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Industries opt for Kenya as new hub for regional trade

Discussion in 'Kenyan News and Politics' started by nomasana, Jan 27, 2011.

  1. n

    nomasana JF-Expert Member

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    Multi-national companies operating in Kenya have stepped up expansion plans, lured by the country’s attractiveness as more African nations embrace borderless trade.

    British American Tobacco (BAT), Nestle Kenya, Weetabix East Africa Limited, Bata Shoe Company and Cadbury East Africa have announced multi-billion shilling expansion plans in the race to tap new demand in Eastern Africa region and part of North Africa.

    The expansion looks set to shore up the contribution of the manufacturing sector to Kenya’s GDP and the share of new jobs in Kenya’s recovering economy in line with the goal to make the country a middle income economy by 2030.


    The rising interest in Kenya is linked to the formation of the common market in East Africa, which is expected to create a market of about 126 million people and allow the free movement of factors of production, goods and services among the five member states.

    Plans by Southern African Development Community (SADC) EAC and Comesa in 2008 to form a free trade area (FTA) covering more than 527 million people with an estimated combined gross domestic product of about $624 billion have also enhanced Kenya’s appeal to manufacturers as a business hub.


    As a result, the multinationals are redrawing their territories, opting to have larger factories to feed different economies a move that has seen Nairobi emerge as a trading hub because of its proximity to a wider market including Central Africa, North Africa and Middle East markets.


    This is a departure from earlier trends where multinational companies have either scaled back new investments in their operations in Kenya or moved their manufacturing plants to countries such as Egypt, which had emerged as a low cost producer, preferring to export finished goods back to Kenya.

    “It marks a major about-turn for multi-national firms. Kenya’s profile as a hub for the regional markets has brightened with the new integration arrangements that have come through,” Mr Robert Shaw, an independent analyst said.

    This has seen Kenya slowly emerge, though at a lower scale, as the third manufacturing destination in Africa after South Africa and Egypt

    Some of the firms that have left the Kenyan market in recent years include Reckitt Benckiser, Colgate Palmolive, Johnson & Johnson and Procter & Gamble, which have either transferred or restructured their operations.

    Egypt had emerged as the favoured destination for the multinational firms leaving Kenya, but the emerging political instability in the northern Africa country coupled with lack of proximity to central and parts of southern African countries including Malawi, DRC Congo and Zambia, have made it unattractive to investors.

    Egypt has used heavy subsidies in the power and petrol products - which costs it $12 billion (Sh960 billion) annually to lure industrialists, but the country is set to withdraw the sweeteners by 2014, according to reports in the Financial Times.

    BAT, for instance, has spent more than Sh5 billion in upgrading its Nairobi plant from where it serves about 17 markets within the Common Market for Eastern and Southern Africa and Indian Ocean Islands.

    The firm closed its manufacturing plant in Rwanda and Uganda and made the Kenyan plant one of the group’s four strategic factories in Africa and Middle East
    .

    “Kenya remains critical to our operations in terms of its strategic location for supply of our markets,” Ms Julie-Adel-Owino, BAT head of regulatory affairs said.

    “The factor of proximity to raw material sources also makes Kenya vital for us because Uganda is our centre of excellence for growing tobacco,” she said.

    Kenya is spending billions of shillings on infrastructure projects include airports, sea ports and , Rwanda, Burundi, South Sudan and DRroads, which seek to connect the manufacturing plants to local and regional market as the networks connect the port of Mombasa to Nairobi, UgandaC.

    The British multi-national Cadbury Kenya Ltd has also announced a multi billion expansion plan, putting to rest fears that it is planning to transfer its manufacturing operations to Egypt to cut costs following its acquisition by American food giant Kraft.

    Late last year the firm sent out international tenders for consultants to help upgrade its plants as it looks to tap new demand from the EAC markets.

    “The investment will position Kenya as a centre of excellence for the manufacture of food beverages and dry powders in the region,” said the firm in the tender notice on November 15.

    This will include the automation of its foods drinks manufacturing line and establishment of a new distribution centre.

    read more: http://www.businessdailyafrica.com/C...z/-/index.html
     
  2. Babu Lao

    Babu Lao JF-Expert Member

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    The expansion looks set to shore up the contribution of the manufacturing sector to Kenya’s GDP and the share of new jobs in Kenya’s recovering economy in line with the goal to make the country a middle income economy by 2030.


    Wakati sisi tunapigizana kelele za umeme jamaa haoo kama wanalia vile!!!
     
  3. VUVUZELA

    VUVUZELA JF-Expert Member

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    CCM/JK na serikali yake hawana jipya. Wakati wenzetu wana mikakati ya maendeleo, JK/CCM/Makamba & co wamejaa porojo tuu. Sijui tutaendelea kuwa na akili mgando hadi lini:roll:........labda kwao foleni ya magari ndio maendeleo na inatosha!!
    Hata Somalia wakitulia na kuacha vita wataipita Tanzania ktk kila sekta ya maendeleo within 3 years:roll:
     
  4. Masikini_Jeuri

    Masikini_Jeuri JF-Expert Member

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    Sijui ninyanyuke nitembeze bakora......................%^&*(&^^%$###@@ zao!
     
  5. Nanren

    Nanren JF-Expert Member

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    Of course hawa jamaa wakikamilisha miundo mbinu- barabara, fly-overs nk, wanazojenga, hata mimi ningekuwa mwekazaji, ningekimbilia huko kuliko TZ. Mwekezaji gani anataka aendeshe gari kwenye mavumbi na matope kama yale ya kuelekea Lindi na mtwara? Halafu giza tupu!

    Viongozi wetu hawana ujanja wa kuwavutia wawekezaji mbali na kuwapunguzia kodi. Wangejitahidi kuboresha barabara, na kutatua tatizo la umeme kwa nguvu zote wangeweza kuvutia zaidi. TZ Tumeliwa!
     
  6. n

    nomasana JF-Expert Member

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    this is my take.

    this is all nice and great but if kenya doesnt provide enough electricity/energy, all these manufacturing jobs will go to other countries very soon. we cannot be having electricity rationings and yet expect multinational companies to invest in kenya.

    kenya needs massive investment in energy
     
  7. VUVUZELA

    VUVUZELA JF-Expert Member

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    I give a lot of credit to Mr Kibaki. I know he does have his own shortfalls, but least the Kibaki's administration has shown some positive initiatives in building and improving the infrastructure, unlike his counterpart in Tanzania who doesn't have a clue about running the country.:coffee:
    If peace and order return to Somalia, it would take only one year for the Somalis to surpass Tanzania in every aspect of development/life.
     
  8. n

    nomasana JF-Expert Member

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    bharti airtel has based it HQ in kenya too but the problem is that they have outsourced some services like customer sevice that they could have easily been handled by kenyan call centres. airtel watu bure kabisa
     
  9. RealMan

    RealMan JF-Expert Member

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    Tanzania zetu porojo hakuna clear plan of where we want to be this time tomorrow.
     
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