Industrialization in the country continues to be among the potential prime movers of the economy after the agricultural sector. With numerous construction and infrastructure projects like the standard gauge railway construction on the pipeline, growth in the manufacturing sector is expected to increase tremendously . Growth in the manufacturing sector brings increased competition and more complex supply chains to provide the cost-effective mix of sourcing, manufacturing and supply operations that entail the cross-border movement of goods. With the highly increasing desire to participate constructively in international trade, industries need to seek trade strategies to reduce costs as they continue to rely on imported machinery — and some on deficient raw materials in order to mitigate the risks of cross-border trade for manufacturing operations. Accordingly, customs and trade considerations are vital for manufacturing firms to support growth and reduce risk and cost. The key areas to consider are customs planning, customs compliance, post clearance customs audits and customs controversy. Effective customs planning is an important strategy for firms that seek to reduce costs to gain a competitive edge or serve a particular market segment in the economy by foreign sourcing raw materials, inputs, equipment and finished goods. For instance, free trade agreements (FTAs) provide preferential tariffs for goods sourced from Free Trade Area member countries, provided that the FTA-specific rules of origin and other requirements are followed. Additionally, qualifying exports to the US and EU markets can benefit under the African Growth and Opportunity Act and the Cotonou Agreement, respectively. This...

Port-based users of the Kenya TradeNet System are happy with stakeholders’ involvement in implementation of the project. Regional heads of State launched the project expected to reduce cargo dwell time at the ports and improve the ease of doing business in Nairobi on May 2. Representatives of key stakeholder organisations in Mombasa said the sustained engagement of system users by the implementing agency, KenTrade, was key to overcoming challenges experienced in previous port-based projects . Shipping agents Juma Tellah, chief executive of Kenya Shipping Agents Association, said implementation of the system was so far the most consultative port-based project. “As shipping agents, we have been involved in every phase of the Kenya TradeNet System implementation from the development of the System Specification Requirement and piloting to Service Level Agreement of Kenya TradeNet System,” he said.  Mr Tellah was speaking in Mombasa during a stakeholder’s consultative forum that brought together representatives of key port-based organisations and institutions using the Kenya TradeNet System. Kenya TradeNet is owned and managed by Kenya Trade Network Agency (KenTrade), a State corporation mandated to implement, operationalise and manage the facility. Source: Standard Digital

Netherlands has overtaken the UK as the second top market for Kenya’s exports in the three months to March as shipments to key traditional markets dropped. Official data shows that exports to Netherlands rose 26.9 per cent to Sh11.8 billion, narrowing the gap with Uganda which imported Kenyan goods worth Sh12.4 billion, down from Sh13.6 billion. The increased shipments to Netherlands were linked to increased flower sales, which accounted for nearly 75 per cent of the earnings. Its rise as a major trading partner comes days after Kenya rebuked Britain, the US, France and Australia for issuing warnings about travel to Kenya, which hurt tourism with the departure of thousands of tourists. The first quarter generally falls within the flower industry’s high season but this year started off with good weather that caused overproduction and political stability that ensured smooth sales during Valentine Day,” said Jane Ngige, CEO of Kenya Flower Council. The Netherlands has consistently ranked as the fifth top export market for Kenya in the last five years, trailing Uganda, the UK, Tanzania and the US. In the first quarter of last year, it fell behind Egypt, after the North African nation edge out Tanzania to take up the third position. Besides Uganda, exports to the UK and Tanzania also dropped in quarter one despite a two per cent rise in overall shipments to Sh134.5 billion, from Sh131.9 billion in the same period last year. The UK, which was Kenya’s top export market unit, was overtaken by Uganda...

