Kenya undergoes rapid change

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Dear Editor,

Thank you for giving me an opportunity to respond to your article, Exploring new pastures, which examines trade and investment between India and Africa.

Kenya has undergone significant legislative and political change over the past year, making it a more attractive destination for international investors.

In August 2011, the people of Kenya voted in a new constitution which replaced an outdated one that was inherited from their former colonial masters – the British.

With the new regime, immigration and the processing of work permits should get easier. In addition, a county system has been introduced (similar to the state system in India), which will tackle areas previously neglected by the national government. This deregulation of power coupled with the grant of a sizeable budget will allow each county to introduce and collect taxes. There will be major opportunities in road construction, manufacturing, entertainment, education, and banking and insurance to name a few areas.

Each county is to get an international airport and will compete for investment. As a country wealthy in resources, Kenya offers Indian companies a plethora of investment opportunities.

In addition to the new constitution, the following events have put Kenya in the spotlight: Oil has been discovered in sizeable quantities in northern Kenya (a region previously neglected) and coal has been discovered in sizeable quantities near the coast region.

The Kenyan government has launched “Vision 2030”, which aims to upgrade the living standards of the people of Kenya to middle income by the year 2030.

The Nile Treaty, which gave Egypt superior control over the waters of Lake Victoria – the largest fresh water lake in the world – has expired and a new agreement, which has been ratified by most of the nations of the Nile basin, has been negotiated but is yet to be signed by Egypt and Ethiopia. This means that Kenya has huge opportunities in irrigation farming, fish farming, as well as tourism and other water-reliant manufacturing industries.

Kisumu – Kenya’s third-largest city port on the shores of Lake Victoria – is now the capital of the East African Community (EAC), which is a common market union of five countries: Kenya, Uganda, Tanzania, Rwanda and Burundi. The EAC aims at becoming a monetary union like the EU and noteworthy advances have been made with the establishment of the EAC parliament, which is now based in Kisumu.

A few noteworthy Indian investments in Kenya that are important for the country’s economy include Essar’s 51% stake and management of the only oil refinery in Kenya and the launch of its Yu mobile operations in Kenya.

Sanghi Cements of India – the largest private cement manufacturer in the world – is putting up a huge cement manufacturing plant in northern Kenya, while the Mehta Group is venturing into cement and sugar manufacturing.

Tata Motors has also tapped the Kenyan market, opening up distribution centres for their vehicles in the country.

Indian companies face stiff competition from Chinese state organizations, which are being backed by their embassy in Kenya. These organizations are giving unfair competition to other organizations through favourable deals that their embassy arranges with the Kenyan government. However, the historical ties and business synergies binding India and African countries will help strengthen trade and investment flows considerably.

Sagar Shah
Director
Pride Enterprises
Vice-Chairman of the Kenya
Association of Manufacturers
(Western Chapter)

Kenya