KEPSA participated in the Kenya Competitiveness Forum organized by the Business Council for International Understanding (BCIU) on 11th November 2015. The aim of the forum was to highlight and address key factors affecting Kenya’s global competitiveness. The forum was also aimed at identifying key investment opportunities for American firms in the country with BCIU helping to promote Kenya as an investment destination.
The Forum was attended by American Ambassador Robert Godec, Senior BCIU Advisor Ambassador (Ret.) Patricia Moller, BCIU President and CEO Peter Tichansky while the Kenyan Delegation was led by East African Affairs, Commerce and Tourism Cabinet Secretary Ms. Phyllis Kandie, Parliamentary Defense and Foreign Affairs Committee Chair Mr. Jams Ndung’u, KEPSA’s CEO Ms. Carole Kariuki and KEPSA Directors.
BCIU President Petet Tichansky said Kenya remains a key player in the regional economy and acts as the gateway to sub-Saharan Africa and therefore has the responsibility of promoting regional trade and integration. According to Mr. Tichansky, the development of regional markets will boost investment across the continent as investors are increasingly using market size to determine the competitiveness of any given region.
American Ambassador Robert Godec commended Kenya’s progress in the implementation of reforms in democracy, freedom of speech, access to government services through devolution and the ease of doing business. Amb. Godec said the implementation of the 2010 Constitution has enabled Kenya become a better country for both its citizens and those seeking to invest in the country. Amb. Godec however cautioned that a lot more needs to be done in regard to governance, tackling corruption, security and ensuring peaceful elections. According to Amb. Godec security threats from acts of terror and corruption are the two main factors affecting Kenya’s competitiveness.
East African Affairs, Commerce and Tourism Cabinet Secretary Phyllis Kandie pointed out that the integration process for the East African Community remains on track with the East African Heads of State remaining committed to the process. According to C.S Kandie this has seen concerted efforts in the development of regional projects including the Standard Gauge Railway, LAPSSET, development of a regional power grid and the implementation of the Northern Corridor Integrated Projects. In addition to infrastructure there has been the adoption of the One Area Network and the single tourist Visa along with the use of national identity cards for cross border movement of persons.
Parliamentary Defense and Foreign Affairs Committee Chair Jams Ndung’u pointed out that the National Assembly continues to play its role in developing investor legislation. According to Hon. Ndung’u key legislation on security, governance and business regulatory reforms have been passed with the aim of securing the country and ensuring it remains an attractive investment destination.
KEPSA CEO Ms. Carole Kariuki noted that Kenya continues to make progress in improving the business environment by adopting a tripartite partnership between the government, the local private sector and development partners to address the challenges facing Kenya’s competitiveness. According to Ms. Kariuki, Kenya is now leading the push towards regional integration so as to provide a wider market for foreign investors. Ms. Kariuki however noted that more needs to be done at policy level to address barriers across the region by both the Private and Public Sectors. According to Ms. Kariuki the interests of business sometimes lead to the development of protectionist law and policies that hinder regional integration and trade thereby narrowing markets and impacting on overall competitiveness.
The forum highlighted the following key challenges to Kenya’s competitiveness:
- Governance– Corruption remains a key challenge for both local and foreign investors seeking to take up investment opportunities in the country as most multinational are signatories to codes of conduct that prohibit them from dealing with any entities or in any projects that are connected to corruption or bribery
- Security – Kenya should do more to remedy its global perception on security especially in relation to terror attacks. The American government pledged to continue offering both technical and financial support to the government in the war on terror
- Education– though the country has a large educated workforce more needs to be done in the development of technical and mechanical skills that on which industries are increasingly dependent on as they continue to adopt mechanization
- Health and Sanitation– additional emphasis needs to be put on the development of additional health facilities alongside investment in provision of infrastructure for clean water. This was identified as an ideal investment opportunity for the development of PPPs and Joint Ventures
- Electricity– It was noted that though Kenya has increased its power production capacity to meet its power needs, transmission infrastructure has lagged behind. The forum noted that power distribution has also been limited to urban areas with additional connections needed at county and local level with Kenya power having connected 4 million customers to the power grid. The forum identified rural areas as new opportunities for power transmission and distribution. Adoption of green energy and off grid power systems was also identified as an untapped investment opportunity for both PPP and Joint Ventures.
- Devolution– The forum identified devolution as a positive step in provision and access to government services in rural areas which were previously under developed. The forum however highlighted some county regulations, taxes and levies as a key hindrance to business creating new barriers to the free movement of goods and services across county lines and therefore impacting negatively on the country’s competitiveness. There is also need to map out economic zones for county level investments.
- Counterfeits and Illicit trade – Counterfeits were identified as a key concern for investors looking to invest in manufacturing of products. During the forum, it was said more needs to be done to empower and equip regulators and customs officers with both technical skills and the manpower to deal with counterfeits and illicit trade.
- Regional integration– The East African Community needs to fully integrate and open up for regional investment creating both enabling policies and infrastructure to support investment. The forum noted that some private companies continue to support policies that hinder market entry for other regional businesses by lobbying their governments to uphold protectionist laws and policies thus rendering the region uncompetitive.
- SME development – The forum highlighted the need to develop industrial parks that enable SMEs to leverage on the economies of scale and established infrastructure to promote value addition and local processing of goods and services. Additional emphasis should be put on agribusiness and agro processing to enhance value addition.
- Credit – While it is now easy for SMEs to access credit and financial services, the cost of credit (high interest rates) continues to hinder the growth and expansion of SMEs. More needs to be done to avail credit at lower interest rates. The forum identified this as a key investment opportunity through the establishment of special purpose funds by private lenders and the adoption of new financing models including strategic partnerships and issuance of preferential shares.
- Infrastructure– While Kenyan and Africa as a whole has started addressing the infrastructure gap creating investment opportunities under PPPs and Joint Ventures, new emphasis needs to be put on the quality of the infrastructure developed. The forum noted the need for the adoption of standards and quality in infrastructure development to ensure that the newly established infrastructure supports long-term sustainability of core infrastructure for service provision to citizens and to both local and foreign investors.
BCIU and KEPSA will enter into a partnership to enable American investors looking to take up locally available investment opportunities through PPPs and Joint Ventures access information on existing opportunities and identify local partners. BCIU will also work with KEPSA to market Kenya as an investment destination of choice and help local companies seeking to market and export products to the United States identify new opportunities for direct exports.