Industrial Sector Focuses on Adding Value
| Thanks in part to stringent reforms, Kenya’s GDP grew from 2.8% in 2003 to 4.3% in 2004, and this economic progress is revising investor interest in the country’s high-potential industrial sector. |
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Chirau Ali Mwakwere
former Minister
for Foreign Affairs
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ccording to Chirau Ali Mwakwere, former Minister of Foreign Affairs, Kenya offers strong investment prospects in a number of fields, particularly agriculture, food processing, manufacturing, motor vehicles production, construction, chemicals, pharmaceuticals, metal products and engineering.
In the agriculture sector, former Minister Chirau Ali Mwakwere cites the production of flowers, beans, pineapples, macadamia nuts, melons, and passion fruit, as well as the production of sugar, tea, meat and dairy products. “The main investment opportunities in the agriculture sector concern adding value to agricultural products which are currently exported in raw form,” he explains. The dairy industry has also seen strong growth, with forward-thinking investment in processed milk products that can be more easily used and stored in rural areas, as well as exported. Kenya remains the world's third-largest exporter of tea.
Kenya’s major export commodities include cut flowers, fluorspar, gemstones, gold, petroleum, pyrethrum, salt, soda ash, sodium carbonate, sugar, tea and coffee, while top imports are automobiles, beverages, capital goods, consumer goods, crude oil, and equipment, petroleum products, pharmaceuticals, professional and scientific instruments and resins. Kenya’s export processing zones (in Mombasa, Athi, Nairobi, Della Rue and Nakuru) offer up-to-date services for manufacturing.
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Among Kenya’s advantages for investors are its strategic location in East Africa, Nairobi’s recognized role as a commercial and trading hub for the region, and Kenya’s membership in a number of trading organizations, including the East African Cooperation formed by Kenya, Tanzania and Uganda with the goals of harmonizing tariffs and customs regimes, supporting the free movement of people, and improving regional infrastructures.
Kenya’s successful microenterprises also represent investment opportunities that can benefit local communities as well as profiting investors.
Recognizing that promoting foreign direct investment in Kenya is a top priority if the country is to get its economy back on track, the government is continuing to develop incentives. As for the future, former Minister Mwakwere says, “I expect Kenya to realize meaningful growth within the next five years.” |
| Value-added Food Processing One Goal for Agriculture Sector |
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griculture is the cornerstone of Kenya’s economy, employing around 80% of the population and accounting for more than 50% of the country’s export earnings. The country’s key crops include tea, coffee, tobacco, cotton, sisal, pyrethrum, and cashew nuts, while exports of fruit, flowers, and vegetables are also attracting an increasing amount of investment. Horticulture and tea production have been cited as offering particularly strong export potential, and cut flowers have become one of the country’s top export products.
Subsistence farming for beans, cassava, potatoes, maize, sorghum, and fruit is common throughout the country and provides much of the diet for Kenya’s rural population, along with the raising of cattle, sheep and goats.
Drought conditions over the past few years have severely hampered the agricultural sector, although certain parts of the country, particularly on the coast and around Lake Victoria, receive adequate rainfall to support more successful crop cultivation as well as a growing dairy industry.
Kenya’s agriculture sector needs foreign investment, particularly in more advanced, environmentally sensitive farming methods, infrastructure, and value-added food processing. The country’s varied climates, long history of agrarian production and rich natural resources make it a promising choice for investment in agriculture. |
| Asego Holdings Limited |
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otton, with its drought-resistant qualities, is a good choice for Kenya, and for the past decade Asego Holdings Limited has been helping Kenyan farmers realize the potential of this crop. The company has a staff of 50 and owns two cotton gins (in Homa Bany and Kendu Bay), and also runs a number of training programs to assist cotton farmers utilize their land correctly, boost yields, and improve the quality of their cotton.
As Managing Director Edward Okundi puts it, “Our vision is to deliver world-class, in-depth training, insights and practical support for our cotton farmers in order for them to realize significant and sustainable incomes from the cotton industry.” One of the company’s initiatives has been to offer free seeds of high-quality cotton plants so that farmers can improve their crops and increase production.
