How Kenya can begin exploiting world's 17th largest economy without reinventing the wheel
Like most African countries, Kenyan trade exports and imports is heavily skewed in the favor of the western countries.
In 2015; Kenya emerged third in the top 20 fastest growing economies in the world according to economists surveyed by Bloomberg Business.
In 2017, Nairobi appeared on the Fortune 500 list with Dubai, Johannesburg, Casablanca, Lagos and Cairo, as one of the highly coveted investment destinations.
It was also ranked 92nd out of 190 countries (moving up 21 places) in the in the World Bank’s Ease of Doing Business report, 2017.
However, there are still huge gaps and deficits Kenya needs to overcome, one which is trade imbalances with the west which is sticking out like a sour thumb.
Like most African countries, Kenyan trade exports and imports is heavily skewed in the favour of the western countries.
Annually the country exports tonnes of raw materials mainly tea, coffee, horticulture etc. to European Union, Asia and the America’s and in return import heavy machinery, processed goods and services etc. in their tonnes.
One of such countries Kenya trades with but at a huge deficit is Turkey, the world’s 17th largest economy.
“We are among Europe’s top electronic appliances producers, we are very big in industrial auto parts which serve world’s top brands of automobiles, we have a strong machinery sector, chemical sector and so forth all of these constitute a huge part of Turkey’s exports”
Turkey’s major exports to Kenya include coal bitumen and petroleum products, transportation machinery, cereal products, textile fibers, fertilizers, machinery, steel, rubber, furniture and plastic products while importing rawhide and products, tea, coffee, spices, cocoa, textile fibers, fish, raw materials for dye and paints from Kenya.
“One challenge we have faced in our economic ties with Kenya is on the fact that Turkey is perceived very positively by the Kenyan people and the Kenyan government authorities but there is still a very serious lack of information”
The Turkish economy has largely remained resilient despite dealing with poor relations with Europe, experiencing security challenges and even travel advisories issued by western countries in the wake of terrorists’ attacks.
Business Insider SSA sat down with the Turkish Ambassador to Kenya, Her ExcellencyAmbassador, Deniz Eke to understand howthe world’s 17th biggest economy and East Africa’s biggest economy can begin reducing the trade deficit and create a win-win situation for both parties.
“I think for the short term we have to be realistic there are going to be trade imbalances until Kenya or Africa completes its industrial transformation we have to be realistic but that doesn’t mean and of course speaking on behalf of Turkey that we cannot try to compensate that huge imbalance in different ways and models” she said.
Having been stationed in Kenya for three years, Ambassador Eke through research, numerous interactions with the Turkish investors and business community and constant consultation with the Kenyan authorities has identified three crucial sectors Kenya can exploit with abandon with Turkey more than willing to facilitate the trade without the two countries reinventing the wheel.
Tourism is one of the strongest sectors of the Kenyan economy and accounts for 10 % of the GDP.
This number is however bound to change and increase even more should Kenya decide to aggressively promote Kenya’s safari and beach unparalleled offers to Turks while still keeping an eye on its traditional markets in Britain, USA, Germany etc. after all what does Kenya have to lose?
“One area I see which Ke exploit is bringing in more tourists from Turkey to Kenya while the trade imbalance is still there Tourism is one area where the imbalance would be on the favour of Kenya”
There is a need for Kenya Tourism Board under the Magical Kenya campaign to launch an aggressive marketing strategy aimed at getting the attention of Turks who are avid travellers and the Kenyan embassy in Turkey headed by Amb. Hon. Kiema Kilonzo has a huge role in rolling out the charm offensive campaign.
