Kenya flowers making it big in the USA

Kenya flower exporters make $259,000 deals in the US.

Kenya flowers are attracting the interest of American flower buyers. A recent event in Dallas, USA saw Kenyan flower growers exhibit at the show with a total of $259,000 in deals with the US customers.

The Kenyan flowers are getting a fare review in continental US following the introduction of a direct flight from Nairobi to New York last year which has eased cargo and passenger movements.

Flower growers from Kenya have been waiting long for the moment that they could enter the enormous US market with Kenyan grown flowers. Shipping directly to the US market without having to reload the flowers somewhere in Europe, affecting both their freshness and cost price, was simply not possible until now.

During the Dallas event, over 12 flower growers booked and exhibited  at the edition.

World Floral Expo is a trade show that offers a platform especially for growers, where they can introduce and present their very best export products to the US flower buyers.

Kenyans flower exporters took the opportunity to travel to Dallas to investigate their chances on the US market. At the same time representatives of various Kenyan Agriculture departments also flew in to the show to find out more about US import requirements for fresh flowers, so they can serve their growers better when they start exporting.

With to date almost 75 exhibiting floral companies from Ecuador, Kenya, Colombia, Holland, Canada, but as well as from the USA itself, it promises to be a very interesting trade show for the flower buyers. A unique chance to see and source fresh flowers grown on different continents, such Africa, European, South America and North America. Besides fresh flowers also many related dry floral products will be on display as well.

UASID Kenya also noted the effectiveness of the show to the Kenyan flower farmers. In a post on their social media, USAID Kenya said, ” As one of the largest exporters of flowers globally, Kenya is working to increase its U.S. market share and create jobs by taking advantage of AGOA.”

Also read: Nairobi Farmers Market in Runda opens in July

Also: More than rose flowers: Oserian workplace innovation, inclusivity awarded

No loan? What Kenyatta secured at China Belt and Road Summit

Kenya has deferred extension of the SGR project, secures avocado deal

As global leaders and the business community met in Beijing, China, for the second Belt and Road Forum for International Cooperation (BRF), Kenyan’s were keenly watching to see what will unravel.

The forum which took place last week brought together about 37 Heads of States, top government officials and business leaders from over 100 countries, who met to discuss issues of inter-continental connectivity for global trade.

A project of President Xi Jinping, China is using the Belt and Road Initiative (BRI) to enhance both China’s development and its cooperation with global partners.

President Uhuru Kenyatta led a strong delegation from Kenya to the summit which also included High Level Heads of State Meetings and sideline business forums.

It had earlier been expected the government will use the Beijing meeting to secure additional funds from China for construction of Phase 2B of the Standard Gauge Railway (SGR).

As per earlier reports, including confirmations by government officials, Kenya had hoped to secure a Ksh370 billion (USD3.65 billion) loan for development of the project whose Phase One (472 kilometre Mombasa —Nairobi line) is currently operational.

It was constructed by China Road and Bridge Corporation (CRBC) on a Ksh327 billion (USD3.2 billion) loan from the Exim Bank of China, with operations commissioned by President Kenyatta on May 31, 2017.

Phase 2A is being developed by a sister company-China Communications Construction Company (CCCC), funded by the Chinese at a cost of Ksh150 billion (USD1.48 billion).

The 120-kilometre line which runs between Nairobi-Mai Mahu and -Duka Moja, a small centre between Suswa and Narok town, is 90 per cent complete.

READ:As SGR heads to Naivasha, Cargo to Nairobi still not off the ground

The government needs funds for Phase 2B (Duka Moja-Kisumu) and the final stretch (Phase 2C) connecting Kisumu to the Kenyan-Ugandan border of Malaba.

In a recent meeting at the Chinese Embassy in Nairobi (March 19), Kenya Railways acting Managing Director Philip Mainga had said the government  was keen to secure funds during the BRF meeting.

“We hope to sign phase 2B during the meeting,” Mainga said, “Kenya Railways is working with the Chinese government in achieving the commitment we have on the 974 kilometre Mombasa-Malaba SGR project.”

Loan or no loan?

Efforts by the government to secure the facility, however seems to have hit the rocks, with the government shifting its position on borrowing from the Chinese to fund the remaining parts of the project.

According to reports, China failed to agree on the terms of the loan that the Kenyan government had proposed.

It is said the government had asked for half of the money to be given as a grant and the remaining be a loan with more flexible terms.

The Chinese on the other hand are said to prefer collateral, something the Kenyan government is keen to avoid.

This is in the wake of a ballooning debt portfolio which hit USD53.3 billion (about Ksh5.406 trillion) in December, nearly double the country’s annual budget.

Kenya’s debt obligation to Beijing, mainly for infrastructure development, closed 2018 (December) at USD6.2 billion (Ksh628. 9 billion). This is up from USD5.3 billion (Sh537.6  billion) a year earlier.

READ:Is China setting a debt trap on Kenya?

Traditionally, the Chinese have used grants and interest-free loans to rope in least developed countries to its Belt and Road Initiative.

On Saturday,( March 27) the government dismissed claims that it had failed to secure funds for the extension of the SGR from Naivasha to Kisumu at the forum, where President Kenyatta met his host Xi Jinping.

“It is important to note that the question of funding for the extension of the Standard Gauge Railway from Naivasha to Kisumu was not on the agenda of the meeting between the two Presidents,” State House Chief of Staff Nzioka Waita said in a statement.

“Whilst making it clear that the Government of Kenya did not discuss any funding proposals for the extension of the SGR at this meeting, it is very critical to state at this point that the SGR project is a regional project and the complexities in negotiating its completion involve several countries and securing financing for its completion could take several years of intricate negotiations,” he added.

Transport Cabinet Secretary James Macharia has since said the SGR, which has reached Mai Mahiu, will now be linked to the old Meter Gauge Railway (MGR) to allow transportation (mainly cargo) into the hinterland mainly Uganda.

“We have about forty three kilometers between Naivasha SGR and Naivasha MGR. The meter gauge is an investment that was made many years ago, it is being used to transport goods to Uganda and therefore we have to make sure that that connectivity in Naivasha is quickly addressed,” Macharia said.

“One of the things we are discussing in this visit is how we can quickly close that gap in Naivasha and we have already good proposals to make sure that when we finish the SGR in August, we can  move goods from Naivasha SGR to Naivasha MGR. That way then we have a seamless movement of goods all the way from Mombasa to Kampala,” the CS added.

