KENYA/INDIA-ECONOMY: Forging Closer Trade Ties

By Moyiga Nduru Reprint | | Print |

Moyiga Nduru

NAIROBI, May 2 1996 (IPS) - It was Indian labour that helped build Kenya a century ago, and now Kenyan business leaders would like to return the favour, and make a healthy profit into the bargain.

They are eying India, whose population is expected to hit the one billion mark within a decade, as a major potential market for Kenyan raw materials and industrial products, as well as a source of cheap technology.

“I’ve always said that if we export goods to only one million people in India, Kenya will have a trade surplus,” says Kassim Owango, chairman of the National Chamber of Commerce and Industry.

The trade between the two countries is currently 80 percent in India’s favour. It rose from 12.38 million dollars in 1987-88 to 125 million dollars in 1994-95. In the current year (1995-96), the figure is expected to jump to 250 million dollars.

India’s major export items include motor vehicles, drugs and pharmaceuticals, machinery and instruments, carpets, spices, rice and wheat. In return, Kenyan goods crossing the Indian Ocean are mainly dyeing and tanning materials, pulses, semi-precious stones, crude minerals and chemicals.

“There is a lot of potential in India,” says Peter Muthoka, the chief executive of the Kenya Export Promotion Council. “That’s why we are trying to increase our trade.”

Joseph Ngok, the chairman of the state-owned Investment Promotion Centre, says in particular, “we are looking… for the type of technology which can produce food, the cheap technology which boosted India’s Green Revolution and made India self- sufficient in food.”

At the moment, 37 percent of Kenya’s trade is with the 22- nation Common Market for East and Southern Africa (COMESA) and 32 percent with the European Union, according to Muthoka.

It is not only Kenyan business which wants to improve trade ties, but also Indian industrialists who are keen to build on the historical links between the two countries.

“India has been slowly and steadily emerging to the position of the 4th major source of imports for Kenya behind the UK, Japan and USA in 1995,” says Indian High Commissioner here, T.P. Sreenivasan. “Indian products are very popular in Kenya, and we are expecting more to be introduced here in August.”

Nearly 70 Indian companies will participate in a major show, called ‘Made in India’, in Nairobi in August. “The exhibition will be the largest ever exposition of Indian trade and industry in the region,” says Sreenivasan.

The High Commission is also assisting in a reciprocal visit by a Kenyan business delegation to India planned for November.

Uganda, Kenya and Tanzania are members of the revived East African Community, with a market of close to 70 million people. This figure includes the populations of Rwanda and Burundi, whose economies are tied to the emerging markets of their three neighbours, and Kenya’s port of Mombassa.

“We are glad that the show is coming at the time when the Community is taking off,” says Sreenivasan. “We expect participants from the three countries to benefit from it.”

Set up in 1967, the economic bloc collapsed in bitter recrimination a decade later after relations between the three states soured with the coming to power of Idi Amin in Uganda in 1971, and Kenya’s unease over Tanzania’s socialist leanings.

Now presidents Daniel Moi of Kenya, Yoweri Museveni of Uganda and Benjamin Mkapa of Tanzania have revived it, allowing for the free flow of trade and the free movement of citizens between the three countries. That means an expanded market for Indian goods.

Kenya is home to about 90,000 ethnic Asians, mainly descendants of those whom the British brought to build the railways in the last century. They now dominate Kenyan commerce and industry.

In Tanzania, the community is even larger and equally entrenched in business. And in Uganda, more are returning to reclaim their properties seized when 60,000 were expelled by Amin in 1972.

“These are the type of people who will do business with India,” says an Indian businessman here, “because they want to maintain ties with the motherland.”

Kenya, with a population of 26 million, is the regional economic power. Export-orientated agriculture, including forestry and fishing, dominates its gross domestic product, but the service and manufacturing industries are disproportionately large for a country of Kenya’s income level.

About one-half of investment in the industrial sector is foreign-owned, and of this, 50 percent is British.