India topples UAE as chief exporter of goods to Kenya


India has overtaken the United Arab Emirates (UAE) to become Kenya’s top source of imported goods, newly released data show.

The world’s second most populous nation grew its exports to Kenya by 27.1 per cent to Sh174.6 billion in the first 11 months of last year or 15 per cent of Kenya’s total imports.

That growth allowed New Delhi to topple UAE from the top trading partner position it has occupied for the past two decades — helped by exports of petroleum products.

Official statistics show that the UAE’s share of Kenya’s total imports dropped to 11.9 per cent saddled by a 22 per cent drop in the value of its merchandise to Sh138.2 billion.

India’s stride to the top spot came on the back of big-ticket contracts in healthcare and energy sectors that were concluded in the past 12 months.

The Indian High Commission in Nairobi said Indian investors had intensified their search for business opportunities in Kenya and that the effort was bearing fruit.

“Kenya has become an important market for Indian firms and most have intensified their search for business opportunities with very positive results,” said Tanmaya Lal, the deputy High Commissioner at the Indian embassy.

Mr Lal said that geographical proximity has made it easier for Indian companies to export to Kenya while keeping prices close to what they charge at home.

The world’s most populous nation and its second largest economy China also grew its exports to Kenya by 16.4 per cent to Sh154.7 billion beating the UAE to the third position.

Chinese goods now account for 13.3 per cent of Kenya’s total imports, affirming the rise of Asia as an important trading partner for East Africa’s largest economy.

UAE has consistently featured as the top source of imports in Kenya in the past 10 years save for 2010 when China sold Sh120.6 billion worth of goods more than UAE’s Sh116 billion.

The relegation of UAE to the third trading spot has been linked to a decline in Kenya’s intake of petroleum products that form the bulk of Abu Dhabi’s exports.

Kenya’s imports of fuel and lubricants fell 5.3 per cent to Sh305.7 billion in the 11 months to November compared to Sh323 billion a year earlier.

The decline in the petroleum shipments – that accounts for a quarter of Kenya’s imports — also pulled down the value of total imports by 3.3 per cent to Sh1.19 trillion in the same period.

India and Kenya have tightened their economic ties in the past three years, paving the way for Delhi to sign major supply deals with Nairobi and deepen its export position.

Top on the list of big contracts that Indian companies have signed in Nairobi is the one to supply equipment and technical skills for construction of a 127-kilometre double circuit power transmission line in Kenya.

The line will help Kenya to stabilise its supply of electricity imports from neighbouring Uganda by connecting the Western Ugandan town of Tororo to Kenya’s national grid at Lessos near Eldoret.

The Sh20.8 billion transmission line is part of the grand plan to interconnect the Great Lakes region’s electricity grids and is financed by the African Development Bank.

India’s Global Procurement Consultants has also won a contract to monitor the implementation of a Sh11.4 billion World Bank-funded project to fight HIV/Aids in Kenya.

The firms won the deals a few months after Delhi sent its largest ever business delegation to Nairobi in 2010.

A communiqué released after a meeting between Prime Minister Raila Odinga and India’s minister of Commerce and Industry, Anand Sharma during the visit said the two countries had agreed to increase the value of trade between them to Sh212 billion ($2.5 billion) by this year.

Mr Odinga said Kenya would rely on India for generic drugs for use in public hospitals as the newly-created anti-counterfeit agency seeks to rid the country of fake drugs.

The PM firmed up the Nairobi deals with a visit to India where the Export-Import Bank of India (Exim Bank) offered Kenya a $61.6 million (Sh5.2 billion) loan to finance construction of power transmission lines.

Under the deal, Indian companies will supply equipment and manpower for the project and make a 100 per cent expense claims with Exim Bank — the force behind India’s globalisation ambitions.

India has in the past decade changed course to focus on developing economies in Asia, Latin America and Africa.

“The direction of Indian merchandise exports has been shifting towards Asia, Africa and Latin American and Caribbean region,” Exim Bank said in a statement.

India’s exports to Africa accounted for 6.6 per cent of its total exports last year, up from 4.7 per cent in 2003, according to official statistics.

India’s rise is expected to intensify its battle with its Asian rival China that has also made major inroads into Kenya with a huge stake in government contracts and consumer goods markets.

Kenya mainly imports textiles, pharmaceuticals, industrial machinery, vehicles, electronic and semi-processed goods from India.
Key items on the list of China’s exports to Kenya include heavy machinery, electronics, vehicles, textiles and a range of household goods.

The two Asian nations have recently entrenched their presence in Kenya with intense economic diplomacy since President Kibaki came to power in 2003.

The rivalry has benefited Kenya in terms of foreign direct investments, a wider variety of consumer goods and opened new sources of technical and financial assistance.

Though the India-China rivalry has played out as a battle of the Asian giants, the biggest losers have been the traditional Western trading partners such as Britain whose share of the Kenyan market has been in a steady decline.

President Kibaki has actively encouraged this shift to the East and has backed it up with exchange of high-level diplomatic visits that have yielded multi-billion-shilling trade and investment deals.

India’s Exim Bank has, for instance, helped Indian companies export cement and sugar to Kenya with the provision of guarantees or letters of credit through PTA Bank.

India has also offered Kenya technical and financial support to revive the ailing textile industry.

The Asian nation, which has one of the world’s best ICT skills pools, is also eyeing major contracts in Kenya’s agribusiness, business process outsourcing (BPO), e-learning and e-government sectors.

India’s Shapoorji Pallonji Group, with interests in construction, engineering, power, and biotechnology, is one of the global firms that have expressed interest to take up space in Konza Technopolis.

(Read: Global giants line up for slice of Konza city)

China, the biggest beneficiary of Kenya’s massive infrastructure projects, has also been expanding its reach to broadcasting, telecoms, textile and the general consumer goods markets.

China is also a major supplier of shoes, textiles, batteries, and motor vehicles parts to Kenya.

Since Mr Kibaki came to power, Chinese firms have won contracts to build some of the largest infrastructure projects in Kenya, including the upgrade of Thika Road at a cost of Sh27 billion.

Chinese firms have been among the top contenders for a multi-billion shilling contract to build a new port in Lamu and a railway line linking the port with Southern Sudan and Ethiopia.

Like India, Chinese companies have relied on their country’s Export-Import Bank (Chexim) and China Development Bank (DBK) to finance their forays into Kenya.

Though the two Asian powers have realised steady growth of their exports to Kenya, Nairobi has only marginally expanded the value of trade with them, resulting in a huge trade imbalance.

This is because Kenya’s commercial engagement with the Asian nations is mainly pegged on low-value primary commodities like tea, coffee and hides.

Besides, Kenya lacks the high-value exports that are the main drivers of India and Chinese interest in the continent.-Business Daily



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