India beats China to top trading spot with Kenya
India has reclaimed its position as the second largest exporter of goods to Kenya, signalling that it is gaining momentum in the race with China for control of Africa’s fast-growing consumer markets.
The value of India’s exports to Kenya rose to Sh97.6 billion or 18.7 per cent of Kenya’s total imports in the first eight months of the year compared to China’s Sh87.2 billion or 16.7 per cent of imports, according to the Kenya National Bureau of Statistics (KNBS).
India has been Kenya’s second largest source of imports for much of the past decade but lost the position to China last year after Beijing deepened its presence in East Africa with mega infrastructure development projects.
Last year, the value of China’s exports to Kenya grew by 62 per cent to reach Sh120.6 billion or 12.7 per cent of total imports, relegating India — which exported goods worth Sh103.2 billion or 10.8 per cent — to the third position.
The United Arab Emirates, with goods worth Sh126 billion or 24.3 per cent of total imports, was the largest source of imports to Kenya in the first eight months of the year – a position it holds mainly because of the large quantities of petroleum it supplies to East Africa.
Kenya mainly imports textiles, pharmaceuticals, industrial machinery, vehicles, electronic and semi-processed goods from India while key items in the list of China’s exports to Kenya include heavy machinery, electronics, vehicles, textiles and a range of household goods.
The two Asian tigers have deepened their presence in Kenya with intense economic diplomacy since President Kibaki came to power in 2003. The rivalry has benefitted Kenya in terms of foreign direct investments, a wider variety of consumer goods and as new sources of technical and financial assistance.
“It has helped lower our import bill, besides diversifying import markets and increasing foreign direct investment inflows,” said Gerishon Ikiara, an economics lecturer at the University of Nairobi.
Though the India/China rivalry has played out as a battle of the Asian giants, Mr Ikiara said the biggest losers have been the traditional Western trading partners such as Britain whose share of the market has been on a steady decline.
President Kibaki has actively encouraged this shift to the East and has backed it up with exchange of high-level diplomatic visits that have yielded multi-billion shilling trade and investment deals.
Last year, India sent its largest business delegation to Nairobi where big government deals were closed and doors opened for the Asian giant’s entry into new segments of Kenya’s consumer market.
A communiqué released after a meeting between Prime Minister Raila Odinga and India’s minister of Commerce and Industry, Anand Sharma, said the two countries had agreed to increase the value of bilateral trade to Sh240 billion ($2.5 billion) in the next two years.
Mr Odinga said Kenya would rely on India for quality generic drugs that can be used in public hospitals as the newly-created anti-counterfeit agency seeks to rid the country of fake drugs.
The PM firmed up the Nairobi deals with a visit to India where the Export-Import Bank of India (Exim Bank) offered Kenya a $61.6 million (Sh6 billion) loan to finance construction of new power transmission lines.
Under the deal, Indian companies will supply equipment and manpower for the project and make a 100 per cent expenses claims with Exim Bank – the force behind India’s globalisation ambitions.