What President Kenyatta secured

Shifting focus from the SGR loan, the government has affirmed President Kenyatta did not return home empty handed.

The President who participated at both the Summit and High Level Heads of State Meetings oversaw the signing of a trade agreement for the export of frozen avocados from Kenya to China.

This follows the signing of an MoU on Sanitary and Phytosanitary Standards late last year for the export to China from Kenya of various horticultural products.

“The trade agreement on avocado which is a huge boost to our farmers marks the beginning of a new chapter in our relations with China that aims to address the trade imbalance and promote mutual economic benefit,” Waita said.

Current trade is in favour of China. According to the Kenya Economic Survey 2019, released last week, imports from china were valued at Ksh370.8 billion (USD3.65 billion) in 2018, against Ksh11.1 billion (USD 109.4 million) worth of exports.

READ:Kenya’s biggest trading partners, Uganda tops EAC

The second item on the agenda was the signing of a Framework Agreement between the Kenya National Highways Authority and the China Road and Bridge Cooperation, for the construction of Kenya’s first expressway from Jomo Kenyatta International Airport (JKIA) to Westlands.

This landmark project aimed at decongesting Nairobi City is privately funded through the Public Private Partnerships legal framework.

The third item was the signing of a financing agreement valued at Ksh17 billion (USD 167.6 million) between the government of Kenya and China EXIM Bank, for the construction of the Konza Technopolis Data Center and IT infrastructure.

“Construction of basic infrastructure at the Konza Technopolis is in the final stages of completion and this IT project will enable the special zone to be operational by 2020. This is a huge milestone for the project conceived over 10 years ago and will be a significant source of jobs in the technology sphere,” State House said.

President Kenyatta also highlighted to his counterpart plans by the government to break ground on the Industrial Park and Dry Port to be constructed at the Naivasha Special Economic Zone by June 2019.

He has since welcomed Chinese companies interested in establishing industries in Kenya’s Special Economic Zones to visit the site.

The Industrial Park and Dry Port are expected to serve the country and neighbouring states of Uganda, Democratic Republic of Congo, Rwanda and South Sudan.

The Kenyan government shared its short term plans to rehabilitate the existing meter gauge railway to the Port of Kisumu “to ensure seamless interconnection with the SGR at the Naivasha facilities.

“SGR remains an essential project of Kenya’s Vision 2030 strategy and a key enabler of regional economic growth within East and Central Africa. As a Pan-Africanist, President Kenyatta remains committed to laying the necessary foundation for the trans-African rail and road infrastructure that will transform intra-African Connectivity and Trade for the economic benefit of over a billion Africans,” Waita noted in his statement.

During the summit, President Kenyatta called for the full participation of the private sector in the Digital Silk Road Initiative, “for seamless connectivity to be attained as envisioned by the BRI.”

As global leaders and the business community met in Beijing, China, for the second Belt and Road Forum for International Cooperation (BRF), Kenya was keen to secure a Ksh370 billion (USD3.65 billion) loan from China for extension of its Standard Gauge Railway to its border with Uganda. President Uhuru Kenyatta however oversaw the signing of a trade agreement for the export of frozen avocados from Kenya to China among other deals.
Presidents Uhuru Kenyatta and Xi Jinping.

According to Kenyatta, it is important to strengthen connectivity, open up markets, commit to rule based international trade, strengthen multilateral cooperation and ensure that development pursued is people centered, sustainable and ensures shared prosperity.

Chinese President Xi Jinping said USD64 billion in deals were signed at a summit on his Belt and Road Initiative and more nations would join the global infrastructure programme as he sought to ease concerns over the colossal project, Agence France-Presse reported. The US did not send any representatives to the meeting.

Beijing has pledged to ensure that projects on the new Silk Road are green and financially sustainable following concerns about debt and environmental damage.

“We are committed to supporting open, clean and green development and rejecting protectionism,” Xi told journalists at the end of the forum.

Washington, India and some European states have looked at the project with suspicion even as China continues to work around strengthening its global influence with a keen eye on Africa.

READ:How China plans to beat US in capturing Africa

ALSO READ:US-China rivalry to shape Kenya, Africa’s foreign policy in 2019

President Jinping’s foreign policy is said to focus on re-inventing the ancient Silk Road to connect Asia to Europe and Africa through massive investments in maritime, road and rail projects, with hundreds of billions of dollars in financing from Chinese banks.

READ:How Trump will beat China in Africa

 

Kenya’s crude oil to hit global market this year

The first batch is intended to test the international markets

Kenyan crude oil could test the global markets before the end of this year, latest developments indicate, as stocks of the commodity continue to pile up at a storage facility in the port city of Mombasa.

In its latest operational update for the period January 1-April 25, 2019, British firm-Tullow Oil plc (Tullow), says the first export cargo is expected in the third quarter of 2019, even as exploration and drilling intensifies in the Turkana region.

This comes as the Early Oil Pilot Scheme continues to truck 600 barrels of oil per day (bopd) to Mombasa, where 80,000 barrels of oil are being stored ahead of export.

READ:Kenya oil exports gains momentum as Tullow bounces back to profitability

The crude oil from the Turkana oil fields is being stored at the defunct Kenya Petroleum Refineries Ltd (KPRL) (refinery) facility at Changamwe, Mombasa.

“Following receipt of regulatory authority approval, which is expected shortly, production will be increased to 2,000 bopd, with the first export cargo expected in the third quarter of 2019,” the firm notes.

Tullow has been searching for buyers of Kenya’s small-scale crude petroleum exports since last year ahead of the first shipment, with a number of unnamed potential buyers said to have expressed interest.

“Tullow has begun to market Kenya’s low-sulphur oil ahead of the first lifting with initial market reactions being very positive,” Tullow said in a recent statement.

Petroleum Principal Secretary Andrew Kamau had earlier revealed that buyers from Europe, India and China had expressed interest Kenya’s crude oil, though the government remains mum on the exact potential buyers.

Sources within government revealed to The Exchange that the country has reached out to at least 18 global oil refinery firms for uptake of its first crude oil.

According to the government, the first batch is intended to test the international markets’ reception to the country’s crude oil before commercial production picks. Tullow plans to commit to commercial oil production later this year.

“Tullow continues to target a Final Investment Decision (FID) in Kenya by year-end although this remains an ambitious target,” the management said this week.

