World Economy

Kenya Trade Hub Status Threatened by Neighbors

Kenya Trade Hub Status Threatened by NeighborsKenya Trade Hub Status Threatened by Neighbors

Kenya’s position as the regional trade and investment hub for eastern Africa is increasingly coming under threat from south-neighboring Tanzania and populous northern neighbor Ethiopia, top government and private sector officials have warned.

President Uhuru Kenyatta told business leaders the neighboring countries have “woken up” and were speeding up infrastructural development in a bid to topple Kenya’s long unrivaled position as the epicenter of investment, trade and transport in the region, AfricaNews reported.

“How we do things today is not the same way as 10 years ago, time has changed and neighboring countries have woken up... (and) we have to up our game by improving on efficiency,” he told a luncheon after the fourth presidential roundtable with the Kenya Private Sector Alliance (KEPSA). “There are no natural markets out there, you have to fight for very single space out there.”

  Mega Projects

KEPSA chairman Vimal Shah singled out Tanzania and Ethiopia as the countries angling to take up part of what has for decades been the preserve of Kenya in terms of foreign direct investment flows.

Tanzania has laid out mega infrastructural projects including a planned Sh1.02 trillion ($11 billion) port at Bagamoyo which will dwarf Mombasa that is gradually finding a footing after years of inefficiencies.

The proposed port at the ancient slave harbor has the backing of China and is widely seen as the legacy project of President Jakaya Kikwete who hails from there, although the initial July 2014 ground breaking was missed.

Tanzania on March 29 announced plans to spend Sh1.31 trillion ($14.2 billion) on a new 2,561 km standard gauge railway in the next five years linking Dar es Salaam to land-locked Rwanda and Burundi with additional lines to iron ore, coal and soda ash mining sites in the north and south.

  Walking a Tight Rope

Vimal said Kenya was walking a tight rope noting that exports have grown by a marginal six percent over the last decade.

Most of this growth was mainly driven by services while the manufacturing exports have remained “flat, yet we still lead in EAC,” he said, adding that only 16 percent of agricultural exports are shipped as finished products.

Deputy President William Ruto asked the private sector to work closely with Treasury on bettering the business climate for manufacturers including a favorable tax regime.