Press Center | Freight Shipping Logistics News

The Kenya government might have hit a high during the US-Africa Leaders’ Summit, but little is said to have come to the business chiefs who made the trip to Washington.
The Kenya government might have hit a high during the US-Africa Leaders’ Summit, but little is said to have come to the business chiefs who made the trip to Washington.

The government’s public relations machinery seems to have struck the right notes, arranging a one-on–one meeting between President Uhuru Kenyatta and two former US presidents: Bill Clinton and George Bush.

They also secured a prime time interview with CNN’s Richard Quest in which the President called for more support in the fight against terrorism.

The big win, however, remains the many pledges made to the government by multinationals and the US government to invest in various industries.

But business executives who travelled to the summit, and who talked to Smart Company, say the trip fell short of expectations.

“The US business community had no excitement about making investments in Kenya on a business-to-business level. Most companies that attended the summit already have local offices and are deeply involved in partnerships with Kenya,” an executive who attended the summit said.

Majority of the US companies, Smart Company established, were more interested in meeting government bureaucrats to get concessions than in meeting local peers for business.

A list released by the Presidential Strategic Communication Unit shows that almost all international companies that were represented in a meeting between the presidents of EAC countries, the US Chamber of Commerce, and the chief executives of major US corporations, had a presence in Kenya.

They included General Electric, IBM, Chevron (Caltex), Motorola, Caterpillar, Deere, Coca-Cola, Alcatel-Lucent and Boeing.

And when the President flew to Dallas, Texas, to meet business chiefs, he held separate meeting after the business luncheon with Moneygram CEO Pamela H Patsley.

Moneygram is a big player in global money transfer, helping wire a big portion of the Sh100 billion-plus remitted by Kenyans in the diaspora annually.

For the Kenya business leaders delegation of 58, those that Smart Company interviewed said their high expectations were quashed by the US’ focus on matters relating to insecurity in Kenya.

“Part of the Kenyan delegation left the three-day summit early,” said one of the delegates. Little time for business

And with both chambers having had their first meeting immediately after the summit, there was little time for business deals to be struck.

According to the Kenya National Chamber of Commerce and Industries (KNCCI), the 58 high-profile Kenyan team at the conference included Athi River Mining Company managing director, and chairman of Kenya Association of Manufacturers, Mr Pradeep Paunrana, as well as Equity Bank boss James Mwangi.

The bustling real estate industry was represented by Suraya property group head Peter Muraya while Mr Vimal Shah, chairman of Kenya Private Sector Alliance, represented Bidco Oil Refineries.

Kenya Association of Manufacturers and Kenya Private Sector Alliance were represented by their respective chief executive officers: Ms Betty Maina and Ms Carole Kariuki. Billionaire Chris Kirubi was also in attendance.

At the summit, US President Barack Obama promised trade goodies for Africa valued at $33 billion (Sh2.8 trillion), directed towards boosting economic engagements; the trade deal was not specific to Kenya. The country would only get part of a $26 trillion (Sh2.2 trillion) fund to increase access to electricity.

KNCCI Trade and Investment official Masinde Mwangale revealed that no major investment deals were struck by the chamber.

“We identified opportunities with companies such as General Electric (GE) to fund Kenya in cheaper energy; firms such as Coca-Cola were willing to expand their presence in Kenya,” said Mr Mwangale.

He added that the main achievement grasped at the summit is America’s realisation that Kenya is a potential trade partner in various areas.

Big American multinationals already have bases in Kenya, with their headquarters in Nairobi; GE and Coca-Cola are among them.

US technology giant IBM opened its first African headquarters in Nairobi last year. This already locks out Kenya from big investments in terms of US multinationals setting shop.

Conglomerates with a presence in the region are already involved in funding projects through their regional offices.

The struggle to present Kenya as a great destination for US investors is symbolic of the cold relationship with the West that has seen Kenya warm up to the East.

Kenya has in the recent past been engaged in trade ties with countries from the East. This has seen the signing of several successful agreements with China, Japan, India, Turkey, Qatar and Russia.

