Mombasa is set to get a free trade zone (FTZ) for motor vehicles this year in a policy move that could create thousands of new jobs for traders and service providers. An FTZ, such as the world renowned Dubai, is a re-export gateway where goods in transit are temporarily stored to avoid strict customs regulations and lengthy administrative procedures that home-bound imports face. The establishment of such a facility in Kenya - almost four years after the Cabinet gave its nod to the plan - means vehicle imports destined to other markets in the region will first be received and sorted in Mombasa. Goods in such a customs haven only get taxed when they end up in the local market. The country benefits from the job opportunities created for citizens and from collecting cargo handling fees. The 1,000-acre Mombasa re-export gateway will initially handle 100,000 vehicles annually, Treasury secretary Henry Rotich estimates in a draft Budget Policy Statement (BPS) released on Friday. The State-owned facility is tipped as one of the flagship projects that the government is banking on to raise the 2018 export earnings by 10 per cent and 20 per cent annually by 2022.  “We intend to strengthen trade facilitation programme,” Mr Rotich says in the draft BPS. The Mombasa FTZ is conceived to serve the landlocked states under the Common Market for Eastern and Southern Africa (Comesa). All the vehicles on transit will be moved directly from Kilindini seaport to the FTZ from where they can be...

British funding of a 10-year-old aid package to drought-hit communities in Kenyais to end in 2024 as part of a new economic partnership with the country, the international development secretary has told the Guardian. The £143m programme, which has helped 600,000 vulnerable people in emergencies via direct cash transfers – a system criticised by some Conservatives as the equivalent of exporting the dole – is the first UK aid project of its kind which will be wholly taken over by a government in Africa. In an interview with the Guardian on her first visit to the continent as secretary of state, Penny Mordaunt said Kenya was a “profound success story” that had “stepped up and taken responsibility” by investing in its own people. Last week, Mordaunt warned Britain would cut aid spending to developing countries if they failed to invest in their own people. Setting out her priorities as a new development secretary, she said she would focus increasingly on helping developing countries “stand on their own two feet” and pledged to use aid as a “Brexit-ready proposition to boost trade and investment with developing countries” in a mutually beneficial relationship. Speaking to the Guardian in Nairobi at the weekend before flying to Somalia, Mordaunt said Kenya was a perfect model of this. “Kenya is an example of a country which I think is doing the right thing.” “There will be other nations who have said: why would they invest in vaccinations and start building up particular services because the international community is going to do...

Governments and regulators in East Africa are facing a herculean task of expanding and deepening financial markets to spur sustainable economic growth. A survey of stockmarkets in 17 African countries showed that only Kenya’s financial markets rank among the top five leading markets on the continent. According to the Africa Financial Markets Index (AFMI) ranking by Barclays Africa Group, although Kenya’s financial market is the most advanced in the East African region, it ranks behind South Africa, Mauritius, Botswana and Namibia on the continent. The index, which measures Africa’s financial markets based on depth and breadth, access to foreign exchange, transparency, tax and regulations, macro economic opportunity, legality and enforceability, ranks Rwanda at position eight, Uganda at 10 and Tanzania 11. Kenya emerged the leading in East Africa due its strong contract enforcement policies, market depth as well as the capacity of local investors. The country also led its East African peers market depth pillar, which focussed on the range of financial products, currencies and hedging options, and capacity of local investors’ parameters. Kenya is also ranked ahead of economic giants like Nigeria, Ghana and Egypt due to the ongoing reforms in its financial markets. “African financial markets have traditionally suffered from a lack of depth relative to other regions. This has been a key factor holding back the ability of firms and investors within and beyond the continent to exploit expansion opportunities,” said Barclays managing director and head of markets, George Asante. Ethiopia Although Ethiopia is one of the...

