Deepening trade ties with Nigeria good for Kenya

By BETTY MAINA

As the trade delegation from Kenya accompanied President Uhuru Kenyatta to Nigeria last week, manufacturers were upbeat about the efforts by Government to open new markets in the African region. Oil-rich Nigeria is now the largest economy in Africa with a Gross Domestic Product (GDP) of about $490 billion and a population of more than 168 million. 

 A huge number of international organisations and business people have been cautious about doing business in Nigeria for years. This may seem eccentric given that Nigeria is one of the most populous countries in Africa as well as one of the most oil-rich places in the world. Combined with the fact that the country abounds with many other natural resources, you might think international business would be fighting for a stake in Nigeria.

The GDP value of Nigeria represents 0.42 per cent of the world economy.

 Oil and natural gas are the most important export products for Nigerian trade. The country exports approximately 2.327 million barrels per day, according to 2007 figures. In terms of total oil exports, Nigeria ranks 8th in the world. As of 2009, Nigeria had approximately 36.2 billion barrel oil reserves.

 According to the 2009 figures, the country’s total export volumes stand at $45.43 billion. The major export items are oil products, cocoa and timber. The UK and the US are the largest trade partners for Nigerian exports.

 Years of political instability, regional strife and the debilitating effects of massive corruption have resulted in the country failing to capitalise on its many advantages.

 However, huge strides have been made in the last few years to try and tackle the many problems besetting the country.  The actions being taken on the ground seem to be bearing fruit.

 Trade between Kenya and Nigeria has been in Kenya’s favour, with an average of Sh 1.2 billion in exports to Nigeria compared to an average of Sh0.109 billion. Over the past decade, exports to Nigeria have shown a gradual increase between 1998 - 2001, 2003 - 2006 and in 2008 with declines in 2002, 2007 and 2009. The decline could be as a result of the prohibited list of products by Nigeria which restricts most products that Kenya would otherwise export to this market.

In September 2013, President Goodluck Jonathan led 500 Nigerian government officials and businessmen in a visit to Kenya. The Nigerian delegation arrived in style and stature; flown in seven private jets with business moguls Aliko Dangote, Tony Elumelu and Femi Otedola in the party.

 During the visit, the two Presidents signed a deal for the creation of the Joint Commission Cooperation with work due to begin on eliminating tariff and non-tariff barriers. Dangote also announced that he would invest $400 million in a cement plant in Kenya’s Kitui County.

Until now, much of the Nigerian business activity in Kenya has been in financial services.

What the Kenyan business people need is a level playing field as well as investment incentives in Nigeria. The protectionist government policies, particularly over restrictions on Kenyan manufactured products entering Nigeria needs to be addressed. 

Other key impediments for trade include cumbersome visa requirements, lack of infrastructure, poor power supply, inadequate security, inconsistent government policies, inability to access funds, multiple taxation and corruption.

 Without a doubt, Nigeria holds enormous commercial potential as recent administrations have focused on developing the non-oil economy and tackling corruption and red tape.

In order to facilitate trade between Kenya and Nigeria a lot more must be done beyond government-to-government agreements which includes the communities getting past the negative typecast that have subjugated the past.

Mrs Maina is the Chief Executive Officer of Kenya Association of Manufacturers and can be reached on info@kam.co.ke