“The UK is a global leader in many of the sectors for which Kenya has greatest demand: infrastructure, advanced engineering, energy, ICT and defence and security. In these and other specialist areas, UK expertise can help accelerate Kenya’s development and economic growth”.
Kenya is fast cementing its reputation for remarkable economic growth. With GDP growth averaging well above 5% for the 12 months to September 2015, impressive improvements in government finances, and falls in oil prices significantly reducing its imports bill, the future is bright for Kenya.
The East African Community (EAC) as a whole is emerging as a beacon for trade. It contains fast-developing economies, and last year’s introduction of a single customs territory is already benefiting cross-border commerce. Foreign investment into sub-Saharan Africa grew last year, notably from diaspora communities, and Barclays’ Africa Trade Index identified East Africa as the trade hub to watch.
With favourable economic conditions comes an expanding domestic market; and entrepreneurs are increasingly stepping up to meet this demand. The region’s growing reputation for entrepreneurship goes hand-in-hand with its ambitions for infrastructure development. Any entrepreneur will rely on digital, energy, and transport infrastructures. The World Bank estimates the impact of Africa’s infrastructure gap on productivity as 40pc, leading to a 2pc drop in growth. Fast-growing economies like Kenya’s require infrastructure that keeps pace with business growth.
The UK is a global leader in many of the sectors for which Kenya has greatest demand: infrastructure, advanced engineering, energy, ICT and defence and security. In these and other specialist areas, UK expertise can help accelerate Kenya’s development and economic growth.
Increasingly, financing and risk insurance for large-scale infrastructure projects across the world come from international export credit agencies. For example, loans used to fund projects may be guaranteed by the governments of countries whose exporters are supplying goods and services; alternatively, specialist export insurance might be a way for both exporter and project sponsor to manage any financial risks involved in the contract. This is highly relevant in Kenya, where numerous large scale public projects are undertaken with international export credit agency support.
The UK’s export credit agency, UK Export Finance (UKEF), has built its reputation on the flexible support it provides both to UK exporters, and overseas buyers of UK goods and services. UKEF offers a high degree of flexibility around where the financed goods and services can be sourced from. It can support contracts where as little as 20pc of supplies are sourced directly from the UK, and the finance can be used for Kenyan goods and services, up to an amount equal to 30pc of the value of the imported supplies.
UKEF is supporting finance for the construction of the new Terminal Three at Julius Nyerere International Airport in Dar es Salaam, currently being constructed by UK company BAM Nuttall and due to be completed in June 2016. It recently announced its willingness to offer special terms to finance supplies for Kenya’s development of renewable energy.
And from now on it will be even easier to work with UKEF, as it is now a member of African Trade Insurance (ATI), the Nairobi-based pan-African export credit agency. ATI has supported over US$17billion since 2003, providing insurance to secure African traders against risks ranging from political instability to non-completion of a contract. Its vision is to make Africa a prime trade and investment destination.
Through ATI’s partnership with UKEF, project sponsors in African countries will have access to the wide range of UKEF support available for overseas buyers. Taken in conjunction with the insurance ATI provides, this represents a combination of real – and flexible – financial assistance and comprehensive insurance for infrastructure projects and other contracts in Africa. And with ATI’s ability to reinsure its partners’ risk, UKEF will be able to support even more business in African countries.
Most importantly, a close partnership between ATI and UKEF it will give African buyers and UK suppliers access to each other. UKEF and ATI will be able to identify and promote real business opportunities where UK and African companies can work together, and to provide the local market knowledge needed to facilitate trade.
UKEF can be a crucial partner in helping East Africa realise its growth ambitions, providing world-class export credit facilities, and access to the high quality products and services supplied by UK companies. And its membership of ATI will make this ever more accessible.
(Nic Hailey is the British High Commissioner to Kenya)