German company Stihl Group is investing Sh500 million to set up an office in Nairobi with an eye on new business opportunities in Kenya and the East African region.
The firm that makes agricultural and construction equipment and boasts of products such as harvesters, tillers, and sprayers says the investment will be used to sublet warehouses as well as paying office space in Kenya.
The money will also be used to ship equipment into the country, train dealers and pay salaries for close to 30 staff they plan to work with in East Africa.
“We have invested Sh500 million to set up shop in the Kenyan market as the regional hub for Eastern Africa. The investment is spread across warehouse facilities, training facilities, and staff recruitment among others” said Stihl East Africa managing director Francois Marais on Wednesday.
The firm is banking on Kenya’s vast infrastructure, booming construction and agricultural sectors as a launch pad for its products to the neighbouring countries.
Kenya is the region’s biggest economy, boasting a vast rail and road network that continues to attract multinational companies seeking to tap into the eastern and central African market.
The firm sees a lot of potential for growth in the East African Community including the Democratic Republic of Congo, which joined the East African bloc early this year. In Uganda and Tanzania, Stihl has importers while in Rwanda it works with dealers. The firm also plans to have footprints in Ethiopia, Eritrea, and Southern Sudan in due course.
“At Stihl, we believe that the mechanisation threshold should be lower than a farmer just buying a tractor and a plow. And, therefore, we have developed a range of products that bring mechanisation to farmers for less than $1,000 (Sh119,950),” Marais said.
The company is seeking to tap into the huge contribution of agriculture and other sectors including construction and the high population in the East African Community (EAC) combined economies to grow sales.
Agriculture contributes between 24 percent and 44 percent of the gross domestic product in the EAC partner-States and accounts for the source of income for about 80 percent of the region’s population.
East Africa is also undertaking grand infrastructural projects including building roads, and railways, and upgrading ports, offering a ready market for Stihl’s products.