The engagement drive being spearheaded by President Mnangagwa is bearing fruits as more countries are warming up to improved bilateral trade-economic relations with Zimbabwe. Of late, the Second Republic has intensified its engagements with fellow African countries as the country looks to unlock opportunities availed by the African Continental Free Trade Area. For example, President Mnangagwa was in Kenya in March on a State Visit, during which he held high-level talks with his counterpart, President Uhuru Kenyatta.
The two presidents discussed the need to expand cooperation between Zimbabwe and Kenya in several critical areas such as trade, investment, and tourism. Further to this, the Zimbabwe-Kenya Joint Permanent Commission for Cooperation (JPCC), has over the past few years been engaging in areas that will bolster ties between the two countries. What is perhaps important in the future is for Zimbabwean companies to ride on areas of opportunities available in Kenya, as well as create strong synergies with like-minded businesses in the east-African country.
To kick-start, this, ZimTrade – the country’s trade development and promotion agency – recently completed a survey in Kenya, whose objective was to identify Zimbabwean products and services with potential in the country, as well as areas of cooperation that local companies can consider when engaging potential business partners in Kenya.
This article will provide snippets of the findings of the survey, which will be discussed in detail at a seminar to be organized soon.
Overview of Kenya:
Kenya`s economy is the largest within the East Africa Community and the country`s overall economic performance is expected to be robust at 4.9 percent per year in 2022-23. Over the last few years, Kenya has experienced continued growth in Gross Domestic Product, supported by ongoing public infrastructure projects, strong public and private sector investment, and appropriate economic and fiscal policies, reflecting
the broad-based and diversified nature of the Kenyan economy.
In terms of trade, Kenya is a high import country, taking products and services worthUS$15.4 billion from across the world in 2020, according to Trade Map. The largest import value share went to fuels and oils, machinery and accessories, electrical machinery and equipment, iron and steel, vehicle, and vehicle parts. In Kenya, other top imported products include cereals, pharmaceuticals, fertilizers, sugars, and sugar confectionery, home and office furniture, and clothing and textiles. Of this import value, Zimbabwe’s share remains low, with only US$53 million worth of products exported to the country in 2020, according to the Trade Map.
Zimbabwe’s exports to Kenya in 2020 were mainly driven by exports of sugar, tobacco, and manufactured tobacco substitutes. During the same time, Zimbabwe imported products worth US$11 million from
Kenya, thus recording a trade surplus of US$43 million. Although trade between Zimbabwe and Kenya is considerably low when compared with other trading partners of Zimbabwe, this is expected to improve following the signing of five Memoranda of Understanding (MoUs) designed to strengthen relations between the two countries by the two countries during the JPCC held in Kenya.
Although Kenya is doing well in terms of exports of horticulture, it also has requirements that Zimbabwean farmers can meet. For example, Kenya imports almost all it’s citrus requirements and there is a good
market for Grade B produce that may not be good enough for the European market. However, more opportunities in the fresh produce sector will be unlocked if Zimbabwean farmers consider partnerships with farmers in Kenya, where they jointly supply markets. Some of the farmers are entering into agreements with Tanzania, Ethiopia, and Uganda to grow export crops so that they meet contractual obligations from
Kenya has a population of more than 52 million which even provides greater opportunities for quality and non-GMO consumer goods. Products with potential include biscuits, cooking oil, sugar syrups, cordials, spaghetti, and cereals. Kenya, when compared to Zimbabwe attracts high prices for processed foods, making it lucrative for local companies that are eying the market. Kenya’s prices are generally high with certain products like cooking oil costing 100 percent more than the Zimbabwean retail price. In terms of product range, Kenya has attracted international brands such as Proctor and Gamble, Unilever, Johnson & Johnson, and Nestle. For Zimbabwean companies that are looking to export to Kenya, there is a need to up their packaging and marketing game as products are competitive. Agriculture inputs and implements
The government of Kenya has prioritized the agriculture sector as one of the key drivers of economic growth. Kenya has more than two million small-scale farmers who contribute 60 percent of the country`s produce. Noticeably, the country has a well-integrated value chain system for small-scale farmers. The supply of inputs and implements targeted at small-scale farmers is crucial for Kenya and offers opportunities for Zimbabwean suppliers. Products with potential include foliar fertilizers, controlled-release fertilizers as well as irrigation equipment. Irrigation equipment, design and construction of custom greenhouses, and
agricultural nets are other requirements that local exporters can satisfy.
Oil and stock feed
Kenya requires cooking oil for human consumption as well as cake for stockfeed and the current supply is failing to meet demand. Accordingly, the Association of Kenya Feed Manufacturers in 2021 reported that thirty animal feed manufacturers closed within a space of two months due to raw materials shortages. Currently, the market is dependent on oil cake imports from Zambia, Tanzania, Uganda, and Malawi. Due to adverse weather, Zambia`s total ban on soya exports, and COVID 19 related issues, supplies from these countries have declined. All these challenges offer opportunities for Zimbabwean suppliers who can meet
standards, quality, and quantity required.
Kenya is strict when it comes to product standards. The importers and or manufacturers need to comply with regulatory standards set by the Kenya Bureau of Standards. These standards cut across all the sectors. Each product that is sold in Kenya undergoes the KEBAS system compliance and this is done to minimize cases of fake products being offered to its customers. Market access The Kenyan market provides various entry strategies and the most viable for exporters of products is through a distributor. Partnerships to create a local presence will also help grow exports, particularly for products and services that require consumer support. Direct supply to retail chains is also an option but, as with any other market, this requires local companies to build enough distribution and logistics network that ensures goods and services reach targeted areas in good time. Regarding logistics, the product to be exported will determine the best choice of transport. For small but high-cost products and perishable products, local companies can take advantage of Kenya Airways which plies Harare-Nairobi. Bulk products can be supplied via road, with the most viable route being through Zambia and Tanzania. Sea freight is cost-effective but takes longer compared to other transport modes, hence exporters and buyers will need to agree on specific timelines that it takes to get products to Kenya.