The firm is finalising its Front End Engineering Design (Feed) studies for the planned construction of a crude oil pipeline from Turkana to Lamu, where the country is developing its second major sea port.

“Tullow is finalising its FEED studies for both the upstream and midstream, and both the upstream and midstream ESIAs (Environmental and Social Impact Assessments) remain on track for submission to the National Environmental Management Agency at the end of the second quarter,” CEO Paul MCDADE said.

“The government of Kenya, via the National Land Commission, has gazetted the land required for the upstream development in Turkana and, so far, approximately two-thirds of the pipeline. Discussions with government regarding key commercial agreements are making steady progress. A late 2019 FID remains contingent on these key government of Kenya deliverables,” the management notes in its update.

Oil pipeline

Kenya is looking forward to the development of an 892-kilometre crude oil pipeline from the oil fields in the Northern region of Turkana to the Coastal County of Lamu.

Last year, Tullow hired Wood Group (Plc) to design the pipeline needed to pump crude from the Lokichar fields to Lamu, with commercial production and exports anticipated for 2021/2022.

The cost of the pipeline is estimated at USD1.1 billion (Ksh111.6 billion), with a further USD2.9 billion (Ksh 294.1 billion) needed for upstream operations.

Other investors in the country’s oil projects include Canada’s Africa Oil and France’s Total. Kenya’s government is expected to take a stake through the state-owned National Oil Corporation of Kenya (NOCK).

Australia’s Worley Parsons has been tasked as the engineers for Tullow’s oil blocks.

According to Tullow, the Amosing and Ngamia fields have estimated contingent resources of about 560 million barrels, with plateau production potentially reaching 100,000 barrels per day.

Tullow and its joint venture partners have proposed to the Kenyan government that the Amosing, Ngamia and Twiga fields be developed as the foundation-stage of the South Lokichar Development.

This foundation stage includes a 60,000 to 80,000 bopd central processing facility and the export pipeline to Lamu.

The installed infrastructure from this initial phase is expected to be utilised for the optimisation of the remaining South Lokichar oil fields and future oil discoveries, allowing the incremental development of these fields to be completed at a lower unit cost post the first oil production.

Total gross capex associated with the foundation stage is expected to be approximately USD3 billion (Ksh304.3 billion).

Last year, Tullow had earmarked USD70 million (Ksh7.1billion) for investment in its Kenyan operations.

The company has spent more than US$1 billion (Ksh101.4 billion) to prospect for oil and develop of wells in the country.

Kenya’s readiness

In March this year, President Uhuru Kenyatta signed into law a Bill outlining how oil revenues will be shared between the national government, counties and local the communities.

Under the new Petroleum Act, county government from where oil is produced will enjoy 20 per cent of revenue from petroleum operations, while five per cent will go to local communities living around the oil fields.

The national government will retain a bigger chunk which is 75 per cent of the revenue.

The law is expected to address concerns mainly by locals who last year paralysed the pilot evacuation of the commodity by road to Mombasa.

READ:Tullow Oil suspends operations in Turkana citing insecurity

The new law however halves the 10 per cent earlier awarded to locals in a previous bill passed by Parliament ( in 2016),  which went unsigned by the President.

On safeguarding and managing resources from oil and other natural resources, the government is working on a Sovereign Wealth Fund, expected to be in place before the country becomes a net oil exporter.

During his State of the Nation address on April 4, the President said his administration will be presenting the Sovereign Wealth Fund Bill during the current session of parliament, a move that could see the fund created before the end of his second term (2022).

The bill proposes creation of a Fund and provides a legal framework to guide the investment of revenues from oil, gas, mineral and other natural resources.

The Fund, as proposed in the bill, comprises three critical parts which include  a Stabilization Fund, an Infrastructure and Development fund; and a Future Generation Fund.

“We are a country blessed with natural resources, which, if properly managed, will transform in a big way our nation and the welfare of our people,” the President said, “It must be our solemn duty as a State to manage those resources sustainably for the fair and equitable benefit of both present and future generations.”

Sovereign Wealth Funds are state-owned investment fund’s whose source of revenue is most often balance of payments surpluses, fiscal surpluses and in particular resource revenues.

In February, the National Treasury invited Kenyans to give views on the draft Sovereign Wealth Fund Bill, 2019 and on Kenya’s draft Sovereign Wealth Fund Policy.

If implemented, Kenya will join the likes of Angola, Rwanda, Libya, Morocco, Nigeria and Botswana, African states which have establishing wealth funds in their respective countries.

Globally, Norwegian Sovereign Wealth Fund remains one of the best examples with a value of more than $1 trillion (about Ksh101.4 trillion).

Data by the Sovereign Wealth Fund Institute shows over 65 economies, majority of them resource-rich countries, own at least one wealth fund.

Lack of proper management of oil and mineral proceeds have been blamed for the never-ending resource-linked conflicts in Africa, with the resources being viewed as a curse rather than a blessing as millions lurch in poverty despite the continent being resource rich.

Multinationals and their respective countries have been accused of reaping billions by repatriating profits and raw commodity, with little benefit going to local communities and host nations.

ALSO READ:Rights bodies calls for greater scrutiny of Kenya’s Turkana oil revenues

 

 

Skills report says IT Skills gap between Kenya and Uganda to widen

By 2022, the value of Kenya’s and Uganda’s ICT sector is projected to be US$1.7 billion and US$1.33 billion, respectively.

The 4th edition of Nairobi Tech Week (NTW2019), has launched the IT Skills Gap Report. The report entitled The Development of IT Skills and Jobs in Kenya and Uganda, provides insights and recommendations on what Kenya and Uganda need to do in order fully benefit from digitalisation.

The Report which is a collaboration between Mercy Corps and Moringa School, explores the sources, nature and size of the existing IT skills gap in Kenya and Uganda. The importance of the Report is compounded by the well-documented growth of and joblessness within Africa’s youth population.

Stacey Ondimu, Country Director Moringa School noted, “Providing our youth with the right skills, will help us address one of the key barriers to the growth of Africa’s tech sector. The Report should help IT professionals understand trends in skills demand, and employers understand and appreciate tech’s role in their businesses.”

The Report examines existing IT skills amongst IT professionals and compares them to the skills demanded by local and international employers, now and in the future. It is based on interviews with employers, educators, IT professionals, and entrepreneurs, and incorporates market forecasting and supporting desk top research.

