German chancellor's visit to boost trade ties with Kenya

15:46, July 10, 2011      

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by Daniel Ooko, David Musyoka and Peter Mutai

German Chancellor Angela Merkel's visit to Kenya from July 12 will usher in new investments from Germany and the rest of Europe into Kenya's "green energy" sector and spur trade between the two countries, diplomats and officials said.

"This visit is a vote of confidence," said Kennedy Osinde, Kenya's ambassador to Germany. "It tells not only Germans but the entire world that Kenya is a safe place and it is open for business. We see this as a selling point to investors mostly from Europe," said the ambassador.

Chancellor Merkel's visit is expected to re-ignite German business interests in Kenya's energy sector, especially the wind power, which the state-run Kenya Electricity Generating Company (KENGEN) has lately been laying fresh emphasis.

"The main agenda of this visit is to explore investments on either side. For us, it is very important because it will help us unlock new markets," Ambassador Osinde told Xinhua in a recent exclusive interview in Nairobi.

The Kenyan embassy in Berlin, Germany, says Kenya's exports to the European Union (EU) is the second most important to the country since 1993, accounting for between 40 and 50 percent of the total exports.

The trade volumes with the EU have however taken a deep plunge since 1994, with the rest of the East African region becoming the preferred export destination for Kenyan products.

Germany is Kenya's second largest export destination after Britain. The main export to Germany has been coffee and horticultural products.

Apart from the trade ties, Germany and Kenya enjoy historical diplomatic ties. Germany was the first country to recognize Kenya' s independence from British rule.

The Kenyan envoy to Germany said the visit by the German chancellor would enhance the historical ties further and lead to even more investments. "Our relations have been very steady and growing. The volume of trade is increasing on both ends and our concern in particular is to see that Kenya is able to export more to Germany," the Kenyan ambassador said in an emailed interview.

The chancellor's visit is also expected to help stop the decline in trade between the two sides in the recent past. Kenya's overall trade deficit grew by 17 percent to 6.28 billion U.S. dollars due to the high import bill, a fact blamed on high prices for capital goods.

Kenyan officials say the country is hoping that tapping into Germany's industrially advanced alternative sources of power generation could help plug this trade deficit.

Kenya's Planning Minister Wycliffe Oparanya said the trade deficit has been growing due to the reduced exports and increased oil imports which saw the import bill shoot up to 13 billion dollars, against an export base of 5.45 billion dollars.

"Trade balance is still in favor of Germany because they export machinery and high value goods to Kenya. We export unprocessed goods of low value. But I am happy that there are efforts aimed at increasing the value-added exports from Kenya."

Kenyan officials say Nairobi has been working to attract investors from Germany to invest in Kenya's renewable energy.

Germany is very strong on wind and solar energies and those are the kind of solutions Kenya is looking for to reduce dependency on hydro generated electricity.

"One of the reasons why this visit is very important for Kenya is that it will open up the country to investments from Germans. We are encouraging this because our intention is to attract investors who put their money in projects of high value output. This way, they facilitate technology transfer, employment of high skilled Kenyans and also help to increase our value added exports, " Oparanya said.

Kenya prides herself as the biggest economy within the East African region. It is also seen as the gateway to Eastern and Central Africa because of the country's advanced telecommunication, financial and air transport system.

The fact that Kenya has signed treaties to eliminate double taxes with Germany is another reason for optimism between the two sides that the exchange of high-level visits would be fruitful.

Source: Xinhua
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