AGRIBUSINESS / HORTICULTURE TRADE AND INVESTMENT MISSION TO THE NETHERLANDS
From 11th – 15th June 2018
Agriculture in Kenya plays a vital role in contributing to its economy. The sector brings in 65% of total export earnings to the country and provides the livelihood for more than 80% of the Kenyan population (employment, income and food security needs). More remarkably, the sector employs more than 40 per cent of the total population and more than 70 per cent of Kenya’s rural people. The sector is also a main driver of the non- agricultural sector. Operations such as tourism, transport, education, construction and other social services are in one way or the other intertwined with agriculture.
Agriculture contributes to:
• 24.5% of the GDP valued at USD 10.2 billion in 2013.
• Contributes another 27% to GDP through linkages with manufacturing, distribution and other service related sectors
• Absorbs 18% of formal employment and 60% of total employment
• Contributes 65% of Kenya’s total exports
• Small scale farmers account for 70% of total exports
• Largest exporter of Tea globally at -USD 1.2 billion Every 4th cup of Tea consumed is Kenyan
• Horticulture penetration USD 1.0 billion in exports ,Every 3rd Rose flower sold globally is Kenyan Drivers of Exports
In appreciation of the important role Agribusiness plays in Kenya and its potential for growth,Changemaker International has organized a trade and investment mission for Agri Business/ Horticulture stakeholders to the Netherlands from 11th to 15th June 2018.
Netherlands is the 2nd largest exporter and importer of agri business products globally and offers the best opportunity for trading while attracting investors to Kenya.
The trade mission will showcase Kenya’s Horticultural products and promote trade relationship while attracting Dutch and other European investors to Kenya.
During the business trip we will bring together the most important players of the European scene, who are likely to be of particular interest to Kenyan companies. We shall match big investors with Kenyan Entrepreneurs.
Specific benefits in this context are opportunities for financing, getting subsidies on machinery and equipment and acquire sales contracts from Netherlands as well as technical assistance.
Economy of Kenya
Kenya’s economy is market-based with a few state-owned infrastructure enterprises and maintains a liberalized external trade system. Kenya is generally perceived as Eastern and Central Africa’s hub for Financial, Communication and Transportation services. Major industries include: agriculture, forestry and fishing, mining and minerals, industrial manufacturing, energy, tourism and financial services. As of 2015 estimates, Kenya had a GDP of $69.977 billion making it the 72nd largest economy in the world. Per capita GDP was estimated at $1,587.
The government of Kenya is generally investment friendly and has enacted several regulatory reforms to simplify both foreign and local investment, including the creation of an export processing zone. The export processing zone is expected to grow rapidly through input of foreign direct investment. An increasingly significant portion of Kenya’s foreign inflows are remittances by non-resident Kenyans who work in the US, Middle East, Europe and Asia. Compared to its neighbours, Kenya has well-developed social and physical infrastructure.
As of March 2015, economic prospects were positive with above 5% GDP growth expected, largely because of expansions in telecommunications, transport, construction and a recovery in agriculture. These improvements are supported by a large pool of English-speaking professional workers. There is a high level of computer literacy, especially among the youth.
The agricultural sector continues to dominate Kenya’s economy, although only 15 percent of Kenya’s total land area has sufficient fertility and rainfall to be farmed, and only 7 or 8 percent can be classified as first-class land.
Tea, coffee, sisal, pyrethrum, corn, and wheat are grown in the fertile highlands, one of the most successful agricultural production regions in Africa. Livestock predominates in the semi-arid savanna to the north and east. Coconuts, pineapples, cashew nuts, cotton, sugarcane, sisal, and corn are grown in the lower-lying areas.
Forestry & Fishing
Resource degradation has reduced output from forestry. In 2004 roundwood removals came to 22,162,000 cubic meters. Fisheries are of local importance around Lake Victoriaand have potential on Lake Turkana. However, output from fishing has been declining because of ecological disruption. Pollution, overfishing, and the use of unauthorised fishing equipment have led to falling catches and have endangered local fish species.
Mining & Minerals
Kenya has had no significant mineral endowment. The mining and quarrying sector makes a negligible contribution to the economy, accounting for less than 1 percent of gross domestic product, the majority contributed by the soda ash operation at Lake Magadi in south-central Kenya. One of Kenya’s largest foreign-investment projects in recent years is the planned expansion of Magadi Soda. Apart from soda ash, the chief minerals produced are limestone, gold, salt, large quantities of niobium,fluorspar,and fossil fuel. Recent exploration of Oil , gas and titanium has however yielded positively. This will greatly give a boost to the economy in the next few years.
Industry & Manufacturing
Although Kenya is the most industrially developed country in East Africa, manufacturing still accounts for only 14 percent of gross domestic product (GDP). The industry and manufacturing sectors have become increasingly important to the Kenyan economy, and has been reflected by an increasing GDP per capita. Industrial activity, concentrated around the three largest urban centres, Nairobi, Mombasa, and Kisumu, is dominated by food-processing industries such as grain milling, beer production, and sugarcane crushing, and the fabrication of consumer goods, e.g., vehicles from kits. Kenya also has an oil refinery that processes imported crude petroleum into petroleum products, mainly for the domestic market. In addition, a substantial and expanding informal sector engages in small-scale manufacturing of household goods, motor-vehicle parts, and farm implements.
