- 20 investments in manufacturing, ICT, energy, health and agri-business have been signed in past two months.
- Latest Kenya-US trade ties place the East African country at a pole position on attracting more American dollars.
- Since President William Ruto took office in September 2022, Kenya-US engagements have been on a full throttle.
Deepening Kenya-US trade ties have started to pay dividends as American firms move to invest in East Africa’s largest economy. With modern infrastructure, and skilled labour force, Kenya offers one of the best opportunities for US investors eyeing the region.
Currently, Kenya is the second most preferred destination by Americans seeking to invest in Africa. The 2023 US government review shows Kenya hosts 142 American firms while Nigeria has 195 conglomerates.
Latest developments, however, place Kenya at a pole position in attracting more American investors in the short to medium-term.
Deepening Kenya-US bilateral ties
Since President William Ruto took office in September 2022, Kenya-US trade talks have been on full throttle. The signs were clear from the start. President Joe Biden sent Trade Representative Katherine Tai to lead a strong team to Dr Ruto’s inauguration.
Other members of the delegation included US Ambassador to Kenya Meg Whitman, and the US Representative Texas Colin Allred. Assistant Secretary of State for the Bureau of African Affairs U.S. Department of State, Mary Catherine Phee and Monde Muyangwa, assistant administrator for the Bureau for Africa, U.S. Agency for International Development.
Soon after, Dr Ruto attended US-Africa Leaders’ Summit in Washington, DC in December, further strengthening ties.
According to Ambassador Whitman, the US-Kenya partnership remains strong, built on sixty years of shared values and interests. “Our partnership has enhanced security, increased prosperity, and improved the lives of Kenyans and Americans,” Ambassador Whitman notes.
Trade and investment
Kenya has started reaping big from the renewed ties, which place premium on ramping up trade and investment. Policymakers are pushing more for further trade deals with the US.
At least 20 investment deals in manufacturing, ICT, energy, health and agri-business have been sealed in the past two months. And 14 of them were signed during the American Chamber of Commerce summit held in March, in Nairobi. The summit attracted over 700 delegates and 300 companies from America.
US government and private sector delegations also met with counterparts from neighbouring Rwanda, Tanzania, Uganda, Ethiopia and Kenya.
During the summit, Moderna and Kenya struck a deal to build a $500 million vaccine factory in the country.
Forge private sector opportunities
Scott Eisner, the US Chamber’s Africa Business Center president said America was seeking concrete private sector opportunities. This week, Kenya’s Investment and Trade Cabinet Secretary Moses Kuria has been pitching tent in the US. Mr Kuria was leading a Kenyan delegation for strategic talks and pitches, including an investment roadshow in New York.
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Mr Kuria called on US investors to put money in Kenya’s capital market, renewable energy, manufacturing, export processing zones. Kenya will offer a conducive business environment that fosters growth and expansion, he said.
A conducive business environment in Kenya
Kenya has also offered to reduce fees on work permits, a move that could attract even more US companies. Nairobi has also pledged a number of tax incentives.
“We are building an environment that is conducive for trade and investment. I want to assure you that you are not in Kenya by mistake,” Mr Kuria said in New York.
Mr Kuria is leading a delegation of Kenyan government officials for the 2023 US-Kenya Business Roadshow. The forum was organised by the US government’s Prosper Africa initiative and its embassy in Kenya.
Participants included the NBA, Mastercard, Copia Global, Equity Bank, and The Children’s Place. PVH, an entity which leads iconic clothing brands Calvin Klein and Tommy Hilfiger. was also in the meet.
During the US-Africa Leaders’ Summit, Ambassador Whitman announced six new Proper Africa co-investments valued at $455 million. The co-investments with Kenyan and American apparel makers build on the 14 deals announced by Dr Ruto during Amcham summit.
The co-investments will connect American buyers with Kenyan manufacturers, creating more jobs in Kenya and across the US.
New investments by American companies
In order to create jobs, MAS Intimates will train Kenyan workers to increase production of high-quality apparels. Further, UAL will increase apparel shipments to America by building a one-stop shop in Kenya. The centre will harmonise all steps in the production process from “Farm to Fashion.”
Megawill add new production lines while Best Lifestylewill hire and train employees as it expands its Kenyan unit.
