Kenya is banking on joint ventures to increase its trade with South Africa in a new campaign that could see many South African firms set base in Nairobi.
Representatives of more than 50 South African firms seeking trade and investment opportunities are expected in Kenya Monday for a week-long commercial mission organised by the ANC Progressive Business Forum and led by the country’s deputy minister for trade and industry, Elizabeth Thabethe.
“The aim of the visit is to facilitate establishment of contacts and initiate dialogue between South African companies and business counterparts in Kenya in pursuit of creating future partnerships for the growth of enterprises in both countries,” said Joseph Kosure, head of bilateral division at Kenya’s Trade ministry.
South Africa tops the list of African countries that have set base in Nairobi.
While a number of firms have pulled out after meeting stiff competition in the past, more than 35 South African companies are still active in Kenya, with interest in banking, insurance, accountancy, pharmaceuticals, retail, tourism and engineering.
The visit comes amid concerns over widening balance of trade in favour of South Africa.
Official data shows that while Africa’s largest economy has increased its chunk of Kenya’s market, shipping in Sh73.8 billion ($868 million) worth of goods in 2011 (fifth largest import source), Kenya is yet to penetrate its market.
No concessions
Kenya, which has traditionally blamed its bilateral partner for erecting tariff and non-tariff barriers on its goods, only exported goods worth Sh2.8 billion (about $33 million) over the period. Two years ago, South Africa banned Kenya’s avocados citing infestation by flies.
Kenya and South Africa belong to different economic blocs — Common Market for Eastern Southern Africa (Comesa) and Southern Africa Development Community (Sadc) respectively, meaning firms engaging in cross-border business do not enjoy tariff concessions.
The barriers are, however, expected to fall once the free trade area bringing together EAC, Comesa and Sadc is finalised.
But local business people believe Kenya can only penetrate the South African market if it improves domestic competitiveness.
The rapid growth of imports from South Africa is driven mainly by demand, not cordial bilateral relations.
“Unlike other African countries, South Africa is an advanced economy with established manufacturing base that is able to supply a variety of goods that are not available locally,” Vimal Shah, CEO of Bidco Oil Refineries told the Business Daily in a recent interview.
Trade ministry officials said Monday’s event will provide opportunity for Kenyan companies to establish contacts, create dialogue and exchange ideas for future cooperation.
Among the sectors represented and seeking partnership with Kenyan companies are construction, hospitality, mining, infrastructure development, real estate and retail, the ministry said in a statement.
“With a liberalised economy, relatively developed infrastructure, strong financial institutions, fast growing middle class, four fibre optic cables, cheap highly skilled manpower and a market access to 133 million population of the East Africa Community, Kenya provides a platform for any investor keen to reap from the fastest growing economies of Eastern Africa,” the ministry said.
Source :africareview.com
