Will thawing Kenya-Nigeria ties lead to higher balance of trade? By Muthoki Mumo Speaking to a group of over 500 technocrats and business leaders from Kenya and Nigeria, President Uhuru Kenyatta last week joked that he had developed a taste for Nollywood productions since he assumed office earlier this year.” The Nigerian entertainment industry has a large following here in Kenya, including myself, now that I don’t move out as much as I used to,” he said. An audience that included Nigerian President Goodluck Jonathan dissolved into laughter, a signal that perhaps relations between Kenya and Nigeria were moving from lukewarm to friendly. The Kenya-Nigeria investment forum was the first of its kind. About 150 of Nigeria’s wealthiest individuals, among them magnates of financial and energy sectors, descended on Nairobi in search of lucrative deals with East Africa’s largest economy. President Jonathan’s delegation was reciprocating a July visit made by President Kenyatta to the West African country. Engagements at such high levels indicate a shift in how these countries perceive and are willing to relate to each other. Nigeria and Kenya have never been best friends, with Nairobi adopting an often cautious stance when dealing with the West African country. “Although Nigeria is an Anglophone country, it has been lumped with its Francophone neighbours. Overcoming cultural differences has not been easy on either side and both countries found it easier to trade elsewhere,” noted Kenya Private Sector Alliance (KEPSA) chief executive, Ms Carol Kariuki. Data from the Kenya Economic Survey actually indicates that trade volumes between Kenya and Nigeria have slumped over the past few years. However, businesses now seem to be reaping the dividends of the deliberate attempts by the political class to engage more closely. During the forum last week, Kenya and Nigeria inked seven pacts meant to ease trade. The private sector responded in kind by vowing investments to the tune of billions of shillings. Nigeria’s businessmen are hungry for a piece of Kenya’s nascent energy and minerals sector. One of the investments that stole the show last week was a promise by Nigeria’s wealthiest businessman, Mr Aliko Dangote, to put Sh34 billion ($400 million) into a cement factory that will rely on coal. President Uhuru Kenyatta, in his speech, also urged Nigeria’s financial institutions to step into Kenya’s oil and gas sector. Oil exploration in the country is gathering speed, raising capital demands that cannot be fully met by the local banking sector. On the other hand, Nigeria, a net food importer, called for technology and skills transfer from Kenya on such areas as dairy production and animal husbandry. Kenya will also embark on a joint venture to grow Nigeria’s textile industry. However, these promises are unlikely to singlehandedly wipe out the obstacles that have traditionally hindered trade between the two countries. Prime among this is the simple geographic factor. Kenya and Nigeria are on two opposite ends of the continent. Although national carrier Kenya Airways has significantly addressed the distance challenge with direct flights to Nigeria, without alternative transport infrastructure, it will remain easier for both countries to trade with South Africa than with each other. “Trade between Kenya and Nigeria has been held back by simple logistics. It is far too difficult to get goods from one country to the other,” said Bidco chief executive Vimal Shah. Beyond this, businesses from both countries have a bone to pick with what they see as protectionist government policies over key industries. During the forum, Kenya Association of Manufacturers (KAM) chief executive noted that many manufactured products from Kenya were restricted from entering the Nigerian market. Nigeria’s manufacturing industry accounts for about four per cent of the country’s gross domestic product (GDP) while in Kenya it accounts for about 14 per cent of the GDP. “Most of the manufacturing that we do cannot find entry in their market. They want to grow their own industries and so they have blocked our products,” said Mr Shah. On the other hand, Nigeria takes issue with ownership regulations in Kenya’s financial sector and immigration policies. The latter was partly addressed by a directive from President Kenyatta to the interior ministry that could see Nigerian businessmen granted visas of up to 10 years. However, as experience from the East African Community (EAC) has clearly shown, presidential directives do little to erode existing perceptions. Nigerians operating in Kenya have complained of being frustrated by local authorities who automatically assume they are in the country to engage in nefarious activities. “We have done inquiries with Nigerian businesses operating in Kenya. There have been some hostilities in terms of immigration policies and we want these addressed,” said Nigerian senator Hope Uzodinma. The touchy issue of immigration was recently at the heart of a diplomatic stand-off after Kenya deported Nigerian businessman Anthony Chinedu over drug claims. Kenyan civil servants who executed the order were detained in Nigeria for days.
Posted on: Mon, 09 Sep 2013 06:30:50 +0000
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