Banks, Ministry Discuss Alternative Collateral for Businesses

Trade

The Ministry of Industry, Investment and Trade in collaboration with the Kenya Bankers Association and other stakeholders is working on the modalities of developing innovative solutions to replace securities for loans such as cash flow based securitisation.

“The credit worthiness of entrepreneurs will soon be extended to include payment of utilities for credit rating by the Credit Reference Bureaus,” Principal Secretary State Department for Industry and Enterprise Development Julius Korir said.

Speaking during the SME FEST 2016 Expo and Conference at the KICC, Nairobi, where he represented the Cabinet Secretary for Industry, Investment and Trade Adan Mohamed, the PS said most SMEs suffer from lack of suitable work stations, both in the urban and rural environments.

He said the Ministry is expanding industrial sheds and developing common manufacturing facilities, industrial parks and clusters that will have the requisite infrastructure for SMEs to operate in.

He explained that the Ministry has also set up work-sites, incubation areas at the Kenya Leather Development Council; Kenya Industrial Research and Development Institute and at the Export Processing Zones Authority to boost SMEs.

Kenya Ranks Top Among African Cash-Makers for Multinationals

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Kenya is among the top-three sources of revenues for multinational businesses in sub-Saharan Africa (SSA) according to a survey by The Economist Intelligence Unit (EIU) of the UK.

The 2016 Business Outlook Survey shows the other two top markets are South Africa and Nigeria.

The three markets are expected to remain at the top for at least the next six years, respondents in the survey said.

“Executives indicated that their top three markets in 2015 — South Africa, Nigeria and Kenya — would remain their key markets for at least the next six years,” said the EIU report. The survey involved interviews with 120 Africa-based business managers.

The placing of Kenya in the top group by executives is also in line with the forecast by investment bankers at Citi Global Markets that Kenya will have the highest economic growth this year among the top-four largest Africa economies, namely South Africa, Nigeria and Angola.

Citi forecasts that Kenya’s GDP will grow by more than five per cent this year while the other three economies grow by less than four per cent.

The executives believe that SSA present opportunities for growth, having already proved that profit margins from the region are either the same as or higher than the global average. The problem, however, is that the level of investment made is too low to achieve the targeted expectations.

“Well over 50 per cent of respondents reported that their firms’ expectations of growth were realistic. However, around 47 per cent cited their firms’ level of investment to be too low to achieve targeted growth expectations,” said the EIU.

Read more: Kenya Ranks Top Among African Cash-Makers for Multinationals

East Africa Trading Bloc Ranked High in Regional Integration

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The East African Community is leading in regional integration and free movement of goods and people on the continent.

A new report unveiled at the ongoing African Development Week meeting at Addis Ababa indicated the cross-border movements were easiest between Kenya, Uganda, Rwanda, Burundi and Tanzania.

EAC's leadership in integration, which identified various matrices including roaming costs and volume of trade, is a major indicator towards achieving the dream of a unified Africa by 2063.

"Deeper regional integration means larger markets and industrialisation and productivity as part of value chains," said Erastus Mwencha, the deputy chairperson of the African Union Commission, adding: "It means talent mobility thanks to greater visa openness." Kenyan citizens, for instance, only need to produce their national identification documents to enter any of the countries in the bloc, while work permit requirements are minimal as the region works towards the dream of a common currency.

A regional parliament made of 54 members, which has been sitting since November 2001, is charged with streamlining the respective country laws with the vision of the five-member community. Several firms have had their shares cross-listed at the various stock exchanges.

Read more: East Africa Trading Bloc Ranked High in Regional Integration

Manufacturing Still Major Driver of Growth

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It is easy to conclude that the era of industrialisation has given way to other sectors, such as the service industry. The assumption is based on the fact that the economies of many developed countries shifted to the service sector in the late 1980s.

In the past three years, however, this thinking has changed. Developed countries have seen a growth in their manufacturing sector, with jobs increasing by 2.6 per cent and uplifting their economies.

The contribution of industrialisation to the growth of the economy of many countries, including Kenya, cannot therefore be discounted.

Historically, Kenya has had major policy regimes to aid effective industrialisation. The reforms have been developed with a view to maximising the use of local natural resources to give Kenya a competitive edge in the global market.

For one, manufactured goods are essential for trade. A country must produce high-value, competitive goods to trade with other countries in order to increase its revenue. The World Trade Organisation states that services only account for 20 per cent of what is traded globally; the rest is manufactured goods.

