Kenya, South Africa aim to expand trade relations

Jean Kamau, Kenya's High Commissioner to South Africa

Jean Kamau, Kenya’s High Commissioner to South Africa

CAPE TOWN – KENYA is aiming to strengthen its bilateral and trade relations with South Africa through the Trade and Investment Summit , to be held in the coastal city of Cape Town.

In an interview ahead of the bilateral summit, Kenyan High Commissioner to South Africa, Ambassador Jean Njeri Kamau, said the key objective was to create an understanding of doing business in the East African country, which boasts the region’s biggest economy.

Kamau said the trade and investment summit was aimed at providing a forum for government-to-business engagement, enhancing exposure of trade and investment opportunities available in Kenya, creating awareness of the new and prioritised investment opportunities in Kenya and urging South African investors to venture into a number of sectors, including energy and mining infrastructure development.

“Kenya has enormous opportunities for investment in ICT, manufacturing, agriculture, mining, finance, transport, infrastructure and energy,” Kamau said. Through the summit, Kenya aims to encourage more South African companies to raise their portfolio in Kenya’s existing investments.

“The expected outcomes of this summit are increased foreign direct investment from South Africa into Kenya, increased exports from Kenya to South Africa that will result in a favourable trade balance for Kenya and transfer of technology and skills” between the countries, Kamau said.

The envoy said that during the summit they would explore practical measures to strengthen trade relations between Kenya and South Africa and work towards the removal of impediments to trade.

The two countries would work together to put in place robust infrastructure programs designed to catalyse markets in the two regions, especially partnering in enhancing the efficiency of their ports and putting together mechanisms to allow for twinning between private sector players from both regions.

Kamau said they would collaborate in reducing the cost of doing business in Kenya through partnerships in programmes, like the injection of 5 000MW of electricity into Kenya’s national grid and entering into joint ventures to increase investment in irrigation to reduce dependency of rain-fed agriculture and increasing the amount of land under crop production.

Kamau assured South African companies of a conducive investment atmosphere. The country has a well-established private sector, an entrepreneurial tradition and a strong manufacturing base as well as abundant, affordable and well-educated human resources. Kenya also boasts a relatively developed physical infrastructure, good social amenities and quality of life. The country also guaranteed investment protection.

Other positive attributes include a fast burgeoning middle class, which is 44,9 percent of the 40 million population, and access to the East African Community population of 134 million with a per capita income of US$ 558.

Common Market Protocol has been operational since July 2010. There is the added advantage of the centrality of Nairobi, the capital city.

Kenya and South Africa enjoy cordial relations, which supports moves to expand trade between the two countries. South Africa is a strategic partner of Kenya in many areas, particularly trade and security. Diplomatic relations between the two countries were established in 1994 following the end of apartheid in South Africa.

Both countries maintain resident diplomatic missions in their respective capitals. The South African High Commission in Nairobi was opened in 1994, the Kenya High Commission in Pretoria was opened in 1996.

Bilateral relations between the two countries are institutionalised under a framework agreement, the Kenya-South Africa Joint Commission of Cooperation (JCC), which was signed in New York, United States in October 2007. The JCC is expected to be formally launched later this year during the state visit to Kenya by South African President Jacob Zuma.

Bilateral relations are further managed through the senior officials meetings (Som) mechanism, under which senior officials from the respective foreign ministries and other departments have met in 2010 and 2011 in both capitals to deliberate on bilateral issues.

The most recent session of Som was held last November in Pretoria, the counterpart delegations deliberated and made significant progress on a number of fundamental issues in areas of trade and economic cooperation, higher education, science and technology, tourism, agriculture & livestock development, security matters, foreign relations, arts and culture, revenue services and correctional services.

A number of Agreements and Memoranda of Understanding were also finalized and will be ready for signature during the launch of the JCC scheduled for later this year during the state visit to Kenya by Zuma.

In addition, day to day issues of bilateral trade are managed within the framework of the Kenya – South Africa Joint Trade Committee (JTC), which held its inaugural meeting in 2009. The JTC’s latest meeting, which was the fifth session, was held in November 2015 in Pretoria.

“In the recent past, the interactions between the two countries have continued to expand with numerous exchanges of visits at all levels, trade fairs and study tours in various areas of interest,” Kamau said.

South Africa is the fifth largest source of Kenyan imports and fourth largest source of foreign direct investment into Kenya after China, India and South Korea.

Trade between the two African countries has increased steadily in the last 20 years. In 1994, the value of Kenyan imports from South Africa was approximately R716 million while Kenyan exports to South Africa were valued at about R28 million. In 2015, the value of Kenyan imports from South Africa was about R8,2 billion while Kenyan exports stood at about R241 million.

The balance of trade has been heavily in favour of South Africa and therefore, a lot needs to be done to increase Kenya’s basket of exports to South Africa.

Leading Kenya exports into South Africa include non-ferrous base metal wastes and scrap, textile fibers, hides and skins, tea, tobacco, vegetables, plastic products and copper.

Imports from South Africa to Kenya include electrical machine and apparatus, telecommunication equipment, iron and steel bars, flat-rolled products of iron or non-alloy steel, rubber tyres, petroleum oil and oil obtained from bituminous minerals except crude, coal, aluminum and vehicles.

Kamau pointed out there was huge potential market for Kenyan tea, beef products such as sausages, beef and pork prawn, butter, plum jam, fish (tilapia and Nile perch) and fish fillets, flowers and organic vegetables.

However, Kenya’s exports to South Africa suffer high tariffs and discriminative levies, an aspect that has prevented Kenyan goods from accessing the South African market.

Notable are Kenyan tea which faces R4 advalorem tariff per kilogram, Kenyan avocado and bovine embryos have been banned on scientifically unproven Sanitary and Phytosantinary Standards.

“The bilateral JTC has tried to resolved the matters to no avail,” said Kamau, who however remained hopeful the summit in Cape Town would loead to a breakthrough.

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Posted by on Sep 5 2016. Filed under Africa & World, Featured, Finance, Investing, National, Regional. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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