Kenya is yet to fully exploit trade opportunities with the European Union; Belgian Ambassador Nicolas Nihon has said.
The envoy said while Belgium’s annual exports to Kenya stand at Sh11 billion, Kenya exports about Sh8 billion worth of goods to the Belgian market.
The ambassador spoke during KTN News Diplomat interview. He noted that the Belgian market has diversified investment opportunities for Kenyan entrepreneurs.
Nihon said this trade imbalance presents an opportunity for the two countries to close the gap.
“Kenya wants to move forward in the European Union market through the Economic Partnership Agreement. Other EAC countries were somehow reluctant but Kenya demonstrated that things can happen,” he said.
According to figures from UNCTAD’s 2020 World Investment Report, Kenya’s foreign investments remain relatively weak considering the size of its economy and its level of development.
Kenya is one of the largest recipients of FDI in Africa, with FDI inflows significantly increasing since 2010. FDI flows in Kenya decreased by 18 per cent to USD 1.3 billion in 2019 compared to USD 1.6 billion in 2018 despite several new projects in information technology and health care.
The figures further indicate that the total stock of FDI stood at USD 15.7 billion in 2019 with the ICT sector having the biggest chunk in recent years. This is attributed to the arrival of fibre optics in 2009-2010.
The other sectors targeted by FDI are banking, tourism, infrastructure and extractive industries. The United Kingdom, the Netherlands, Belgium, China and South Africa are the main investors in Kenya.
In 2020, due to the COVID-19 pandemic, FDI flows in direction to the country fell significantly. This is because the investment was hit by budget cuts and a morose business climate.
The Kenyan government has however been actively taking measures and implementing reforms to attract FDI. As a result, Kenya made progress in the Doing Business ranking published by the World Bank. It was ranked 56th worldwide, for the ease of doing business in 2020 Doing Business Report of the World Bank.
In the 2019 edition, the country was ranked 61st. Kenya also improved the reliability of the electricity supply by modernising its existing infrastructure.
Registering property, getting credit, protecting minority investors, tax payment and resolving insolvency are the other aspects where the country has made notable changes.
Kenya however still plays a pivotal role in the East African Community, acting as a regional economic hub.
According to the UN report, numerous obstacles to investment persist, notably poor infrastructure, skill shortages, instability related to terrorist risk and political, social and ethnic divisions, ineffective rule of law and corruption.
State to state loans
The Belgian envoy said Nairobi has done well with state-to-state loans granted by the Belgian government to implement high-quality, non-commercially viable projects such as water distribution system and medical waste treatment in hospitals. He said the Kenyan government was satisfied with the highly concessional character of these loans offered by the Belgian State and the efficiency of the Belgian companies, which implemented those projects.
“These loans are tailored to offer solutions to various government institutions. Although the Kenyan government has always approached us for more, there is always a limit to what the Kenyan Treasury can sustain,” he said.
The envoy said an upcoming state visit to Belgium by President Uhuru Kenyatta at the end of this month, will explore more areas where the two countries can cooperate.
“President Kenyatta will have a meeting with His Majesty King Philip.” Ambassador Nihon expressed his confidence in the deepening of bilateral relations between the two countries.
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