EAC companies buck trend with mega Kenya deals

 Kigali Farms stand

Rwanda Farmers Cofee Company sales and marketing manager Aaron Rutayisire (right) at Kigali Farms stand during the 2023 Agri-Africa Expo and Conference in Nairobi on May 11, 2023. 

Photo credit: Bonface Bogita | Nation Media Group

East African Community (EAC) businesses are increasingly expanding into Kenya’s key sectors, including service, manufacturing, agriculture, and oil and gas, bucking a trend where Kenyan firms have long dominated forays into the region’s markets.

Deep-pocketed investors in firms from EAC countries like Uganda, Tanzania, Rwanda and Somalia have been expanding their footprints into the country, threatening the dominance that has for long been almost exclusively enjoyed by locals and businesses beyond the region.

The growing interest of regional firms like Amsons Group, Taifa Gas, Maziwa, Premier Bank, Yego Global, and Liptons Teas and Infusions Rwanda in the Kenyan market, comes after years of many Kenyan firms, including banks, insurers and manufacturers, expanding into the EAC market in search for new opportunities.

EAC region’s economy was valued at $312.9 billion (Sh40.36 trillion) and had a population of 300.4 million people at the end of 2021, according to the bloc’s data.

Tanzania-based conglomerate, Amsons Group last week made a formal takeover bid for Bamburi Cement, in a deal valued at Sh23.59 billion ($183 million), marking the latest interest of an EAC country for a piece of business in Kenya.

The Tanzanian firm has pledged to strengthen Bamburi’s position as a “leading” cement player in the East African cement market, signalling that it will up rivalry with existing players like National Cement Company, Mombasa Cement and East Africa Portland Cement Company.

Amsons Group Managing Director Edha Nahdi said the group will not stop at just acquiring Bamburi—one of Kenya’s iconic blue-chip companies—but make other investments in the country.

Market expansion

“Our offer to acquire shares in Bamburi is part of our corporate market expansion plan and will mark the formal entry of Amsons Group into the Kenyan market, where we plan to make investments in other industries in the coming months,” said Mr Nahdi.

Amsons’ impending entry comes hardly three months after Uganda’s leading milk processing firm, Pearl Dairy Farms, known for its popular Lato brand, received approval to acquire a Kenyan milk company, giving it room to overcome hurdles that have been disrupting the supply and sale of its products in Kenya.

The Comesa Competition Commission, in a notice dated March 11, gave a nod to Maziwa, the non-operating holding company incorporated in Mauritius, to acquire a 100 percent stake in Highland Creamers & Food Limited, a Kisii-based firm that started operations in 2015 and is behind the Farmily Milk brand.

“The access to the two separate milk pools in Kenya and Uganda, will also allow for growth in the local Kenyan market without dependency on imports from other nations,” said Pearl on getting the approval.

Pearl signed a deal with the State-owned financier Kenya Development Corporation (KDC) to invest jointly in local dairy ventures, signalling that more deals could be on the way after the Highland one.

Pearl hopes to use the acquisition to set up a manufacturing base in Kenya and bypass supply chain challenges, giving it quicker access to the market as opposed to bringing in the products from Uganda.

The firm had last year signed a deal with the KDC, to invest jointly in local dairy ventures in Kenya.

Disrupt dominance

Another Tanzanian firm, Taifa Gas Investment, which is the largest supplier of liquefied petroleum gas (LPG) in Tanzania, is constructing a 30,000-tonne LPG import and storage terminal in Mombasa, pointing to the dividends of improving Tanzania-Kenya trade relations. The construction costs were estimated at $101 million (Sh12.9 billion).

The entry of Taifa Gas, owned by tycoon Rostam Aziz, will disrupt the dominance of Mohammed Jaffer, who has, through African Gas and Oil Company, towered over other Kenyan firms in the country’s LPG business for years.

A Mogadishu-based lender, Premier Bank Limited (Somalia), last year paid Sh2.8 billion for a 62.5 percentstake in Kenya’s First Community Bank (FCB). The deal made Premier Bank the first lender in Somalia to establish a majority-owned banking subsidiary in Kenya, according to the Central Bank of Kenya.

In the transport sector, Ugandan and Rwandan firms have also come to Kenya. Ugandan mobility startup SafeBoda, which entered Kenya in 2018, resumed operations in the highly competitive sector in February this year after a pause in November 2020.

Yego Global, a ride-sharing platform from Rwanda, entered the Kenyan market in May 2023 to take on the likes of Uber and Bolt through its subsidiary, Yego Mobility Kenya Limited. In the tea market, another Rwandan firm, Lipton Teas and Infusions Rwanda Ltd began selling its Kibeho garden mark tea at the Mombasa Tea Auction last month.

The entry of the Rwandan firm gave a boost to the Mombasa Tea Auction, which has been struggling with quality products that fetch lower prices on the global market.

Its entry into Kenya came after the completion of the Kibeho factory, a state-of-the-art facility, which has enabled the company to begin full-scale production.

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