Read more: Manufacturing Still Major Driver of Growth

Leather City to Create 50,000 Direct Jobs

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Industry, Investment and Trade, Cabinet Secretary Adan Mohamed says Kenya’s first leather city will create 50,000 direct jobs for Kenyans. The CS said that once in operation, the total value of finished leather products for export are also expected to increase 12 times.

He spoke today when made a tour of the Leather City in Kinanie, Machakos County to oversee the ongoing progress of the first leather industrial park in Kenya. In 2013, the value of export of leather footwear from the country amounted to US$2.8 million (Ksh208 million).

The Ksh17 billion, 500-acre Park once completed, will propel the current Kenyan leather industry from a mere exporter of raw materials and semi-processed hides and skins to a major player in finished leather goods.

“Leather city will grow our leather industry, increase our competitiveness in leather and leather products, grow our exports and create tens of thousands of new jobs,”  CS Adan said, adding that this will create a viable and sustainable industry to propel the country toward inclusive prosperity.

He said the Industrial Park will improve the country’s global competitiveness in leather production and drive the  economy in line with the 5-10 year industrial plan for the country’s manufacturing sector to accelerate critical industries that support the country’s development.

The construction of the industrial leather park is meant to address the current trade deficit in the leather sector and increase the national capacity for leather production and exports by an estimated Ksh15-20 billion ($150-200 million). The instant gains from this would be increased national Gross Domestic Product and massive creation of jobs.

The center located in Athi River will have 15 tanneries initially, a training centre, common manufacturing facilities and a common Effluent Treatment Plant (ETP). These will translate to a production capacity of about 10 tonnes of hides and skins with an output of 10,000 pairs of shoes, handbags, leather garments and industrial gloves per day.

The Government envisions the leather industrial sector playing a crucial role in the development of the economy. On the leather processing side, it intends to facilitate investors to move away from processing the wet blue into finished leather, and leather product for export.

Kenya’s leather sector is composed of suppliers of raw hides and skins, abattoirs, traders, tanneries, and producers of leather products in varying sizes. Broadly, the sector is divided into the formal and informal sector. Presently, the total employment in the leather industry is estimated to be around 14,000 during peak times.

 

Kenya Seeks to Double Number of Formal Manufacturing Jobs

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Kenya has identified opportunities that will double the number of formal jobs in the manufacturing sector to almost a million in the next two years.

State Department of Industry and Enterprise Development Principal Secretary Julius Korir said this when he received the New Zealand Ambassador to Kenya Bruce Shepherd in his office today.

“Our focus is to progressively make manufacturing more competitive to create jobs for the youth”, the PS said and encouraged investors from new Zealand to consider investing in fish processing industry in Kenya saying that the country had a virgin unexploited sea front of more than 200 nautical miles.

He pointed out that out of the 9000 fishing vessels off the Kenyan coast line only 30 land their fish for processing in Mombasa. He explained that the Special economic zone at the coast would have facilities for processing fish.

He said that the country had launched key flagship projects that would quickly contribute to its transformation program and make it an industrial hub in sectors it had competitive advantage.

PS Korir said that the Country was building an enabling environment to attract investment and in line with this was improving the ease of doing business; building a network of competitive industrial parks; creating a pool of qualified and technically competent work force; investing in the development of the Small and Micro Enterprise sector and was establishing a fund for industrial development to avail competitive loans for investors.

In response, the Ambassador said investors from his country had shown great interest in supporting Kenya improve on its agriculture especially in value addition and encouraged the country to seek ways of tapping into New Zealand’s technology and know-how especially in the livestock sector.

​The Ambassador's delegation told the PS that a successful avocado farming project ​in the country ​has been implemented through a five year aid program from ​New Zealand.

So far 1,200 Kenyan smallholder avocado farmers have benefited under the Olivado project. It was confirmed that the project was helping in adding value by getting high grade oil from avocados, getting better avocado plant varieties and access to ​ overseas ​markets​.​ He called upon ​the country​ to seek ways of scaling up the OLIVADO project to benefit more farmers.

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Kenya Looks Forward to 'Roaring Success' of UNCTAD 14

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Kenya's Cabinet Secretary for Foreign Affairs and International Trade Amina Mohamed said she expected her country's hosting of the fourteenth United Nations Conference on Trade and Development in July to be a "roaring success".
 