The industry does need to look far, just borrow a leaf from Cabinet Secretary for tourism, Najib Balala whose several exploits and stunts have put the country on the global map
“Every year from Turkey there are ten million people going out or visiting other countries across the world and when I look at the figures I am really ashamed to pronounce the numbers of Turks coming to Kenya”
“That is because they don’t know about Kenya as an excellent destination for Safari number one, number two many people in Turkey believe that safari is a very luxurious and expensive form of Travel, they don’t know that if they come to Nairobi there is a National Park where with a very modest budget do a perfect safari on that end a lot depends on Kenya to promote and be more vocal in Turkey to explain to Turkish people that Kenya offers excellent combination of Safari, wildlife and the beaches which is unique and tourism can do that for Kenya”
Since 1893 when Coffee was first introduced in Kenya, the cash crop has slowly grown to become one of Kenya’s most profitable crops after tea.
Annually, the country produces about one million bags according to Coffee Board of Kenya.
The Turkish diplomat thinks there is a huge potential for Kenyan coffee in Turkey and the country needs to step up and seize it.
“While Turkey is a tea producer and we are sort of competitors in that area, Turks drink lots of Coffee, we have this famous coffee brewing technique but we don’t produce Coffee at all and I am a great fan of Kenyan Coffee”
“We have managed to pull one coffee producer to the Coffee festival which is regularly held in late September or early October in Istanbul and I think if Kenya pushes more there is a huge potential ." She said.
Ultimately Kenya needs to go out of its way to convince investors and companies from the world’s 17th largest economy, to come and invest in East Africa's largest economy by having sound policies, provide incentives, make information readily available among other extra efforts.
“The third and the most important part is investments, by creating jobs for the Kenyan people by bringing in Turkish businesses to Kenya by making the Kenyan people benefit from the know-how and expertise of the Turkish industry I think that is the area where we should prioritise our efforts.
Kenya has taken significant steps in terms of facilitating the business environment, organizing and establishing some special zones but my feeling having heard many stories and questions from our sector is there is a need for working more in that sense of guiding the companies of where to start” said Ambassador Eke.
Kenya Investment Authority needs to create a database, make information readily available and in this era where bad news sells strive to make success stories of companies who have set their base in Kenya and are reaping huge returns also heard as well.
“I will tell you a very recent example, in mining we have a few companies in Turkey who are interested in investing in Kenya and they need guidance where to go where to start, this is very much evident in other sectors as well, the Kenya Investment Authority recently reorganized itself and are doing their best but I think there has to be more effort on that part”
“if we can create a few good examples because most of the times business look at each other they look for pioneers and so if there is one successful pioneer that creates a good example and reference for the rest of other businesses to follow suit with greater confidence and that is what we are trying to achieve and show Turkish companies that there is a huge potential and Kenya is an excellent destination”
As Ambassador Eke winds her term in office at the end of 2017, she is proud that during her term Kenya-Turkey bilateral relations have grown stronger and a few Turkish brands such as LC Waikiki have already set base in the country.
In 2016, Kenya and Turkey set an ambitious target to grow their bilateral trade volume to Sh100 billion ($1billion) mark in the next five years following a bilateral meeting between President Uhuru Kenyatta and President Recep Tayyip Erdogan, when he visited Kenya.
“The trade between our countries stands at 144 million dollars and this is insignificant. President Kenyatta and I have set a target for the future and we said let us lift this figure to the 1 billion dollar mark,” said President Erdogan.
Ambassador Eke is optimistic that the future of Turkey-Kenya trade relations would not only be mutually beneficial but stronger as well.
“I think we have managed to create a much wider awareness in that sense and I believe the next couple of years our relations would look much different than what it used to be”
“We have gotten one of Turkish biggest ready wear brands LC Waikiki who opened their first store here in Nairobi and after six months opened their second store and they are looking at Kenya with a long-term investment plan and Kenya was their flagship country for their Africa operations”
“We have managed to pull in big and top companies of Turkey to Kenya who are now very seriously looking at projects, I don’t want to reveal the details before everything is signed but I can tell you in Agriculture, irrigation, transportation, infrastructure and energy we have top companies looking at opportunities to invest in Kenya which would create a win-win situation” she said.
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