 INVESTMENTS: THE ROAD TO RECOVERY |
According to Mr. Chris Kirubi, the outspoken chairman of the Kenya Association of Manufacturers (KAM), doubtlessly the strongest lobby group in Kenya, very few companies in the country are still fit to compete in the international market because of the high local production costs. Even though the labor is good, it is not yet technically trained to handle international trade: "If the western world could encourage us to produce and to get access to their markets and remove tariff barriers instead of giving us aid, I think Africa could develop much better". He further adds that the Lome Convention and the African Growth and Opportunity Bill are some efforts that "if implemented properly, could assist us to become economically independent rather than being dependent on foreign aid".
In order to attract further investment, the government
created in 1990 the Export
Processing Zones Authority (EPZA). Any company
wishing to export can get established in these zones
receiving a number of fiscal benefits as long as
their production is exclusively destined to foreign
markets. They are for instance exempted from custom
duties and VAT on all imports of raw material and
inputs. Companies also get a ten year corporate
tax holiday and access to export markets under preferential
treatment. "The volume of investment has been
going up. It is now in the region of 6 billion Kenyan
Shillings (US$ 79 mill). Exports have been going
up from zero to Ksh 1.8 billion (US$ 23.7 mill)
in 1997 and Ksh 2.4 billion (US$ 31.5) in 1998.
There is an American company that sells about 60,000
pieces of Jordache jeans to the US per week"
explains Mr.
Bundotich, Chief Executive of EPZA. According
to the latest reports, sales in the fist six months
of the year among EPZ firms experienced a 45% rise
respect to the same period last year owing to the
entry of 5 new companies. |
| FINANCIAL INVESTMENT & THE INSURANCE SECTOR |
Outside of government intervention, investment is silently carried out by private local companies which, giving the present low indexes of the of the stock exchange and the low market prices, are making a killing. First Chartered Securities, one of the largest investment groups in East Africa, has steadily been diversifying its portfolio, spread across insurance, banking, agriculture and industry. Only taking into account their insurance companies they possess a US$ 100 million property portfolio. Its Managing Director, Mr. Bird, an elegant middle aged man with a heavy British accent, maintains that they are actively looking for new investments, not only in Kenya, but within the East African Region, especially in the health-care and infrastructure sectors. However they are not only investing locally. They claim they are so well positioned that they could support any foreign investor coming in, by establishing itself as the necessary bridge and guarantee needed by foreign investors willing to enter the market. "There are some very interesting acquisition opportunities, but availability in management expertise is key. If you cannot easily recruit management, it is far better to tie in with an organization that already has the needed expertise" remarks Mr. Bird in his 17th floor light flooded office. |