In addition, Coast Apparel will purchase machinery to increase production and export capacity. The move is meant to creating new jobs especially for women and the youth.
On its part, NexGen will be set up a new factory in Kenya to manufacture tags and labels. The firm’s branding products in apparel and footwear will be sold within and outside Africa.
“Prosper Africa is proud to connect U.S. buyers with African suppliers and drive U.S. investment into Kenya and countries across Africa,” said Prosper Africa Acting Coordinator Scott Cameron. “Together, we are creating jobs and fostering shared prosperity on both sides of the Atlantic.”
Ambassador Whitman has termed Kenya as the most stable democracy in East Africa and gateway to a regional market of 500 million consumers.
Kenya as a regional logistics hub
Ambassador Whitman said Kenya is the regional logistics hub and financial centre. These make Nairobi the most preferred destination for foreign direct investment and venture capital.
“Kenya has the Silicon Savanah, with super smart engineers. Kenya has a young, educated, English-speaking workforce, and generates over 90 percent of its energy from renewable sources,” Ambassador Whitman explained.
Goodwell Investments has invested $51.5 million in financial inclusion and inclusive growth sectors, making it the largest American business in Kenya.
Opportunities for underserved communities
Its Kenyan affiliate, Goodwell Kenya, provides basic goods and services and income generation opportunities to underserved communities.
Goodwell Investments has led a group of returning and new investors backing a Series C round for Kenya-based Copia Global, a B2C online shopping and delivery service used by middle and low-income consumers in rural areas.
Meanwhile, Kenya Investment Authority has entered into a partnership with CNN to bolster investment promotion efforts. “The objective of this partnership is to enhance Kenya’s reputation as an appealing investment hub and boost export activities,” KenInvest said.
Strategic talks
While the two countries continue to deepen ties, their bi-lateral relation is expected to be cemented by the Strategic Trade and Investment Partnership (STIP) which is in the offing.
CS Kuria expects Kenya and US to have a deal in place by December. This will make Kenya the first African country to have a strategic trade pact with the US, outside the African Growth and Opportunity Act (AGOA).
“This week we held our third bilateral strategic dialogue with Kenya. This fruitful engagement demonstrated the depth and breadth of the US-Kenya strategic partnership. We look forward to deepening our cooperation across the board in advancing shared values and interests,” the Bureau of African Affairs, led by Assistant Secretary of State Molly Phee, said.
The talks are headed to a third round this July, amid increased interest in Kenya’s Small and Medium Enterprises (SMEs) by the US.
Extension of Agoa
Exim Bank is looking to fund African business to the tune of $100 billion with Kenya among countries that stand to benefit. While Nairobi supports extension of AGOA, which expires in 2025, the country is seeking Kenya-US pact that offered preferential trade terms with America.
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Kenya is keen to tap at least five percent of the US market, which has the potential to earn the country over $14.7 billion in export revenues, annually.
The talks are around increasing predictability, engaging SMEs, expanding reciprocal access, facilitating digital trade, tackling trade in Genetically Modified Organisms (GMOs), improving intellectual property protections, enhancing transparency, capacity Building, and enforcement, and preserving Agoa benefits.
In 2021, Kenya’s exports to the US grew to $437.8 million, up from $362.8 million in 2020, attributable to rise in macadamia nuts, apparel and clothing accessories’ shipments.
Garment exports
The US is the largest export destination of Kenya’s apparel, accounting for over 90 percent of garment exports every year. The sector that stands out as the biggest beneficiary in an improved Kenya-US trade pact.
Kenya plans to increase exports from 10 percent of GDP to 30 percent by December 2025, and push manufacturing contribution from seven percent to 20 percent by 2030.
A document by the US Trade Representative’s office indicates Kenya is keen on securing comprehensive market access for US agricultural goods in Kenya by reducing or eliminating tariffs.
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“…Eliminate practices that unfairly decrease US market access opportunities or distort agricultural markets to the detriment of the United States, including non-tariff barriers that discriminate against US agricultural goods, and restrictive rules in the administration of tariff rate quotas,” the document reads in part.
The US is also pushing for a competitive procurement space in government, eradication of corruption, adequate and effective protection of intellectual property rights. The removal of non-tariff barriers, favourable sanitary and phytosanitary measures are also under focus.