By 2022, the value of Kenya’s and Uganda’s ICT sector is projected to be US$1.7 billion and US$1.33 billion, respectively.  Though digital jobs have the potential to create significant opportunities in Kenya and Uganda, there is a shortage of IT professionals, which is expected to grow.

By 2022, the value of Kenya’s and Uganda’s ICT sector is projected to be US$1.7 billion and US$1.33 billion, respectively- The Exchange
Jussi Hinkkanen, CEO, Fuzu with Victoria Mukami, Senior Lecturer, Africa Nazarene University and Doris Chelangat Muigei, Head of Business and Partnerships, Shortlist at the launch of the IT Skills Gap Report

In Kenya, analysis of advertised jobs reveals developers to be in highest demand. More than 50% of postings seek mid-level applicants with 2 – 5 years’ experience; only 2% seek entry level candidates. In Uganda, almost half of IT-related job postings were for administrative IT roles. Just 13% were for developers.  Kenya’s IT sector is more advanced and the current Ugandan policy and regulatory environment deters investment.

All stakeholders who participated in the report agreed that the current formal educational system is a major contributing factor. In Kenya, 40% of survey respondents resort to teaching themselves, while many Ugandans take online IT courses offered by international training and certification providers to increase their chances of employment.

All Ugandan employers who were interviewed mentioned Ugandan graduates not only lack hard skills, but also the soft skills needed for effective service delivery.

Interviews also suggest that many employers still do not fully understand what IT entails, and by extension, businesses often do not know who to hire, the skills needed, and how to deploy them effectively. In Kenya, the number of IT professionals in employment will grow to 95,000 in 2022 from 57,000 in 2017. In Uganda, over the same period, these figures will grow from 28,500 to 43,400.

In 2022, it is expected 17,671 higher education students will graduate with IT qualifications in Kenya and 3,222 students in Uganda. These numbers will not address our IT skills gap.

Gituku Ngene of Mercy Corps says, “We think the Report helps both universities and specialist IT schools in Kenya and Uganda understand what they need to do, to address the needs of the private sector. If they adapt curricula to reflect industry needs, add the practical application of theoretical concepts and mix in soft skills, they are well on their way to equipping our youth to fully participate in the fourth industrial revolution.”

Read also: Challenge: Kenya’s smartest ICT students heading to South Africa

Kenya’s biggest trading partners, Uganda tops EAC

China dominates as Kenya’s top import source globally 

Uganda is Kenya’s biggest trading partner within the East Africa Community (EAC), latest data show, with China dominating the global scene.

The Economic survey (2019) shows total trade volumes (import and exports) between Kenya and Uganda in the year 2018, were valued at Ksh111.3 billion (USD1.09 billion).

Tanzania comes in a distant second with a total trade value of Ksh47.6 billion (USD468.9 million) while Rwanda is third with Ksh19 billion (USD187.2 million).

Trade with DR Congo, South Sudan and Burundi, mainly export markets for Kenya, were valued at Ksh15.2 billion (USD149.6 million), Ksh12.9 billion (USD127.1 million) and Ksh6.6 billion (USD65.02 million) respectively.

Uganda

During the year under review, Uganda increased the value of its exports to Kenya by 17.6 per cent to close at Ksh49.4 billion (USD486.7 million), from Ksh42 billion (USD413.8 million) in 2017.

READ:Uganda keen on enhancing exports to EA region

“The value of imports from Uganda rose largely driven by increased imports of maize, sugar, milk and animal feeds,” the Kenya National Bureau of Statistics (KNBS) has noted.

Kenya however exported more to her neighbour where total volumes were valued at Ksh61.9 billion (USD 609.9 million),a slight increase from Ksh61.8 billion (USD608.9 million).

Uganda exports to Kenya include wood and articles of wood, wood charcoal, fodder, mineral, cereals, dairy products, honey, edible products, sugars and sugar confectionery, coffee, tea, mate and spices, tobacco and manufactures tobacco substitutes among other products.

In return, Kenya exports salt, sulphur, earth, stone, plaster, lime and cement, mineral fuels, oils, distillation products, plastics, pharmaceutical products, vehicles, beverages, spirits and vinegar, soaps, lubricants, waxes, candles, modeling pastes among others.

Tanzania

The value of imports into Kenya from Tanzania increased by 3.5 per cent to Ksh17.8 billion (USD175.4 million) up from Ksh17.2 billion (USD169.5 million), mainly on live animals, cereals, beverages, spirits and vinegar, fertilizers, mineral fuels, oils, distillation products and textile articles.

Kenya exports to Tanzania on the other hands gained marginally to close at Ksh29.8 billion (USD293.6 million) from Ksh28.5 billion (USD280.8 million), despite the existing tariffs and Non-Tariff Barriers (NTBs) between the two states.

READ:Kenya, Tanzania mistrusts ripping apart the EAC

Last year, the two EAC member states were entangled in a trade war after Dar es Salaam denied unrestricted entry of Kenyan made chocolate, ice cream, biscuits and sweets entry into its market.

Nairobi retariated by imposing new tariffs on Tanzania products such as flour with both breaching the EAC common market protocol, which allows free movement of locally manufactured goods.

Presidents Uhuru Kenyatta and John Magufuli have on several occasions directed their ministers to resolve outstanding trade disputes, to pave way for increased trade between the two countries and the region as a whole.

ALSO READ:Why Magufuli, Kenyatta are worried over Kenya-Tanzania borders

Rwanda and the rest of EAC

The President Paul Kagame led country lost ground on its exports to Kenya where the value dropped by 29.4 per cent to close at Ksh1.2 billion (USD 11.8 million) from Ksh1.7 billion (USD16.7 million) in 2017.

This is expected to further dwindle based on the recent tiff with Uganda which has led the closure of borders, with Uganda being the main transit route between Kenya and Rwanda.

Kenya’s exports to Rwanda however surged to Ksh17.8 billion (USD175.4 million) from Ksh17.1 billion (USD168.5 million) in value.

Those to DR Congo, South Sudan, and Burundi however dropped to Ksh15.2 billion (USD149.6 million), Ksh12.9 billion (USD127.1 million) and Ksh16.8 billion (USD165.5 million), from Ksh18.9 billion (USD186.2 million), Ksh6.6 billion (USD 65 million) and Ksh7.4 billion (USD72.9 million) respectively.