Prices of goods in East Africa are expected to remain stable this year, a reprieve for consumers, following near double-digit inflation last year. A report by African Development Bank (AfDB) released last week indicates that inflation in the region is expected to fall sharply due to improved crop harvests, having spiked to nearly 10 per cent last year. East Africa is also expected to post the fastest growth on the continent, which will likely attract more investors into the region. “Growth is expected to remain buoyant, reaching 5.9 per cent in 2018 and 6.1 per cent in 2019. Strong growth is widespread in the sub-region, with many countries (Djibouti, Ethiopia, Kenya, Rwanda, Tanzania and Uganda) growing five per cent or more,” said AfDB in its 2018 Africa Economic Outlook report on the continent’s macroeconomic performance and prospects. Factors to spur growth Some of the factors expected to contribute to faster economic growth are increased private consumption and manufacturing, especially in Tanzania, Kenya and Rwanda, and investment in public infrastructure in Djibouti and Ethiopia. “African economies have been resilient and are gaining momentum,” said Akinwumi Adesina, president of AfDB. “Challenges remain, especially for the structural transformations that would create more jobs and reduce poverty by deepening investment in agriculture and developing agricultural value chains to spur modern manufacturing and services.” At the launch of the report at the headquarters in Abidjan on Wednesday, Mr Adesina said that Africa’s infrastructure requirements are about $130 billion to 170 billion a year. “That’s far higher than...

The Directorate of Horticulture has banned all avocado exports following a severe shortage that has raised prices of the fruit to a three-and-a-half-year high. The average price of a 90-kilogramme bag of avocado shot up to Sh2,560 in December, making it the highest cost of the commodity since May 2014, when a bag was selling for slightly above Sh2,700. A single avocado is currently selling for between Sh50 and Sh80 in Nairobi’s retail markets, up from between Sh10 and Sh20 each during high season. The Agriculture and Food Authority (AFA), under which the Directorate of Horticulture falls, attributes the increase in the price of the fruit to the biting shortage of popular varieties, Fuerte and Hass, which are off-season. Avocado contributes seven per cent of Kenya’s total fruit export to the global market but production has been static over the years. Farm production stood at 230,948 tonnes in 2015, rising slightly to 246,057 tonnes in 2016. About 387.2 tonnes worth Sh5.4 billion was exported in 2016, compared to 461.1 tonnes worth Sh7.1 billion last year as per AFA data. Foreign investors have been keen on financing the avocado sub-sector in Kenya because of its low-risk investment environment, wide market access, and improved infrastructure. The Netherlands Trust Fund launched a $1 million project in 2016 to enhance the export competitiveness of the avocado sector in Kenya. The project’s strategy includes updating the commodity business plan for the avocado sub-sector and increasing the export capacity of exporting SMEs and farmer groups linking...

The United States Agency for International Development (USAID) Hub in east Africa and the Kenyan ministry of industry, trade and cooperatives recently joined Kenya’s private sector to review and validate a new Kenya National African Growth and Opportunity Act (AGOA) strategy that aims to double its 2016 figure of exports to the United States by 2025. Kenya nearly doubled its exports to the United States under AGOA from $225 million in 2010 to $389 million in 2016. Apparel is mainly exported under AGOA. The new national AGOA strategy outlines updated priority actions for Kenya to diversify its export portfolio, according to an USAID press release. The new strategy is the result of a supply-side and end-market analysis provided by the USAID East Africa Trade and Investment Hub at the invitation of the Kenyan Government. The apparel sector under AGOA is the largest contributor to job creation in Kenya currently credited with supporting over 200,000 full-time jobs. It is also Kenya’s highest earning sector, accounting for 85 per cent of its $389 million in 2016 AGOA exports. The USAID Hub is also working with the Kenyan ministry on a ‘East Africa Cotton, Textile and Apparel Workforce Development Initiative’, a collaborative effort with the private sector based on a partnership agreement between the Hub and the American Apparel and Footwear Association. The partnership ensures US brands and retailers’ goods are manufactured in accordance with best business practices and operations in East Africa, producing a win-win for trading partners. (DS) Source: Fibre 2 Fashion

Penny Mordaunt has hailed the “incredible power of technology to deliver aid in new ways” on her first official visit to Kenya as International Development Secretary. During her visit, Ms Mordaunt saw how UK aid is supporting vulnerable communities in the north of the country devastated by East Africa’s drought. In Kenya’s capital Nairobi, Ms Mordaunt also heard how UK support for innovative programmes is helping to create jobs for a rising population. Ms Mordaunt was also in the country to hear from British businesses about how new technology has helped them tap into the Kenyan market. The UK is the fifth largest exporter of goods to Kenya and trade between the two countries is worth over £1 billion annually. Innovative technology, supported by DFID, is helping Kenya build resilience to climate challenges, including drought, and to build a modern economy for the future. During her visit the International Development Secretary: Saw how UK aid-supported research is helping to power low-cost insurance for livestock herders in drought-prone parts of Kenya. The research makes use of already existing satellite technology by NASA to provide images of vegetation cover. This ensures timely insurance pay-outs are made correctly and quickly if cover levels drop. DFID both backs the research and supports private sector insurers to provide it to local herders. Set out further UK aid support to the Hunger Safety Net Programme – an innovative cash-transfer scheme bringing together biometric technology and mobile money. This is helping more vulnerable households and supporting the...

