magnetic or optical readers.

an estimated 40,000 Kenyan population living and working mostly in the professional sector, hotel, security and logistics.

Kenya’s foreign policy seeks to deepen cooperation with the UAE in the expansion of markets, foreign direct investment, development assistance, humanitarian assistance, renewable energy (support to IRENA) and strengthen joint commission of cooperation Kenya’s export commodities to UAE include tea, fruits, nuts, fish, coffee and vegetables while UAE exports to Kenya include petroleum, oils, automated data machines and magnetic or optical readers.

Diaspora The government of Kenya has integrated diaspora remittances in its economic planning in cognizance that these remittances hit 6.4 billion Kenya shillings in 2009 with Kenyans in UAE contributing substantially. It is against this backdrop that the consulate has brought together Kenyan businesspeople, professionals and entrepreneurs to establish the Kenyan Business Council whose request for registration has been submitted to the relevant authorities to; (a) Disseminate information to the Diaspora on investment opportunities in Kenya (b) Build investor confidence in the

Kenyan market and other emerging frontiers in Africa (c) Address challenges facing Kenyan Diaspora while securing investment back home (d) Create inter linkages with the Chambers of Commerce in UAE (e) Address challenges faced by new Kenyan investors in the UAE and Middle East markets (f ) Level the playing field by developing a one stop information sharing centre for those interested in investing in either country

LABOUR RELATIONS The Consulate takes cognizance that the UAE has endeavored to protect the rights of foreign workers through elaborate federal labour laws and bilateral work agreements, an important element since the number of Kenyans working in UAE has been growing steadily and if the trend continues, we will likely be a major force in the UAE employment market. Towards this end, we encourage finalisation of the ongoing negotiations on a labour and immigration protocol which both sides have agreed to in principal.

Development and humanitarian assistance The Consulate with assistance from Sharjah Charity organised a fundraising to assist people who were facing food shortages due to the ravages of drought in the northern part of the country.

UAE government has equally supported humanitarian and development projects in Kenya through the Abu Dhabi Fund for Economic Development (ADFED), the UAE Red Crescent Society and the Sheikh Zayed Bin Sultan Al Nahyan Charitable Foundation. The Sheikh Zayed Bin Sultan Al-Nahyan Charitable and Humanitarian Foundation Constructed the Sheikh Zayed Children’s Orphanage and Sheikh Khalifa Secondary School both in Mombasa.

The foundation has also financed the drilling of boreholes in different parts of Northern Kenya.

DECEMBER 2012

49

FOCUS CASE STUDY

A committed partner African Salihiya Cargo and Clearing Company is a logistics company with an integrated supply chain providing chartered air transport of various volumes, to have a sustainable competitive advantage. We caught up with Mohammed Sheikh Abdirahman, Managing Director of the company to know more about their operations.

Mohammed Sheikh Abdirahman, Managing Director, African Salihiya Cargo and Clearing Company

A

frican Salihiya Cargo & Clearing (ASCC) is an Air & Sea and Road Freight forwarding company based in U.A.E. ASCC was founded in 1993 in the U.A.E but has since spread across the globe in leading economies such as China, India, Turkey, Malaysia and many more.

The company provides multi-modal freightair, sea and land.

“We approach the market by offering our dedicated services to our clients, mainly in East Africa, serving them from Dubai International Airport by delivering practical solutions to the various destinations, “said Mohammad.

The company also offers a fully integrated door-to-door service in East Africa through the Eldoret International Airport in Kenya.

The company with its operation base at the Eldoret Airport commenced services from the United Arab Emirates in early 2000.

50

DECEMBER 2012

Abdirahman explained that the traders collectively get their merchandise, which is packed and labelled individually and the consignment is later loaded onto the chartered aircrafts.

“Our vision is to expand further in the African Continent, and not only concentrate on the East African market. The UAE is a vibrant market for African traders, as this is a transit hub for cargo coming from Europe, the Far East and other countries worldwide.

Our aim is to maintain and surpass the client’s satisfaction with the highest integrity and service commitment,” said Abdirahman.

He said that the traders prefer to send their cargo through African Salihiya, because the company has a proven record of providing value added services, ensuring the clients‘consignment reaches its destination safely.

Asked about competition in the market, Abdirahman admits the competition is stiff, especially in Dubai as there are a number of companies that provide such services but maintained that African Salihiya is outstanding due to its commitment to efficiently serve their clients.

“Our rates from Dubai to Eldoret are very competitive and this route is also busy in air traffic. We have at least two flights on a weekly basis, although the number can increase during the peak season,” said Abdirahman.

He disclosed that the company’s main operational base is London, with agent offices in Turkey, Hong Kong, Bangkok and Nairobi, besides Eldoret and Dubai. “So you can see our network is well connected with the London offices serving Europe, while the others serve the Far East, Middle East and African regions. We have been in business for long and this is one reason, why we have an established clientele,” he added.