“This was occasioned mainly by the political instability in these regions,” a trade expert told The Exchange.

EAC and Africa

Kenya’s total imports (value) from her EAC peers totaled Ksh68.4 billion (USD 673.9 million) an upward trend compared to Ksh60.9 billion (USD 600 million) the previous year.

READ:EAC bloc has made significant gains in reducing trade bottlenecks

The East Africa economic power house however lost ground on her exports to the regional markets where the total value dropped 1.9 per cent to close at Ksh129 billion (USD1.27 billion), from Ksh131.6 billion (USD1.29 billion) the previous year.

In the continent, South Africa topped as Kenya’s biggest trading partner with the trade being in favour of the southern country.

This is on the Ksh64.7 billion (USD637.4 million) worth of imports from SA up from Ksh61.9 billion (USD609.8 million), against exports valued at Ksh4.4 billion (USD43.3 million). Kenya however gained 57.1 per cent from Ksh2.8 billion (USD 27.6 million) a year earlier.

Other notable trading partners in Africa include Egypt where the country exported to, goods worth Ksh201. Billion (USD198 million), and Somalia whose imports from Kenya in the year amounted to Ksh15.1 billion (USD148.8 million).

Imports from Swaziland were valued at Ksh8.6 billion (USD84.7 million) a drop from Ksh11.2 billion (USD110.3 million ) in 2017, while those from Zambia closed the year at Ksh6.9 billion (USD67.9 million) after dropping from Ksh7.7 billion (USD75.8 million).

Mauritius, another key trading partner exported goods worth Ksh6.1 billion (USD 60.1 million) to Kenya, a drop compared to Ksh7.3 billion (USD 71.9 million) in 2017.

During the year, total imports from the African market were valued Ksh205.9 billion (USD 2.03 billion) a slight increase from Ksh200.5 billion (USD 1.98 billion) the previous year.

That of exports however dropped slightly, by 3.4 per cent, to close at Ksh216.2 billion (USD 2.13 billion) compared Ksh223.9 billion (USD 2.21 billion) the previous year, meaning Kenya lost its export market share in intra-Africa trade.

China and the World

China continues to dominate as the top source of imports into the country in the global scenario, despite losing five percentage points on its trade with Kenya last year.

READ:US-China rivalry to shape Kenya, Africa’s foreign policy in 2019

According to the survey released this week, imports from china were valued at Ksh370.8 billion (USD3.65 billion) in 2018, a slight drop from 390.6 billion (USD3.85 billion) the previous year.

India comes in a distant second where imports from the Far East nation totaled Ksh185.3 billion (USD1.83 billion). This was however an increase from Ksh170.4 billion (USD 1.68 billion) worth of imports into the country in 2017, mainly on account of medicinal and pharmaceutical products.

The drop in the value of imports from china is seen as a result of reduced importation of machinery and equipment, related to the construction of the standard gauge railway, whose phase two-Nairobi-Mai Mahiu is 91 per cent complete.

Major Chinese imports to Kenya include machinery, electronics, motorcycles, motor vehicles spare parts, furniture and clothes.

Other top import sources for the country are Saudi Arabia and the United Arab Emirates (UAE), where total imports were valued at Ksh172.7 billion (USD 1.70 billion) and Ksh147 billion (USD 1.45 billion ) respectively.

The Asian continent remains the top source of imports into the country having closed at a total of Ksh1.168 trillion (USD 11.5 billion) in value last year.

It is followed by Middle East whose imports closed the year at Ksh355.7 billion (USD3.50 billion).

Imports from Europe and the US were valued at Ksh292.6 billion (USD2.88 billion), and Ksh85.9 billion (USD846.3 million) respectively last year.

READ ALSO:How Trump will beat China in Africa

Exports to china last year were valued at a paltry Ksh11.1 billion (USD 109.4 million) with the total exports to Asia closing at Ksh180.9 billion (USD1.78 billion).

“The increase in exports to Far East was largely due to significant improvement in exports to India, China, Thailand and Afghanistan,” KNBS notes in its survey.

According to the official government statistics, trade balance widened by 1.4 per cent to a deficit of Ksh1.147 trillion (USD11.30 billion) in 2018, from a deficit of Ksh1.131 trillion (USD 11.14 billion) in 2017.

“The growth of exports weakened in 2018 compared to the strong performance recorded in 2017, as increased uncertainties in the global trade led to constrained external demand,” KNBS Director General Zachary Mwangi noted during the release of the survey in Nairobi.

Kenya’s top exports include tea, horticulture, articles of apparel and clothing accessories, coffee, titanium ores and concentrates, collectively accounting for 62 per cent of the total domestic export earnings.

“The rise in exports was mainly as a result of increase in exports of horticultural products, while the slowdown in import growth was attributable to decline in imports of food due to favourable weather conditions as well as a reduction in the value of machinery and transport equipment imports,” Mwangi said.

The government has prioritized growth of the manufacturing sector, under the big four agenda, with a key focus on value addition on local produces, as it seeks to bridge the trade deficit and increase the sector’s contribution to the GDP.

“We have been implementing various initiatives to support manufacturers. This includes cutting by half the cost of electricity for industries,” National Treasury CS Henry Rotich said.

READ:Five ways Kenyan government bets will boost manufacturing sector

Emerging Trends of Islamic Banking and Finance Industry in CIS Countries

The total volume of Islamic Banking and Finance has been exceeded $2.6 trillion globally. The growth of the Islamic banking and finance volume in different continents and regions is continuous with the positive node but sometime its vary region to region.

Due to the reason, about 2,500+ Islamic banking and financial institutions are working in every region including both Muslims and non-Muslim countries. In the current era, Islamic banking and finance started in 1960s from Egypt and Malaysia and dramatically spread over the Middle East, Africa, Europe and other regions.

The growth of this phenomenon swiftly increased in Middle East, South and East Asia whereas, in some regions, the growth of the industry was comparatively slow as in Northern African (Tunis, Morocco, Algeria etc.), Central Asian and Balkan countries. But keeping in view the Islamic banking and finance industry initiative was taken very late in Commonwealth Independent States (CIS) countries and its growth indicate that CIS countries are the emerging Islamic banking and finance market for near future.

