Kenya abounds with opportunities for local exporters

The Sunday Post

trade focus
Alan Majuru

The ongoing engagement and re-engagement initiative driven by President Mnangagwa is bearing fruit.

More and more countries are warming to bilateral trade and economic relations with Zimbabwe.

Recently, the Second Republic has intensified its cooperation with other African countries to explore opportunities used by the African Continental Free Trade Area (AfCFTA).

In March, President Mnangagwa paid a state visit to Kenya, during which he held high-level talks with his counterpart, President Uhuru Kenyatta.

The two presidents discussed the need to expand cooperation between Harare and Nairobi in critical areas such as trade, investment and tourism. Additionally, in recent years, the Zimbabwe-Kenya Joint Permanent Commission for Cooperation (JPCC) has engaged in areas that will strengthen ties between the two countries. What is perhaps important going forward is that local companies explore the opportunities available in Kenya and create strong synergies with like-minded companies in the East African country.

To get this going, ZimTrade – the country’s trade development and promotion agency – recently conducted a survey in Kenya, the aim of which was to identify local products and services with potential in the country.

The survey also included areas that local businesses can consider when onboarding potential business partners.

This article contains excerpts from the results of the survey, which will be discussed in detail at a seminar to be organized in the near future.

overview

Kenya’s economy is the largest in East Africa.

The country’s overall economic output is expected to be robust, registering growth of 4.9 percent in 2022-2023.

In recent years, Kenya’s gross domestic product has experienced sustained growth, supported by ongoing public infrastructure projects, strong public and private sector investment, and appropriate economic and fiscal policies, reflecting the broad-based and diversified nature of Kenya’s economy.

In terms of trade, Kenya is a high-volume import country, absorbing US$15.4 billion worth of products and services from around the world in 2020, according to the Trade Map.

Fuels and oils, machinery and equipment, electrical machinery and equipment, iron and steel, vehicles and vehicle parts accounted for most of the value of imports.

Other important Kenya import products are grain, medicines, fertilizers, sugar and confectionery, home and office furniture, clothing and textiles.

Of this import value, Zimbabwe’s share remains low, accounting for just US$53 million worth of products exported to the country in 2020, according to the Trade Map.

Zimbabwe’s exports to Kenya in 2020 were mainly driven by sugar, tobacco and processed tobacco substitutes.

At the same time, Zimbabwe imported US$11 million worth of products from Kenya, registering a trade surplus of US$43 million.

Although trade between the two countries is fairly light compared to the country’s other trading partners, it is expected to improve following the signing of five Memorandums of Understanding (MoUs) to strengthen ties during the JPCC held in Kenya.

Fresh Produce

Although Kenya does well in terms of horticultural exports, it also has requirements that local farmers can meet.

For example, Kenya imports almost all of its citrus needs and there is a good market for grade B products that may not be good enough for the European market.

However, more opportunities in the fresh produce sector will be unlocked as Zimbabwean farmers consider partnerships with farmers in Kenya, where they will jointly supply markets.

Some of the farmers make agreements with Tanzania, Ethiopia and Uganda to grow export crops to fulfill contractual obligations from international markets.

Processed Foods

Kenya has a population of more than 52 million and offers great market opportunities for high quality and non-GMO consumer goods.

Products with potential include biscuits, cooking oil, sugar syrups, liqueurs, spaghetti and cereals. Kenya attracts high processed food prices compared to Zimbabwe, making it lucrative for local businesses eyeing the market.

Prices in Kenya are generally high, with certain products such as cooking oil costing 100 per cent more than the local retail price.

In terms of product range, Kenya has attracted international brands such as Proctor and Gamble, Unilever, Johnson & Johnson and Nestle. Local companies looking to export to Kenya need to step up their packaging and marketing game as the products are competitive.

Agricultural resources and equipment

The Kenyan government has prioritized agriculture as one of the key drivers of economic growth. Kenya has more than two million small farmers who contribute 60 percent of agricultural produce.

Notably, the country has a well-integrated smallholder value chain system.

Inputs and equipment geared towards small farmers are vital to Kenya and provide opportunities for local suppliers.

Products with potential include foliar fertilizers, controlled release fertilizers and irrigation equipment.

Irrigation equipment, design and construction of custom greenhouses and agricultural netting are other requirements that local exporters can supply.

oil and animal feed

Kenya needs cooking oil for human consumption and cakes for animal feed and current supply cannot meet demand.

Accordingly, in 2021, the Association of Kenya Feed Manufacturers reported that thirty animal feed manufacturers were closed in two months due to shortages of raw materials. Currently the market is dependent on oilcake imports from Zambia, Tanzania, Uganda and Malawi.

Shipments from these countries have fallen due to adverse weather, Zambia’s ban on soy exports and issues related to Covid-19.

All of these challenges present opportunities for local suppliers who can meet the required standards, quality and quantity.

norms

Kenya has strict product standards.

Importers and/or manufacturers must comply with regulatory standards set by the Kenya Bureau of Standards.

These standards apply across all sectors.

Every product sold in Kenya is subjected to KEBAS system compliance to minimize instances of counterfeit products being offered to customers.

market access

The Kenyan market offers various entry strategies and the most profitable for exporters is through a distributor.

Partnering to create a local presence will also help increase exports, particularly for products and services that require consumer support.

Supplying retail chains directly is also an option, but as with any other market, local businesses need to build a sufficient distribution and logistics network to ensure goods and services reach destination areas on time.

In terms of logistics, the product to be exported determines the best choice of means of transport. For small but expensive and perishable products, local businesses can take advantage of Kenya Airways serving the Harare-Nairobi route.

Bulk products can be delivered by road, with the most practical route being through Zambia and Tanzania.

Sea freight is inexpensive but takes longer compared to other modes of transport, so exporters and buyers need to agree on specific timetables to bring products to Kenya.

Allan Majuru is CEO of ZimTrade.

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