The International Monetary Fund (IMF) managing director Christine Lagarde has commended Kenya and Cote d’Ivoire for starting regional development projects that are likely to drive economic growth. Ms Lagarde said high quality infrastructure could be a magnet for foreign investment, economic diversification and employment. Kenya is involved in the standard gauge railway (SGR) project that is to link Kenya, Uganda, Rwanda and even South Sudan. The Lamu Port South Sudan Ethiopia (LAPSSET) corridor projects — rail, roads and pipeline — that start at Lamu port are supposed to link with South Sudan, Ethiopia and Uganda. “Kenya and Côte d’Ivoire are also initiating regional infrastructure projects in electricity, and road and railroad networks,” she said in prepared remarks titled ‘Africa Rising—Building the Future’ to be delivered in Maputo, Mozambique. Such investments would make growth sustainable for a large group of people in Africa, she said. However, she said, the infrastructure investment needs for the Africa region top Sh8 trillion ($93 billion) annually. “The investment needs for the region are estimated at about $93 billion annually. In most cases, the investments are large and upfront,” she said. She said the investments need to be carefully selected, managed and implemented within medium- to long-term budgeting. Another policy priority was to build institutions for improved governance. “We all know that Africa has tremendous potential — it is home to more than 30 per cent of the world’s mineral reserves. Properly managed, these endowments offer unparalleled opportunity for economic growth and development,” she said. Valuable...

Kenya’s trade deficit narrowed by Sh14 billion as local firms reduced their appetite for industrial supplies in the three months to March, official data shows. Data from the Kenya National Bureau of Statistics indicates that imports dropped to Sh345.2 billion in quarter one, down from Sh356 billion in a similar period last year. This narrowed the gap between goods bought from foreign countries and exports, which grew by two per cent in the period under review to Sh134.5 billion. Capital equipment for industrial and infrastructure development has been a major contributing factor to the widening trade deficit and balance of payment. “Industrial supplies (non-food) were the main import items followed by fuel and lubricants, machinery and other capital equipment including transport equipment,” KNBS data states. Industrial supplies account for about a third of Kenya’s imports and their value dropped to Sh77.1 billion in the first two months of the year, from Sh82.1 billion in the same period last year. The value of fuel products, which averagely account for a quarter of Kenya’s imports, dropped to Sh53.3 billion in January and February, from Sh56.2 billion in the two months last year. This is due to cheaper oil since Kenya consumed 965,000 metric tonnes of fuel products, from 917,000 in quarter one of last year. The reduction in the orders of industrial goods could point to a slowdown in certain critical sectors of the economy like manufacturing. The contribution of manufacturing to Kenya’s gross domestic product dropped to an all-time low last...

Members of East African Legislative Assembly (EALA) have called upon the business community and other stakeholders to fully exploit Single Customs Territory potential. They made the call in Arusha when contributing to the report of the Committee on Communications, Trade and Investment on Single Customs Territory tabled in the 6th EALA Plenary session on Tuesday. “As a Member of Parliament for East Africa, I wish to call upon the business community and other stakeholders to fully exploit this opportunity of SCT,” said Shyrose Bhanji one of Tanzania’s EALA MPs. She urged the region to exploit the ever-increasing trade opportunities, saying Dar es Salaam was another strategic port for consideration and that the Committee should visit the port to acquaint themselves with its operations. She added: “Since the SCT aims at reducing transaction costs of business, we expect reduction of prices so that goods can be enjoyed across the EAC Region.” Bhanji suggested the need to lower the high communication costs in the EAC region which may affect the operationalization of the SCT. “Given the existence of over 140 million East Africans, we are now tasked to take our market to the next level. If prices of goods will be reduced then poverty arguably will also be reduced, other things being equal,” she said. The heart of SCT lies in the operation of the two main ports namely Mombasa and Dar es Salaam. “As we have already visited Mombasa Port three times (once the whole Assembly and twice as Communication, Trade...

The reputation of Kenya’s horticulture exports to the European Union remains under threat as local dealers step up smuggling of rejected flowers and fruits to Europe. Data from European Food Safety Commission showed that 45 consignments of contaminated fresh produce sourced from Kenya were intercepted in the four months to April — cementing a trend analysts warned could ruin the country’s competitiveness if not checked. This is up from 41 consignments captured in the same period last year and pales in comparison to nine contaminated shipments from Ethiopia, which rivals Kenya in the export of flowers to the EU. The banned shipments are set to up pressure on Kenya to enhance safety measures on its horticulture exports as it emerges that some farmers are still using banned pesticides during production. “We have had a lot of sensitisation on the strict safety requirements in the EU but a few guys out there don’t seem to heed the word,” Joseph Waweru, a mid-sized horticulture producer in Limuru said by phone. “Unfortunately we may all be affected in the long run.” Kenya may lose its position as the world’s biggest horticultural exporter, in the wake of the rising cost of production and compliance bottlenecks linked to the tighter safety measures. There are concerns that flower importers are shifting focus to Ethiopia and India, which have cheaper flowers than Kenya. Kenya earned Sh93 billion from the cultivation of fruit, vegetables, flowers and nuts last year, up from Sh87.71 billion in 2012. The European Parliament...