The government’s shift to a commercial trend in financing for infrastructure, award of public tenders and payment for import bills, also favours Asian and Arab countries.

Since President Kenyatta’s election in March last year, Kenya has signed high profile contracts with China, Japan, India, Turkey, Qatar and Russia.

The US has been an exception. The President’s first visit to China after the elections landed Kenya a $5 billion (Sh439 billion) deal to build a railway line, an energy project and to improve wildlife protection.

The relationship has since seen several Chinese investors flock into the country, taking advantage of the many investment opportunities available locally.

Latest developments by China in the country include a Sh6.9 billion Africa headquarters and broadcast centre in Nairobi, and a bilateral air service agreement allowing Kenya Airways to access more destinations in China.

As at last year, China’s trade with Africa had surpassed that of the US, with China boasting $200 billion worth of trade on the continent, compared with the US at $80 billion.

Kenya is, nonetheless, working hard to mend the widening rift. President Kenyatta last Friday told US investors to view Kenya as the destination of choice for their businesses.

He particularly assured Americans that Kenya and other countries in the region had never taken deliberate decisions to ignore the US in terms of business.

From the US-Africa Leaders’ Summit, the World Bank called Kenya a giant that cannot be ignored by United Nations financial institutions.

“The message we have for you is that you are not a small fish but a big one. The respect you (President Uhuru Kenyatta) have among your regional counterparts is also a plus, and economic success in Kenya is very personal for me,” said World Bank President Jim Yong Kim.

Mr Kim added that the World Bank is encouraged by the economic reforms going on in Kenya, as he pledged support in upcoming projects.

The sentiments came soon after a report published by the Washington Post ranked Kenya among top democratic states in Africa.

On a positive note, the business community in Kenya is enthusiastic about expansion of the African Growth and Opportunity Act (Agoa) for the next 15 years.

“The African Ministerial Council agreed to unanimously push for extension of Agoa for the next 15 years at the US-Africa Leaders’ Summit,” Ms Amina Mohammed, Kenya’s Foreign Affairs and International Trade Cabinet Secretary, said last week.

Agoa was signed into law by former US President Bill Clinton in May 2000. Its objective is to widen investment relationships with the continent to encourage growth, development and regional integration. Kenya’s trade with America is mainly anchored in the Agoa initiative, which was crafted to expand duty-free access of over 4,000 product lines to the world’s largest economy.

Agriculture and apparel produce are largely exported to the US through Agoa. The arrangement lifts import duty on all eligible African products and grants preferential market access upon compliance with rules of origin.

“As we keep pressure on the US to grant us more trade deals, we are happy to have got an extension on Agoa. This will see us enjoy trade with America as we have done in the past 14 years,” said Mr Mwangale of KNCCI.

China mission

In contrast, President Kenyatta’s visit to China in 2013, followed by a mission to Nigeria in May this year, were very fruitful.

While the China visit culminated in multibillion projects, including the Sh327 mega railway deal, Nigeria brought forth several trade agreements, including memoranda on agriculture, livestock and fisheries co-operation, tourism, oil and gas.

From Kenya’s meeting with the US, the results were not that promising. President Kenyatta had to convince the US trade delegation that Kenya was open to trade investments.

“We want to take advantage of the vast economy of the US and we have made progress in improving our legal systems to make our region more business friendly,” he told the US Chamber, adding:

“We will do everything to facilitate your entry into our market to benefit us and the US.” The team’s expectations were pitched on strengthening trade ties.

KNCCI chief executive Charles Mbogori told Smart Company that the chamber, alongside the Kenya Private Sector Alliance, was banking on the US Chamber of Commerce to get potential investors into the country.

“The Kenyan business community is looking forward to opportunities such as export increase, trade expansion, enhanced bilateral relationships and expanded co-operation in key sector programmes in the private sector,” Mr Mbogori said as the meeting started.

The business delegates are now back in the country, with most of them shy to speak of the progress made from the US-Africa summit.