Ugandan President Yoweri Museveni will tomorrow officially open the first session of the fourth East Africa Legislative Assembly. A programme seen by the Star yesterday indicates 54 EALA lawmakers from six East African Community member states were scheduled to arrive in Kampala, Uganda, yesterday. They will conduct House business until February 9. Museveni, who is the chairman of the Summit of East Africa Community Heads of State, will deliver the State of EAC Address in the House presided over by Speaker Martin Ngoga. On Monday next week, the MPs will debate motions before establishing and electing chairpersons of committees. They include Committee on Legal Rules and Privileges, Committee on Communication, Trade and Investment, Committee on Agriculture, Tourism and Natural Resources and Committee on Accounts. Others are Committee on Regional Affairs and Conflict Resolution and the Committee on General Purpose. After the election, the committees will start sittings. Chairman of the Kenya chapter at EALA Simon Mbugua yesterday told the Star they are looking forward to effectively representing the country in the second meeting of the Parliament’s first session. On February 7, the East African Monetary Institute Bill, 2017 and East African Community Statistic Bureau Bill, 2017 will be introduced in the House for first reading. The plenary will also debate Museveni’s address and on February 8, the East African Community Oaths Bill, 2017 will be introduced for its first reading. Source: The Star

Britain will continue to grant Kenyan products duty-free access to the UK under Economic Partnership Agreement, it has said. Secretary of state for International Development Penny Mordaunt assured Kenya that Brexit will cut current trade barriers and strengthen bilateral economic relationship and long term prosperity of both countries. “We now have an opportunity to do more with Kenya to open up trade around the world. This is already an extraordinary trading partnership,” she said. UK agreed to support president Uhuru Kenyatta's big four priorities including manufacturing, affordable housing, universal health care and food security. 'We have agreed on a number of new initiatives aimed at strengthening the relations between the two countries. This will underpin mutual activities to attract investment, increase access to capital, deepen business links, create jobs for millions and support the delivery of president Kenyatta's four priorities,'' said Mordaunt in a joint press statement The meeting which was organised by the Ministry of Foreign Affairs and chaired by National Treasury cabinet secretary Henry Rotich saw UK welcome Kenya's confirmation to participate in the Commonwealth Heads of Government Meeting (CHOGM) to be held in April this year. The two countries will also co-host with the International Disability Alliance, the Global Disbility Summit in London in July Other government officials attended the meeting includes Health CS Cleopa Mailu and his East African Community counterpart Phyllis Kandie. Others were principal secretaries Monica Juma of Foreign Affairs and Cris Kiptoo from the State Department of Trade in the Ministry of Industry,...

Phase one of the Standard Gauge Railway connecting Mombasa and Nairobi is already operational, having come into service on June 1, 2017. The new service has revolutionised travel between the two cities. Passenger trains operating between the two points have not only reduced the cost, but have also cut down the time it takes to travel from Mombasa to Nairobi and vice versa to only four hours. Equally important, the first SGR cargo delivery to Nairobi from Mombasa was made early this month, signalling the seriousness that the Government attaches to its flagship project that, upon completion, will have immense value for Kenyans and the economy; creating jobs, reducing congestion and delays at the port of Mombasa, easing passenger and freight transportation as well as lowering cost. However, challenges still abound, and mostly revolve around the acquisition of land along the projected route. Indeed, some rights group went to court seeking to stop the construction of the railway line citing environmental concerns and the possible negative effects of SGR on wildlife as its route runs through the Maasai Mara. Concerns have been raised by the Government over the high cost of land between Nairobi and Naivasha that could cost the government Sh15 billion, which Kenya Railways Managing Director Atanas Maina said was unsustainable. Despite these challenges, the Government has announced SGR construction to Olkaria will continue. Completion time is expected to be 36 months. Outstanding matters of land acquisition need to be cleared amicably in order that people who have...