Opportunities in Africa featuring Kenya

 
EXECUTIVE SUMMARY 

Kenya is a country of extremes, with an average growth in GDP of 5% during the past few years, with an inflation rate as higher than its GDP growth (8% in 2018) and an unemployment rate of 40%.

The Kenyan Government is working on the Kenya Industrialisation Transformation Programme, which will culminate in 2030 and should see Kenya as a newly industrialised, middle-income country.
The focus of this programme is the downstream beneficiation of agricultural products, including fish and livestock.  This will include the building of abattoirs, food and beverage processing equipment, canning factories and dairy processing plants.  One of the factors hindering this process, is the lack of, or quality of, existing infrastructure in the region. Many projects to alleviate this are being implemented or being planned.

As with most of the world, fluctuating commodity prices have affected the mining sector in Kenya, albeit that it was not an extensive sector in the first place.  The retail sector is developing at a fast rate with 470,000 square meters currently in the development pipeline. South African retailers Checkers and Woolworths have already entered this market.

HISTORY OF KENYA

The roots of the colonial history of Kenya go back to the Berlin Conference in 1885, when East Africa was first divided into territories of influence by the European Powers.  The British Government founded the East African Protectorate in 1895 and soon after, opened the fertile highlands to white settlers.

Even before it was officially declared a British colony in 1920, these settlers were allowed a voice in government, while the Africans and Asians were banned from direct political participation until 1944.

Kenya was under a state of emergency from October 1952 to December 1959, due to the Mau Mau rebellion against British colonial rule and thousands of Kenyans were incarcerated in detention camps.  During this period, African participation in the political process increased rapidly and in 1954 all three races (European, Asian and African) were admitted into the Kenya Legislative Council on a representative basis.

In 1962 Jomo Kenyatta was released from detention, where he had been since
1953, for directing the Mau Mau uprising, and became Kenya’s first Prime Minister and Kenya gained full independence from the British on the 12th of December 1963.  In 1964 Kenya became a republic with Kenyatta as its first President, and Kenya joined the British Commonwealth.

ECONOMY 
Kenya’s GDP in 2018 was 5.5% and the inflation rate stood at 8%.  Total imports into Kenya were US$15.8 billion, the top four imports were:

  • Machinery and mechanical appliances;
  • Electrical machinery and equipment;
  • Vehicles (not including railway or tramway rolling stock);
  • Iron and steel.

In terms of export from Kenya these totalled some US$5billion in 2018 and the top four were:

  • Coffee, tea;
  • Live trees and other plants, bulbs and cut flowers;
  • Edible vegetables;
  • Articles of clothing and apparel and accessories

Hot off the press: “Washington, April 30, 2019 – The World Bank today approved a $250 million International Bank for Reconstruction and Development (IBRD) loan to enhance access to affordable housing finance for Kenyans who are unable to access long-term housing finance.” (Reuters, 30 April 2019)

VISION 2030 

The vision for 2030 is Kenya’s current blue-print for the future of economic growth.  The long-term goals of this vision are to create a prosperous, and globally competitive nation with a high quality of life by the year 2030.  To do this it aims to transform Kenyan industry all the while creating a clean and secure environment.  The vision is separated into three different pillars: economic, social and political governance.

The Economic Pillar

The economic pillar is seeking to consistently achieve a high economic growth averaging more than 10% for 23 years beginning year 2007.  The economic areas that the Vision 2030 is targeting are: tourism, agriculture, wholesale/retail trade, manufacturing, IT enable services, and financial services.

The Social Pillar

The Social Pillar of Vision 2030 has the objective of improving the quality of life for all Kenyans.  It aims to do this by targeting human and social welfare programs, specifically: education and training, health, environment, housing and urbanisation, children and social development, and youth and sports.

The Political Pillar

The Political Pillar of Vision 2030 objective is to more to the future as one nation and envisions a democratic system that is issue based, people centred, results oriented, and is accountable to the public.  It targets five main areas:  The rule of law – the Constitution of Kenya, electoral and political processes, democracy and public service delivery, transparency and accountability, and security, peace building and conflict management.

MINING IN KENYA
A new mining act signed into law by President Uhuru Kenyatta in March 2018, could see Kenya’s nascent mining industry finally come into its own. Oil companies, like UK’s Tullow Oil, have been prospecting in Kenya for a few years now, and they are expected to start production by 2021.  Due to a mining law passed late 1940 combined with geological data that was 32 years older than that, Kenya missed out on the mineral exploration boom that benefited its neighbours Tanzania and Uganda.

The Kenyan ministry for mining was created about three years ago and the sector’s size is bolstered by the fact it includes production of cement and soda ash.  India’s Tata Chemicals partly owns Kenya’s largest manufacturer of soda ash the Magadi soda company.  Dan Kazungu, the current mining minister, has reportedly envisioned a strategy that he hopes will see up to 20 more operators such as Base Resources in the coming 15 years.  Government revenues from mining and mineral operations were just Ks1.65bn ($16.5m) in the last financial year and Mr Kazungu expects these to have more than doubled by June 2018, the end of the financial year, with a goal of 10 per cent of GDP by 2030 — a figure likely to be well over $7bn.  This is achievable he says, by attracting foreign investments and registering the tens of thousands of Kenya’s informal miners, developing a mining services industry and expanding the small gemstone industry.Mining experts and analysts say that in addition to gold deposits Kenya also has base metal deposits such as copper, rare earth minerals and some coal.  Most believe that the country does not have the prospects of either Uganda or Tanzania, but Mr Kazungu remains optimistic.  “We don’t even know what we’ve got,” he says. “About 95 per cent of the rock structures coming up from Tanzania have not even been mapped.”  The aim is to make Kenya a regional hub for mining, as it is for financial services. “We should bring minerals here and do value addition,” he says, referring to the processing of raw materials. “About $24bn-worth of minerals go to Thailand each year for value addition and half of that comes from Africa. If we organise ourselves and get even 10 per cent of that, we’ll be making progress.”
 
DOING BUSINESS WITH KENYA – COURTESY OF BUREAU VERITAS 
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Lesley Squires
Market Intelligence & Exports
Tel: +27 11 883 0119 | Cell: +27 82 758 8074