The delay for Islamic finance initiative in CIS countries may count in many folds, it would be due to Russian influence in CIS countries, mind set of Russian block and limited relations with International Banking and Financial Markets were few hurdles for the development of Islamic Banking and Finance in CIS, but recently, unstable Russian relationship with Europe and sharply decline of oil prices compelled Russia to get benefit from the best financial alternative, which is definitely Islamic banking and finance. The recently friendly Islamic Banking policies of Russia geared-up Islamic banking and finance industry in CIS countries, and now they opened for Islamic Banking and Finance industry aggressively.

In 1992 the CIS organization was established. Total Muslim population of CIS countries is estimated 75 million which is a good news for growing Islamic banking and finance industry. CIS countries’ list consist of 10 countries which includes Kazakhstan, Uzbekistan, Tajikistan, Kyrgyzstan, Turkmenistan, Azerbaijan, Russia, Armenia and others.

In CIS countries, the Islamic banking and finance market can be divided into three parts. At first, there are countries (Kazakhstan, Uzbekistan, Kyrgyzstan and Azerbaijan) where the pace of Islamic banking and finance industry is satisfactory and these countries want to promote it as sustainable financial alternative. Secondly, there are countries (Tajikistan, Turkmenistan and Russia) where the Islamic banking and finance industry exist with low growth rate. At final, there are countries like Armenia, Ukraine, and Belarus etc. where there is no initiative taken so far. However, overall Islamic banking and finance position in CIS countries is encouraging.

Islamic finance leader in CIS countries

If we want to determine the Islamic finance leader in CIS countries, the credit goes to Kazakhstan where the Islamic banking and finance was started in 1992 but the growth was not phenomenal. After the recent financial crises in 2008, Islamic banking and finance again get a momentum in Kazakhstan with appropriate support of government institutions. Currently, 1 full-fledged Islamic banks and 4 Islamic banking windows are operating in the country. Takaful, Islamic leasing (Ijarah) and Islamic micro-financial institutions are also growing in the country, Kazakhstan also exercised Islamic Agricultural Finance product in the country with the financial assistance of Islamic Development Bank. The recent establishment of Astana International Financial Center (AIFC) caused innovation in Islamic financial market which would be positive sign for Kazakhstan to get eminent regional positioning in Islamic Banking Industry.

Azerbaijan comes after Kazakhstan where the Islamic finance history is as old as in Kazakhstan but unfortunately, Islamic finance industry in Azerbaijan could not get the attention of government as much as was in Kazakhstan. Although there is no full-fledged Islamic bank in the country but 4 Islamic banking windows are working in the country with limited Islamic Banking Regulations. Whereas, under ICD- IsDB funding support, one Islamic leasing company offering Ijarah products to its clients while couple of Bank/Microfinance Institutions also utilizing ICD-IsDB funding for Islamic Banking and Finance.

Uzbekistan secured its positive position for Islamic finance industry in CIS countries after considerable initiatives taken by the new president H.E. Shavkat Mirziyoyev. Three Islamic banking windows are operational and accepting deposits on Shariah bases. Few Islamic leasing companies also offering Ijarah services, but it is predicted that after proper Islamic Banking and Finance regulations, Uzbekistan can supersede other regional countries in the race of Islamic Banking hub for Central Asia.   Kyrgyzstan is the only country in CIS where the Islamic banking law has been approved from the parliament in 2011 and one conventional bank is in the process to be full-fledged Islamic bank in near future.

Russia is also one of the biggest player of Islamic Banking and Finance in the CIS countries with having significant Muslim population, Russia has been trying to promote Islamic Banking since long but unfortunately did not get significant success but in recent Govt. led initiative to support Islamic Finance will play a vital role for the development of Islamic banking, Islamic Finance, Sukuk and Takaful in Russia but also in other CIS countries as well.

The most important factor of the growth of Islamic banking and finance industry in CIS countries is the Islamic Development Bank’s support whereas, ICD – IsDB also has huge investment portfolio for Islamic banking and Islamic leasing avenues in CIS countries including Azerbaijan, Kazakhstan, Uzbekistan, and Kyrgyzstan etc.

The writer has started putting his research, advisory, consultancy and capacity building services in CIS countries for Islamic banking and finance industry from 2006. In this connection he has conducted various capacity building and training workshops and conferences. He is hopeful that the volume of Islamic finance industry will increase by 100% in next five years which also will strengthen global Islamic finance industry. AlHuda CIBE is going to organize one more Islamic banking and finance conference of its kind in Tashkent, Uzbekistan on 2nd May 2019. The CIS Islamic Banking and Finance Forum will gather the CIS Islamic finance industry specialists and stakeholders on a single platform to promote Islamic banking and finance in the region.

 

(Mr. Muhammad Zubair Mughal is the Global CEO of AlHuda Center of Islamic Banking and Economics since 2005 and eminent writer of Islamic Banking and Finance, he can be contacted at  Zubair.mughal@alhudacibe.com )

 

What Africa stand to gain from ACFTA

The African Continental Free Trade Area isn’t simply a ‘Free Trade Agreement’ it’s about establishing a unified continental market with 1.2 billion potential customers and where the private sector is a major engine to make it happen.

This, according to the East African Business Council (EABC) was the tone from the discussions of the meeting held on Thursday in Arusha about how the East African Private sector including Small and Medium Enterprises (SMEs) could benefit from the AfCFTA.

The one-day meeting, organized jointly between the EABC and the UN Economic Commission for Africa (ECA), convened close to 40 key players from the region’s private sector.

The office for Eastern Africa of ECA estimates large potential gains from the AfCFTA, including an increase in intra-African exports of Eastern Africa by nearly US$ 1 billion and job creation of 0.5 to 1.9 million.

“Together African economies have a collective GDP of 2.5 trillion USD, making it the 8th largest economy in the world. That makes the continent much more attractive to investment, both from within and from outside the continent”, said Andrew Mold, Acting Director of ECA in Eastern Africa. “This should encourage business people to take advantage of AfCFTA and make the investments necessary to sustain economic growth and create employment”.

Single continental market

According to data from the African Union, the objectives of the CFTA is to create a single continental market for goods and services, with free movement of business persons and investments, and thus pave the way for accelerating the establishment of the Continental Customs Union and the African customs union.

The agreement is also expected to expand intra African trade through better harmonization and coordination of trade liberalization and facilitation regimes and instruments across RECs and across Africa in general as well as resolve the challenges of multiple and overlapping memberships and expedite the regional and continental integration processes.