Ms. Amina Mohamed was speaking as she led a delegation to the UNCTAD secretariat in Geneva, Switzerland, comprised of Cabinet Secretary for Industry, Investment and Trade Adan Mohamed and Cabinet Secretary for the Ministry of Tourism Najib Balala.

Taking place in Nairobi on 17–22 July 2016, UNCTAD 14 is an unrivalled opportunity for heads of State and government, ministers and other prominent players from the business world, civil society and academia to drive forward the 2030 Agenda for development. The conference includes the World Investment Forum, Youth Forum, Commodities Forum and civil society events.

The Kenyan delegation announced that Kenyan President Uhuru Kenyatta will attend the gala opening ceremony of UNCTAD14 on 17 July. UNCTAD Secretary-General Mukhisa Kituyi thanked the ministers present for helping to fast-track preparations for the conference and said they had "gone beyond the call of duty" in their levels of "enthusiasm and engagement".

Read more: Kenya Looks Forward to 'Roaring Success' of UNCTAD 14

How Silkworms and Cotton are Spinning Jobs in Makueni

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Lucy Lau Bigham is that rare woman serial social entrepreneur, and she loves it.

She founded Tosheka Textiles, which creates community-empowering, sustainable and globally competitive eco-friendly textiles, apparel and accessories.

Tosheka takes "green" to its fashion extreme by creating innovative designs and stylish fabrics for designers from organic cotton, silk and other natural fibres and dyes. 

As an expert in printing and surface design, Lucy is building a textile industry from scratch in Makueni County and wants to expand throughout the country. 

Growing up in Jericho, Nairobi, she developed an early liking for design. By the time she went through Kenya High and State House Girls, she had decided to study design at the University of Nairobi’s Institute of Architecture, Design and Development. 

She honed her early design experience at Tototo Home Industries in Mombasa, then went to the University of Northampton for her master’s degree. 

It was here that her curiosity on the status of women began to bother her. She specifically wanted to know what factors hinder the success of women in developing countries and built this into her thesis.

Soon after, she left the country to attend a leadership course on training for development in the United States. While there, she was invited by the Fabric Workshop and Museum (FWM) to lead a program and train some apprentices.

While at FWM, she made many trips to Kenya intending to help local people print their own textiles. She found a lack of fabric, but realised that because we had a competitive advantage on labour, there was potential for cotton growing and fabric making.

Read more: How Silkworms and Cotton are Spinning Jobs in Makueni

Draft Policy Seek to Promote SME Growth

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The government plans to cut tariff levels, reduce licensing requirement and eliminate price controls in a new measure to make Kenyan goods competitive in the regional and international markets.

This is under the national trade policy currently in its final edition, which targets to reduce Non-Tarrif Barriers and promote Small and Medium Enterprises, a measure that will help the country improve its balance of trade, which heavily favours imports.

According to government, NTBs in export markets coupled by bureaucracies remain a major constraint to international trade, denying the country the 10 per cent economic growth preference.

The policy that underwent a stakeholders discussion on Friday also seeks to review regulatory requirements especially on the retail sub-sector, which has made the cost of doing business remain high.

“We need to take a bigger share of the regional market. We are dealing with bureaucracies that are denying us from accessing regional and global markets,” CS Industry, Investment and Trade Adan Mohamed said.

Read more: Draft Policy Seek to Promote SME Growth

Special Economic Zones Will Give Much Needed Boost to Manufacturing Sector

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The presidential assent to the Special Economic Zones (SEZ) Act in 2015 is not the be all and end all of the process to establish SEZS. The country is now currently working on regulations that will guide the establishment and running of SEZs.

Whether the SEZs bend towards manufacturing or services, they are of importance to industry and the economy as a whole due to the benefits of sustained economic growth, foreign direct investment and employment to be created which Kenya so needs to address the challenges faced by our graduates. This is based on the fact that reducing restrictions to the entry of foreign capital, attracts more tax revenue for the government.

Over 120 countries in the world are said to have SEZs and have contributed to over 50 million direct jobs. Countries like the Philippines with an estimated 100 zones have benefited greatly in terms of Job creation with close to 1 million employees. They have also helped certain countries that formerly relied on agriculture to transform into manufacturing based economies.

As specially designated zones of integrated development of rapid growth under one authority, SEZs are expected to contribute to Kenya’s industrial transformation.

Read more: Special Economic Zones Will Give Much Needed Boost to Manufacturing Sector

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