The largest share of Kenya’s electricity supply comes from hydroelectric stations at dams along the upper Tana River, as well as the Turkwel Gorge Dam in the west. A petroleum-fired plant on the coast, geothermal facilities at Olkaria (near Nairobi), and electricity imported from Uganda make up the rest of the supply.
Kenya is East and Central Africa’s hub for financial services. The Nairobi Stock Exchange (NSE) is ranked 4th in Africa in terms of market capitalisation.
The Kenya banking system is supervised by the Central Bank of Kenya (CBK). As of late July 2004, the system consisted of 43 commercial banks (down from 48 in 2001), several non-bank financial institutions, including mortgage companies, four savings and loan associations, and several score foreign-exchange bureaus.
TRADE BETWEEN KENYA AND NETHERLANDS
Kenya’s exports to Netherlands include cut flowers, tobacco and horticultural products. On the other hand, Netherlands exports to Kenya chemicals, medical equipment,machinery, engines and transport equipment.
The relation between the two nations, however, goes beyond trade.
According to the Dutch Embassy in Nairobi, the Netherlands funds various programes in Kenya in art, governance, trade development, agriculture, water and environment sectors.
Cut flowers contribute to close to 80 per cent of Kenya’s exports to Netherlands. Analysts note that growing ties between the two nations show that Kenya is keen on seeking new trade partners, especially those who benefit her most as in the case of Netherlands.
“Kenya’s central location in East Africa is attractive to Dutch investors. “Investing in this country means access to a market of over 135 million consumers in East Africa, an abundant labor which is skilled and enterprising,” noted Dutch Embassy in Nairobi.
GOOD REASONS TO INVEST IN KENYA
i. A Range of Tax Treaties and Investment Promotion and Protection Agreements.
Kenya has a number of tax treaties and investment promotion and protection Agreements. Exports from Kenya enjoy preferential access to world markets under a number of special access and duty reduction programmes. Kenya is signatory to various agreements aimed at enhancing trade amongst member states.
ii. Multilateral Trade System (MTS)
The World Trade Organization (WTO) is the only international organisation dealing with the global rules of trade between nations. The overriding objective of the WTO is to ensure that trade flows as smoothly, freely and predictably as possible. Kenya has been a member of the WTO since its inception in January 1995.
iii. ACP/Cotonou Partnership Agreement
Exports from Kenya entering the European Union are entitled to duty reductions and freedom from all quota restrictions. Trade preferences include duty-free entry of all industrial products as well as a wide range of agricultural products including beef, fish, dairy products, cereals, fresh and processed fruits and vegetables.
iv. African Growth and Opportunity Act (AGOA)
Kenya qualifies for duty free access to the United States of America (USA) market under the African Growth and Opportunity Act enacted by USA. Kenya’s major products that qualify for export under AGOA include textiles, apparels, handicrafts, etc.
v. Generalised System of Preferences (GSP)
Under the Generalised System of Preferences, a wide range of Kenya’s manufactured products are entitled to preferential duty treatment in the United States of America, Japan, Canada, New Zealand, Australia, Switzerland, Norway, Sweden, Finland, Austria, and other European countries. In addition, no quantitative restrictions are applicable to Kenyan exports on any of the 3,000-plus items currently eligible for GSP treatment.
vi. Investment Protection Guarantee
The constitution of Kenya guarantees protection of life and private property. The Foreign Investment Protection Act guarantees against expropriation of private property by government. Kenya is a signatory to and Member of the Multilateral Investment Guarantee Agency (MIGA) an affiliate of the World Bank which guarantees investors against loss of Investment to political problems in host countries. Kenya is also signatory to International centre for Settlement of Investment Disputes which is a channel for settling disputes between foreign investors and host governments
The construction of superhighway in city of Nairobi is a leading link for investors for transportation renovation of Kenya Railways, Kenya Airways (Pride of Africa) and Lamu Port has made Kenya a hub of International Transportation Centre
viii. Bilateral Trade Agreements
Kenya has signed bilateral trade agreements with several countries around the world. Some of the countries are already members of existing schemes offering market access/duty reduction preferences as above.
viii. Trade Agreements Under Negotiations
1. Argentina 2. Bangladesh 3. Bulgaria 4. China 5. Comoros 6. Congo (DRC) 7. Djibouti 8. Egypt 9. Hungary 10. India 11. Iraq 12. Lesotho 13. Liberia 14. Netherlands 15. Nigeria 16. Pakistan 17. Poland 18. Romania 19. Russia 20. Rwanda 21. Somalia 22. South Korea 23. Swaziland 24. Tanzania 25. Thailand 26. Zambia 27. Zimbabwe 28. Belarus 29. Czech Republic 30. Ethiopia 31. Eritrea 32. Iran 33. Kazakhstan 34. Mauritius 35. Mozambique 36. South Africa