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Edward Okundi
Managing Director
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“Our vision is to deliver world-class support for our cotton farmers.”
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As for the future, Asego is aiming to upgrade the diesel-powered machinery at its cotton gins, which are currently expensive to run and involve high annual maintenance costs. “We propose to change to more efficient electrically powered gin machinery coupled with the appropriate training for operational and maintenance staff, and we welcome American investors who can help us achieve these goals,” Okundi says. He adds that US investment is also needed for pesticides, fertilizers, seeds for high-yield cotton plants, and the overhaul and replacement of the company’s trucks.
In the next five years, Asego aims to begin to export its products, boost its ginning capacity to 5,000 bales and broaden its activities throughout the region. Demand for cotton currently exceeds supply, and investors and partners will find that an investment in Asego is a high-potential opportunity. Okundi says, “We have 10 years of success in this industry and we aim to have a successful cotton ginning operation as well as serve as the ambassador for our cotton farmers.” |
WATER
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Urgent Need for Water Infrastructure Improvements |
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Martha Karua
former Minister
for Water Resources
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hanks to a number of factors including recent droughts, pollution, population increases and poor management, around half of Kenya’s citizens cannot count on reliable supplies of clean water. In response to this crisis, the government created the Ministry of Water and Irrigation three years ago, and the ministry has made significant progress. The Ministry has recently adopted more stringent regulations governing water-quality and flood control, and is working to improve the country’s water infrastructure, waste-water treatment facilities and hydropower in order to ensure an adequate supply of clean water to all Kenya’s citizens and businesses.
Martha Karua, former Minister, explains that the ministry is open to cooperation with US companies and investors. She says, “Kenya is in need of capital for water. I am open to companies dealing with equipment and methods and equipment for making more efficient service deliveries concerning water. I think that we can all work together. Our water boards are also looking for investment concerning infrastructure and irrigation. Our ministry is looking for grants and loans from development partners, and we remain open to ideas. In fact we created eight new parastatals hoping to make water more sustainable so that it will eventually pay for itself.” |
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| Nairobi Water Company |
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ollowing a complete reorganization under new management, Nairobi Water Company has achieved major successes over the past three years in bringing a reliable supply of water to Kenya’s residents and businesses. F.K. Mugo, Managing Director, who has overseen the company’s transformation, says, “We have taken extreme measures to build a strong organization that is making a reliable and adequate supply of water available throughout Nairobi.”
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F.K. Mugo
Managing Director
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“Nairobi Water Company will be a blue chip company.”
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Nairobi Water Company is also managing the leakages that had plagued the system in the past and is minimizing sewer overflows. The company has significantly reduced the amount of water loss in the system, and has upgraded its billing system, formerly limited to annual billing, in order to get more frequent bills to clients in a timely manner.
As for the future, Mugo aims to further improve the city’s water services through additional staff training and the introduction of a new billing system which will require the installation of new billing software. He explains, “Our goals are to offer an online, serialized metering system where customers’ account numbers will be aligned with their meter and plot numbers. This will ensure faster and more efficient meter-reading, which will leave meter supervisors enough time to cross-check customers’ readings and guarantee accuracy.”
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Thanks to Nairobi Water Company’s upgrades and improvements, the city’s water supply is now increasing by 10,000 cubic meters per day. Yet Mugo would like to improve the water system even further through upgrading technology, for example concerning leak-detection systems.
Nairobi Water Company offers excellent investment potential and welcomes contacts with US investors. Mugo says, “With the correct investment of capital, the company can grow and achieve the goals it has set for itself, and the returns on investment will be high. I believe Nairobi Water Company will be a blue chip company and one of Kenya’s chief success stories.”
Asego Holdings Limited (back)
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P.O. Box 43417
Argwings Kodhek Rd. - Nairobi
Tel.:+254 202 717045
Fax:+254 202 716980
Asego@mfano.com |
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