Economy

Firms eye deals during Obama summit

OBAMA

US President Barack Obama will attend the Global Entrepreneurship Summit which opens in Nairobi on July 24, 2015. AFP PHOTO/MANDEL NGAN

Kenya’s business leaders were Monday planning how best to exploit the deal-making opportunities in the country’s history starting this Friday when the world convenes in Nairobi for the Global Entrepreneurship Summit (GES).

Industrialists, entrepreneurs and bankers said through their unions, they were keen to find global partners with expertise and financial clout to help drive their expansion in East Africa and beyond.

Expansion of the private sector – the engine of the economy – would trigger economic activity, ignite productivity and create the much needed jobs for the millions of unemployed youth.

“Local manufacturers will be looking for joint venture deals and partnerships to boost their capacity for growth through skills transfer besides new capital injection,” the Kenya Association of Manufacturers (KAM) CEO Phyllis Wakiaga said.

A number of industrialists have opened talks with their global counterparts who have arrived in Kenya ahead of the GES which opens in Nairobi on July 24 and will be attended by US President Barack Obama.

The manufacturers, like other local entrepreneurs and innovators, have been allocated exhibition stands at the summit venue from where they will showcase their products and facilitate investors interested in entering East Africa’s largest economy.

Kenya Bankers Association chief executive Habil Olaka said lenders would be keen to find financing opportunities in deals struck between local and foreign entrepreneurs for new and established ventures.

“The summit will provide lenders with a platform to showcase their products,” said Mr Olaka adding that Nairobi’s hosting of the global event was a vote of confidence in the economy.

Kenya accounted for the lion’s share of private equity in East Africa taking 63 per cent of the reported $800 million (Sh82 billion) worth of deals between 2007 and 2014.

READ: Top global investors eye deals ahead of city summit

The private equity survey by financial consultancy KPMG and the East Africa Venture Capital Association (Eavca) released last month placed Kenya ahead of ahead of Ethiopia, Tanzania, Rwanda and Uganda.

Several state-backed agencies charged with promoting and attracting foreign direct investments will also be on a charm offensive to sell the country.

The list includes Kenya Investment Authority, Kenya National Chamber of Commerce & Industry and the Brand Kenya Board.

Kenya is the first country in sub-Saharan Africa to host the annual summit and second in Africa after last year’s edition in Morocco.

President Uhuru Kenyatta is co-hosting the summit with his American counterpart. Kenya’s private sector last year lost its jobs creation momentum in the wake of a slow-down in growth to 5.3 per cent from 5.7 per cent the previous year.

Official data shows that the sector created 69,600 formal jobs down from 106,200 the previous year. In comparison, the public sector created a paltry 17,500 jobs last year, underlining the critical role of the private sector in jobs growth.

Launched by President Obama in 2009, GES brings together entrepreneurs and investors from across Africa and around the world annually to showcase innovative projects, exchange new ideas, and help spur economic opportunity.

The 2015 GES agenda will focus on generating new investments for entrepreneurs, with a particular focus on women and youth.

Billionaire businessman Chris Kirubi said that he expected the summit to translate into increased dealings between Kenya and the US and capital inflows.

KAM said the recent renewal of the African Growth and Opportunity Act (Agoa), which allows exports to the US duty free, would help balance Kenya’s global trade.

“We have in the past not utilised the AGOA opportunity to its full potential. We have only been strong on the textile front. It’s high time we leveraged on the remaining 6400 products that enjoy tax-free access to the US market,” said Ms Wakiaga adding that Kenya needs to invest in value addition to sharpen its competitiveness even in the absence of such preference treatment.

Kenya’s exports to the US stood at Sh38 billion, attributable largely to the Agoa trade agreement, which was recently renewed for another 10 years.

The Agoa window, introduced by former President Bill Clinton’s administration in 2000, allows Kenya and other African countries to export more than 6,000 goods to the US without paying taxes.

Last year, Kenya for first time bought more goods from the United States than it did from the whole of Africa, underlining growing commercial ties that are expected to deepen with the entrepreneurship summit.

US exports to Kenya rose to Sh168 billion last year compared to the Sh146 billion worth of goods and services that came from Africa, according to data from the Kenya National Bureau of Statistics (KNBS).

This made America Kenya’s third largest source of its imports, behind China and India.

“Direct flights to the US will also help increase activity between the two countries,” said Ms Wakiaga.