Kenyan president Uhuru Kenyatta and South African president Cyril Ramaphosa met in Pretoria recently to discuss trade and investment opportunities between the two countries. The two leaders engaged in the South Africa-Kenya Business Forum to further explore the vast economic potential of the African Continental Free Trade Area.
“The value that we can expect the Continental Free Trade Area to unlock in the short term will be immense, but it is the prospect for future growth that is truly remarkable,” Ramaphosa said during his speech from the South African capital.
“It is envisaged that the urban population of Africa will be larger than that of China and India, and four times larger than that of the United States. To realise the opportunity of this demographic dividend, we will need to rapidly expand and diversify our industrial capacity. We must become leading producers in the type of consumer products a growing working and middle class demands. We must manufacture the complex industrial commodities needed for core industries like mining, construction and agriculture.
“The development of regional value chains that allow for specialisation while also fairly sharing the benefits of growth will allow our economies to grow as our populations do. With these regional value chains as a base, and as Africa becomes more interconnected, we will be able to competitively integrate into global value chains. This will open a new era for African exports.”
Africa’s infrastructure requirements are estimated to cost between $130 and $170 billion each year, according to the African Development Bank.
Enhancing investment opportunities
“As two leading economies in our respective regions, South Africa and Kenya have a key role to play in driving continental integration,” Ramaphosa added. “Our existing regional value chains can be integrated by deepening bilateral economic relations, and specifically by more direct collaboration in industrial and infrastructure projects that are of mutual interest.”
In the past two decades, over 40 South African companies have invested in the Kenya market. Altogether, these projects have an investment value of R6.84 billion and created over 2 700 jobs in Kenya. Outside of the Southern African Development Community, Kenya is South Africa’s greatest commercial partner in Africa, while South Africa is the continent’s top exporter of products to Kenya.
South Africa’s department of agriculture, land reform and rural development (DALRRD) and the National Agricultural Marketing Council (NAMC) has also outlined plans for the “South Africa and Kenya bilateral trade in agriculture” plan.
Currently, there is no existing bilateral trade agreement between South Africa and Kenya.
The two countries are members of the tripartite free trade agreement (FTA) compromising of Common Market for East Africa ( COMESA, SADC and East African Community (EAC).
“South Africa has several processed products of interests that have potential for exports to Kenya,” the DALLRD and NAMC’s plan stipulated. “Current tariffs on all primary and processed products are very high at 25% tariff equivalent. Opportunities for SA to Kenya include sauces and preparations, fermented beverages, soups, tomato sauces, fruit and veg juices, jams, food preparations from cereals, orange juice, wine, glues, vegetable preparations and margarine.”
Based on the plan’s analysis, realistic potential investment opportunities exists between South Africa and Kenya in the following prioritised industries:
✓ Sauces and preparations valued at about R6,1 million
✓ Beverages, fermented valued at R5,8 million
✓ Soups and broths and preparations valued at R5 million
✓ Sauces: tomato & ketchup valued at R4.3 million
✓ Juice: of any single fruit or vegetable valued at R4 million
✓ Liqueurs and cordials valued at R3,9 million
✓ Jams, fruit jellies, marmalades, purees and pastes: of fruit or nuts valued at R2 million
Based on the above analysis, realistic potential investment opportunities exists between SA and Kenya in the following prioritised industries:
✓ Birds’ eggs, in shell: fresh, fertilized eggs for incubation, fowls and domestic hens valued at R3.1 million
✓ Fruit, edible: apples, fresh valued at R1,5 million
✓ Fruit, edible: grapes, dried valued at R910 000
✓ Vegetable products: fresh, chilled, frozen or dried valued at R350 000
✓ Fruit, edible: grapefruit, including pomelos, fresh or dried valued that R140 000