It is also expected to enhance competitiveness at the industry and enterprise level through exploiting opportunities for scale production, continental market access and better reallocation of resources.

The 18th Ordinary Session of the Assembly of Heads of State and Government of the African Union, held in Addis Ababa, Ethiopia in January 2012, adopted a decision to establish a Continental Free Trade Area (CFTA) by an indicative date of 2017.

The Seven Clusters 

The Summit also endorsed the Action Plan on Boosting Intra-Africa Trade (BIAT) which identifies seven clusters: trade policy, trade facilitation, productive capacity, trade related infrastructure, trade finance, trade information, and factor market integration.

The CFTA will bring together fifty-four African countries with a combined population of more than one billion people and a combined gross domestic product of more than US $3.4 trillion.

According to Nick Nesbitt, EABC’s Chairman it is important that the continent having a clear vision to put an end to the fragmentation of the internal market.

“I really applaud everybody who has involved in creating the AfCFTA because their vision is the one of pan-Africanism. It is something our founding founders aspired to. Our thanks to ECA for being at forefront of this conversation and pushing the agenda forward so that the continent becomes a single economic trading bloc”, he said.

Kenneth Bagamuhunda, Director General of Customs and Trade at the East African Community Secretariat, cited the experience of Regional Economic Communities as the building blocks for the AfCFTA. “The AfCFTA should build on what has already been achieved in regional negotiations like the Tripartite Free Trade Area, as well as within our respective regional blocks” he said.

Bagamuhunda highlighted governments need to set a conducive environment for the successful implementation of AfCFTA.

The AfCFTA was signed in March 2018, at a historic meeting of the African Union in Kigali. 52 of 55 African Union member states have so far signed the AfCFTA, 22 countries that have ratified the agreement, which was the minimum number required for it to enter into force.

According to a study by united nations conference on trade and development (UNCTAD), the CFTA must be ambitious in dismantling barriers and reducing costs to intra-African trade and in improving productivity and competitiveness.  Intraregional trade liberalization needs to be contextualized in a broader developmental framework that will provide benefits in terms of realizing Agenda 2063 of the African Union and the 2030 Agenda for Sustainable Development of the United Nations.

“Development-oriented regionalism can contribute to spearheading Africa’s achievement of development goals, the building of resilience to external financial and economic crises and the fostering of inclusive growth. It can have spillover benefits in terms of helping foster peace, security and political stability on the continent. UNCTAD, working in partnership with the African Union Commission, African States and other development partners, is committed to supporting the attainment of these objectives, embodied under the CFTA.” The study reads in part.

UNCTAD also notes that the CFTA may also mitigate costs associated with inaction in building an integrated market. The international trading environment within which Africa participates is changing rapidly with the proliferation of regional trade agreements and, in particular, mega-regional trade agreements, such as the recently concluded Trans-Pacific Partnership, the Transatlantic Trade and Investment Partnership and the Regional Comprehensive Economic Partnership. These arrangements may create spheres of trade centred on partner economies, and African countries face the risk that preferences and trade shares in these markets may erode.

According to an EABC brief on AfCFTA, one of the key steps beyond the ratification of the AfCFTA is to prepare and submit tariff offers, under modalities on goods that will determine tariff liberalization on goods to be undertaken between the AU Member States. Under AfCFTA, African Union Member States have agreed to remove at least 90 percent of tariff on goods imported from other State parties. This implies that under AfCFTA the coverage of products with zero-rated is not intended to be 100 per cent but rather 90 per cent with the remaining 10 per cent tariff classified as sensitive and exemption goods.

Currently is not very clear that 90 percent of tariffs refers to 90 percent of total tariff lines only or a combination of a minimum of 90 percent of total tariff lines and not less than 90 percent of the total value of imports.

In addition, there are uncertainties over the remaining 10 percent tariffs and how these are to be approached in relation to exempted and sensitive products, and how those tariffs are to be liberalized, whether partially or in full, and over what timeframes. Some quarters are proposing that of the remaining 10 percent: 7 percent are classified as sensitive goods with a lengthy phasing-in period, and 3 percent of goods to be exempted altogether. However, it is not known which products will be classified as sensitive and exempt. The most negotiating challenge is to determine which tariff lines will be classified as exempt and sensitive

Also Read: EABC means business when it comes to regional trade

 

New plan to grow Ford’s vehicle market in Kenya

NIC Bank and CMC Kenya have entered a deal for Ford Ranger vehicles

CMC Motors, the sole distributor of the Ford Ranger vehicles, and NIC Bank, have signed a partnership agreement that will see CMC- Ford customers receive up to 95 per cent financing on all Ford ranger vehicles.

The deal is based on a 60-months-repayment plan, the latest in an effort to grow the uptake of commercial motor vehicles in the country.

This promotion scheme will ease the acquisition of Ford Ranger vehicles as customers will be able to enjoy maximum loan tenure of 60 months; 60 days repayment holiday after vehicle release and insurance services arranged through NIC bank.

Speaking in Nairobi during the signing ceremony of the financing deal, CMC Motors Group CEO Noel Mabuma said: “Given the vast expertise in financial services from Al Futtaim, CMC is proud to launch the interest subvention scheme that will ease the acquisition of the Ford range of vehicles.”

A Ford Ranger customer for example who seeks to purchase a vehicle worth Ksh 4,395,000 (USD 43, 296) will only be required to pay Ksh95,000 (USD935.87 ) for a period of 60 months.

“His or her first payment will only be required after 60-days of vehicle delivery,” Mabuma noted.

With the current financial support coupled with Ford Protect, it is now even easier to own a Ford with peace of mind through CMC, Ford and NIC bank, the two noted in a joint statement.

Ford Protect is a maintenance and service plan available for any Ford in the model line up in Kenya.

“With Ford Protect, all the owner needs to think about is driving, insurance cover and tire replacement. You can choose the premium service offering from three years 60,000 kilometres to eight years for 300,000 kilomteres. The reason for this is the confidence behind the robust workmanship of the products,” CMC notes.

Ford protect can be bundled in the CMC-NIC financing plan and for any Ford Everest and Ranger double cab, it is free for three years covering or 100,000 kilometres  whichever comes first.

NIC Bank Executive Director Alan Dodd has lauded the partnering with CMC, saying it will reinforce NIC position as the leading bank in asset finance in the country.

