TRADE TIES

Private sector warms up to Japan for industrial investments

Japanese firms have renewed interest in investing in Kenya in the latest scramble for the local and regional markets which has seen growing interest from China.

In Summary

•At least 40 Japanese companies are in the country for a three-day business forum as they seek to seal major deals in the country.

•Japans's strict ethics in doing business has made it difficult for Japanese companies to secure business with Kenya in the past, where corruption and kick-backs have marred public projects.

L-R:Meghraj Capital Chair Binoy Meghraj, KAM Chair Sachen Gudka, Japan Business Council for Africa Co-chair Yokoi Yasuhiko, Principal Technical Director Technical Cooperation METI Japan Asakura Daisuke and KAM CEO Phyllis Wakiaga/Courtesy
L-R:Meghraj Capital Chair Binoy Meghraj, KAM Chair Sachen Gudka, Japan Business Council for Africa Co-chair Yokoi Yasuhiko, Principal Technical Director Technical Cooperation METI Japan Asakura Daisuke and KAM CEO Phyllis Wakiaga/Courtesy

Kenya is marketing the Naivasha Special Economic Zone (SEZ), low power tariffs and ease of doing business to attract Japanese investors, in the wake of increased interest from Asian investors.

This, at a time when Japanese firms have renewed interest in investing in Kenya's multi-billion industrial sector, in the scramble for the local and regional markets which has seen growing dominance by China.

 To pursue investment avenues, at least 40 Japanese companies are in the country for a three-day business forum.

Areas of interest include food and beverages, energy and electrical, metal and allied, automobile, information technology, paper and board, building and construction and agro-processing.

“Kenya is a strategic partner because it is our gateway to developing business regionally besides being the most promising in terms of economic development,” Japan Business Council for Africa representative Yokoi Yasuhiko said yesterday.

The team is also keen to invest in the service sector, the Kenya Association of Manufacturers(KAM) said during a briefing in Nairobi yesterday.

KAM chairman Sachen Gudka said partnership between Kenyan and Japanese companies will be a key driver towards the achievement of the Big Four Agenda and increasing the sector’s contribution to the GDP to 15 per cent by 2022.

“The more we increase our collaboration in driving the efficiency of our local industry, not only will we realise both our economic goals but also create wealth and increase the purchasing power of all citizens,” he said.

Investment banking advisory and infrastructure consulting firmMeghraj Group has listed Kenya's skilled labour and continued investments in infrastructure as key components attracting investors

These, together with its access to the East African Community(EAC) and the Common Market for Eastern and Southern Africa(COMESA) markets makes the country attractive to investors seeking to venture into the region.

 

“Kenya is investor friendly, we don't have many FDI (foreign direct investment) controls here. The country also has a middle class which is growing. These are things that makes a market very attractive,” executive vice chairman Binoy Meghraj told the Star.

KAM expressed confidence in attracting investments at the Naivasha SEZ, where the government will offer cheaper electricity tariffs, at $5 cents (about Sh5) per kilowatt hour.

This is lower compared to the traditional charges of between Sh10 and Sh15 per unit of electricity, which has been blamed for making Kenyan un-competitive.

This is quite a competitive price for large consumers like metal and allied sector , textile and glass manufacturers, so we are keen to see these tariffs gazetted so that manufacturers can take advantage of it,” KAM CEO Phyllis Wakiaga said.

At least 60 Japanese companies have set base in Kenya. Some of the major Japanese projects in the country include Olkaria V and the second container terminal at the Port of Mombasa.

Japan is also eyeing to develop the Dongo Kundu bypass in Mombasa and the Likoni bridge.

 In 2018, the value of imports from Japan increased by 22.2 per cent to Sh99.8 billion driven by road motor vehicles, mobile lifting cranes, flat rolled products of iron and steel and turbines, Economic Survey 2019 shows.