The trend for up-sizing on North-South routes, most visible on Far East-Latin America trades over the last couple of years, has not bypassed African trades, with a number of services to West Africa recently reorganised. Despite a variety of infrastructure challenges, the average size of vessels calling at African ports continues to increase, supported by notably robust trade volume growth. The largest container capable ships calling in Africa, along with the largest trade volumes, unsurprisingly come from Asia, as displayed in the Graph of the Month. The average capacity of these ships is now almost 4,000 TEU, compared to just under 2,000 TEU for those coming from Europe, and 1,333 TEU for those steaming from North America. Spate of New Services Improvements in port infrastructure, along with strong volumes and stable freight rates (according to the SCFI, Shanghai-Lagos freight rates have remained between $1,800-2,100/TEU since August 2012), have recently stimulated a round of service upsizing on the Far East-West Africa trade. Small Post–Panamaxes (up to 5,800 TEU) along with gearless Panamaxes and 4,500 TEU ‘Wafmaxes’ (wide beam designs that are the largest geared containerships in world) have been deployed in the place of 2-3,000 TEU geared vessels. However, as internal infrastructure (road and rail connections) is often poor, ships must continue to call at a number of less developed ports along the coast. As such, smaller geared vessels will still be required to operate regional transhipment services from larger hub ports. Strong Volumes Driving Demand Far East-Africa trade volumes increased...

TANZANIA has outshined her East African Community (EAC) partner states in launching and executing electronic cargo systems around the region, Deputy Minister for East African Cooperation, Abdullah Juma-Saadala, has revealed here. Speaking during the ongoing East African Legislative Assembly (EALA) sessions here, Dr Saadala noted that Tanzania was keen to reduce and significantly so, the number of weighbridges and roadblocks with the entry of the Single Customs Territory (SCT) and the move was in line with refurbishing both the Dar es Salaam and Tanga ports to speed up exports and imports through the Indian Ocean. According to the Deputy EAC Minister, the weighbridges along main corridors in the country will be upgraded to be able to measure vehicles without the latter having to stop thus reducing time taken on transit. The Secretary General for EAC, Dr Richard Sezibera, also noted that the processes to that effect were also at various stages of implementation in other countries; “The United Republic of Tanzania is currently ahead while Burundi, Rwanda, Uganda and Kenya are working on the same,” he added. With electronic cargo system it also means that imported goods headed to neighbouring countries can now be cleared at border points instead of having to queue at the harbour for the process and thus creating unnecessary congestion. Tanzania is also working hard to ensure that the national identity cards project was a success; “We are also on course in issuing machine-readable electronic Identity Cards to the citizens; the process is slow because we...

Kenya and Uganda have issued fresh terms to Rift Valley Railways (RVR) and given the rail operator nine months to put its house in order for improved performance. The two governments Tuesday said they had given RVR till February 2 to increase its cargo haulage above 1.6 million tonnes from the current 1.2 million tonnes, and to invest more cash in the upgrade of the Kenya-Uganda line and purchase of new wagons. The States maintains that RVR has failed to live up to expectations nine years since it won the concession. A joint communication indicated that the States rejected RVR’s one year window to meet the terms of its concession and asked Kenya Railways and Uganda Railways to re-invigorate the monitoring of the rail firm on a quarterly basis. “While the performance trend since April 1 has improved, the same has not met the expectations of both governments,” read the joint communiqué. “The governments…will make further assessment of performance of RVR during the next nine months,” added the notice dated May 2. Uganda and Kenya did not state actions that will be taken after February, but last year Transport secretary Michael Kamau warned that the governments could terminate their agreement if RVR failed to meet terms of the pact, including performance and fees payments. But RVR says the turnaround efforts that started in January 2012 have begun to be felt and that it will double its cargo capacity this year. “Cargo carrying capacity will double with the delivery of 20...