READ:NIC Bank, Toyota Kenya in unique asset financing scheme

“By virtue of our strengths in our product offering, this strategic partnership for all Ford Models presents a strong value proposition to SMEs and individual customers who are keen on expanding their businesses and buying new assets but face strained cash flows due to ever fluctuating economic situations in the business environment,” Dodd said.

He added that customers will now be able to apply for asset finance loans through the newly launched online portal that is available on the bank’s website. Through this, customers will get approvals in 24 hours, the quickest turnaround time in the market.

ALSO READ:Toyota, NIC Bank offer customers 90 days repayment holiday on cars

Tanzania’s Rufiji Hydro Power project gets first batch of disbursement

The Tanzanian government on 24th April, 2019 released Tshs.688.65 billion ($299.4 million) in advance payment to the contractor of the 2,100 MegaWatts (MW)Rufiji Hydroelectric power project ahead of the start of the construction in June.

To be implemented jointly by Arab Contractors and Elsewedy Electric Company the project is now in mobilization stage which includes setting up of enabling infrastructure such as houses, roads and water prior to its official commencement.

Speaking during the handing over event, the Treasury Permanent Secretary Doto James said that payment was part of an estimated Tshs.6.5 trillion ($3 billion) to be wholly funded by the government.

`The issuance of the advance payment marks a crucial milestone towards commencement of the implementation of the project which upon completion will play a pivotal role towards realization of Tanzania`s industrialization strategy and attainment of middle income status by 2025, ` he declared.

The project will also improve irrigation agriculture, water supply in Dar es Salaam and Coast regions as well as enhancing tourist activities in the Selous Game Reserve. The dam is expected to create a flood plain downstream that can support crop production of 450,000 tonnes of paddy, 7,000 tonnes of maize, 3,000 tonnes of cotton, and some vegetables which will boost agriculture contribution to the GDP which stood at 26.4 per cent in 2017.

For his part, Energy Permanent Secretary Dr. Hamis Mwinyimvua said the project which will be implemented in 36 months to generate 2,115 MW represents a greater power source than all electricity generated from all other sources in the country, which currently stands at 1,602 MW.

He assured the contractors of full government support, urging them to work hard and with due diligence to ensure quality work.

Mohamed Hassan, the deputy project director of Arab Contractors commended the government for its solid commitment towards the implementation of the project. The consortium shall work to ensure that they provide quality work and within the set time frame.

`We appreciate the government of Tanzania for paying us on time. Our job now is to produce quality work, ` he told the gathering.

Last week, CRDB Bank Plc and the United Bank for Africa (UBA) signed a Tshs.1.6 trillion ($737.5 million) bank guarantee to the Tanzania Electric Supply Company Ltd (Tanesco) for the implementation of the massive hydropower project.

On December 12, 2018, the government signed a Tsh.6.5 trillion ($3 billion) landmark deal with Arab Contractors to implement the project.

The signing of the deal was witnessed by President Magufuli and Egyptian Prime Minister Mustafa Madbouly in Dar es Salaam.

Speaking shortly after the agreement was signed, President Magufuli reiterated his rejection of exaggerated environmental concerns, saying the project will instead be eco-friendly. Critics including environmentalists and conservationists who have been several times quoted as  saying the project would adversely impact wildlife ecosystem.

Also read: Tanzania and Egypt to forge ahead with $3 billion dam project

 

 

 

 

UK firm kicked out of Nairobi Securities Exchange

It was suspended from trading at the NSE in May 2017

Troubled logistics firm-Atlas Development and Support Services (ADSS) has been delisted from the Nairobi Securities Exchange (NSE) .

The delisting took effect on April 25, bringing to an end a five-year stint at the Nairobi bourse.

Registered in Guernsey, UK, in 2002, Atlas was admitted to trade at the NSE in December 2014, where it was cross-listed in the London Stock Exchange (LSE)’s Alternative Investment Market (AIM) segment.

In December 2015, the firm decided to close its operations in Kenya, placing its Kenyan subsidiaries into liquidation by way of a Creditors Voluntary Liquidation after financial headwinds.

The firm had hoped the closure of the Kenyan subsidiaries, Ardan Logistics Kenya Ltd, Ardan (Medical Services) Ltd and Ardan (Civil Engineering) Ltd, would improve the group’s overall cost base.

Two years later (May 2017), it was suspended from trading at the NSE following resignation of its Kenyan nominated advisor I&M Burbidge Capital.

The Nairobi move came after the firm had been delisted at the LSE in the same month, following the resignation of its Nominated Advisor, Stifel Nicolaus Limited.

READ:Atlas suspended from trading at LSE

NSE chief executive officer Geoffrey Odundo had then attributed the decision to the firm’s “unresolved issues at the London Stock Exchange” where it had been suspended following the resignation of its nominated adviser.

Atlas had also failed to prepare and publish its financial statements from December 31, 2015 to date, hence failing to comply with the continuing listing obligations.

The Nairobi headquartered logistics firm also did not have a Kenyan nominated advisor, and no updates have been made by the company to the shareholders and the general public regarding their closing down process.

“Notice is hereby given on the mandatory delisting of Atlas Development and Support Services from the Nairobi Securities Exchange (NSE) effective April 25, 2019,” NSE said in a statement on Friday.

“This follows the closing down of the company’s operations; the deregistration of the company in its country of incorporation under the Guernsey laws and failure by the company to adhere to regulatory requirements from the year 2017 when the security of the company was suspended from trading on the NSE,” the bourse added in its public notice.

The delisting has been approved by the Capital Markets Authority (CMA).

It now winds up Atlas’s existence in the Kenyan market, a blow to investors and shareholders who had hoped of its possible turnaround or listing in another stock.

The firm has had previous troubles including tax evasion claims in Ethiopia, a market it had entered through the acquisition of TEAP Glass.

The Ethiopian Revenue and Customs Authority seized USD2.4 million from the subsidiary’s account to clear the tax liability.

The Nairobi-headquartered support services and logistics company was listed on the Growth Enterprise Market Segment (GEMS) of the NSE, after it had (then) raised USD5 million through a private placement to Kenyan investors.

According to the then CEO Carl Esprey, the firm had hoped to tap the growing opportunity in the region as well as leverage on local content.

“The strong interest from Kenyan investors is recognition of the opportunity to create a world class development and support services provider in Eastern Africa,” Esprey had said during the listing.

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