AGRIBUSINESS, TRADE AND INVESTMENT TOUR TO THE NETHERLANDS
22nd to 27th April 2019
Agriculture is key to Kenya's economy, contributing 26 per cent of the Gross Domestic Product (GDP) and another 27 per cent of GDP indirectly through linkages with other sectors. The sector employs more than 40 per cent of the total population and more than 70 per cent of Kenya's rural people. Agriculture in Kenya is large and complex, with a multitude of public, parastatal, non-governmental and private sectors.
The sector accounts for 65 per cent of the export earnings, and provides the livelihood (employment, income and food security needs) for more than 80 per cent of the Kenyan population and contributes to improving nutrition through production of safe, diverse and nutrient dense foods. The sector is also the min driver of the non-agricultural economy including manufacturing, providing inputs and markets for non-agricultural operations such as building/construction, transportation, tourism, education and other social services.
The country's population has increased significantly (growing from 11 million in 1970 to 39.5 million in 2011) and at the current rate of growth, it will be double in the next 27 years, reaching 81 million in 2039. As a result of this rapid increase, land parcels in the areas of high agricultural potential are decreasing in size, affecting food production.
Given the importance of agriculture in rural areas of Kenya where poverty is prevalent, the sector's importance in poverty alleviation cannot be overstated. Strengthening and improving the performance of the agricultural sector and enabling the engagement of the poorest and most vulnerable in this process is therefore a prerequisite and a necessary condition for achieving recovery and growth in Kenya after recent years of drought and slow development.
Contribution of Agriculture to the Kenyan Economy.• 24.5% of the GDP valued at USD 10.2 billion in 2013.
• Contributes another 27% to GDP through linkages with manufacturing, distribution and other service related sectors
• Absorbs 18% of formal employment and 60% of total employment
• Contributes 65% of Kenya’s total exports
• Small scale farmers account for 70% of total exports
• Largest exporter of Tea globally at USD 1.2 billion. Every 4th cup of Tea consumed worldwide is Kenyan.
• Horticulture contributes USD 1.0 billion in exports. Every 3rd Rose flower sold globally is Kenyan.
In appreciation of the important role Agriculture plays in Kenya and its potential for growth, plus the need to grow a vibrant agro-processing industry, Strategia Netherlands in conjunction with Capacity Africa Institute has organized a mission for Agribusiness and manufacturing stakeholders to the Netherlands from 15th to 20th October 2018.
Why Visit The Netherlands?The Netherlands is the world's second largest exporter of agricultural products, after the USA. Together with the USA and Spain, the Netherlands is one of the world's three leading producers of vegetables and fruit. It supplies a quarter of the vegetables that are exported from Europe. The Dutch agricultural sector is diverse; it covers a wide range of livestock and plant-cultivation sectors that include, for example, arable and dairy farming, cultivation under glass, tree-growing and pig farming.
For decades, Dutch agriculture has succeeded in maintaining its lead over international competitors by continually investing in the renewal of agricultural production chains. Farmers and growers are full partners in the agricultural production chain. Their primary task is to produce food, flowers and plants with an optimum price/quality ratio using innovative, socially responsible and sustainable methods.
The Dutch are forward-looking. This is reflected in the worldwide renowned research and innovation infrastructure of the Netherlands. Wageningen University is the number one Agricultural University in the world for the third year in a row according to The National Taiwan Ranking of over 300 universities on scientific and research excellence. Five of the top 26 global agri-food companies have Research & Development facilities in the Netherlands. Examples of recent private investments; Danone opened a large, new Research & Development centre in Utrecht in 2013, where it concentrates its European research on clinical nutrition and nutrition for children. In 2013, Heinz opened its new R&D centre for Europe in Nijmegen. Royal Friesland Campina concentrated its R&D in a new large R&D centre in Wageningen that opened in 2013.
More Facts & figures about the Dutch food industryThe total value of Dutch agricultural exports was € 82.4 billion in 2015. The contribution of the Dutch agricultural sector, including trade and processing of products to the GDP and employment is 10% (around € 11 billion) of the total GDP in 2014.
Their most important export products for 2015 were potatoes, vegetables and fruit (AGF), with € 11.1 billion as value.
Three out of the world’s top-25 food and beverage companies are from the Netherlands.
The Food Valley region, centred at Wageningen University and Research Center, is one of the most authoritative agri-food and nutrition research centres in Europe. Wageningen University occupies the first place in the European ranking, and the second place worldwide in the QS World University Rankings by Subject 2014, in the category Agriculture & Forestry.
NIZO food research is a leading global center in proteins, bacteria, and processing. It is an independent company and one of the most advanced contract research centers in the world. The latest food technologies are brought to life in our own food grade processing plant.
Holland is one of the world’s leading developers and manufacturers of food processing machinery.
Dutch industry produces 80% of the world’s capacity of poultry processing machinery, and a substantial amount of cheese production machinery. Dutch agricultural entrepreneurs use efficient and sustainable production systems and processes, resulting in a productivity that is five times higher than the European average.
Amsterdam is the largest cocoa port in the world.
The trade mission will showcase Kenya’s Agricultural products and promote trade relationship while attracting Dutch and other European investors to Kenya. During the business trip we will bring together the most important players of the European scene, who are likely to be of particular interest to Kenyan companies. We shall match big investors with Kenyan Entrepreneurs.
Specific benefits in this context are opportunities for financing, getting subsidies on machinery and equipment and acquire sales contracts from Netherlands as well as technical assistance.
Economy of Kenya
Kenya's economy is market-based with a few state-owned infrastructure enterprises and maintains a liberalized external trade system. Kenya is generally perceived as Eastern and Central Africa's hub for Financial, Communication and Transportation services. Major industries include: agriculture, forestry and fishing, mining and minerals, industrial manufacturing, energy, tourism and financial services. As of 2015 estimates, Kenya had a GDP of $69.977 billion making it the 72nd largest economy in the world. Per capita GDP was estimated at $1,587.
The government of Kenya is generally investment friendly and has enacted several regulatory reforms to simplify both foreign and local investment, including the creation of an export processing zone. The export processing zone is expected to grow rapidly through input of foreign direct investment. An increasingly significant portion of Kenya's foreign inflows are remittances by non-resident Kenyans who work in the US, Middle East, Europe and Asia. Compared to its neighbours, Kenya has well-developed social and physical infrastructure.
As of March 2015, economic prospects were positive with above 5% GDP growth expected, largely because of expansions in telecommunications, transport, construction and a recovery in agriculture. These improvements are supported by a large pool of English-speaking professional workers. There is a high level of computer literacy, especially among the youth.
The agricultural sector continues to dominate Kenya's economy, although only 15 percent of Kenya's total land area has sufficient fertility and rainfall to be farmed, and only 7 or 8 percent can be classified as first-class land. Tea, coffee, sisal, pyrethrum, corn, and wheat are grown in the fertile highlands, one of the most successful agricultural production regions in Africa. Livestock production is predominant in the semi-arid savanna to the north and north east. Coconuts, pineapples, cashew nuts, cotton, sugarcane, sisal, and corn are grown in the lower-lying areas.
Forestry & Fishing
Resource degradation has reduced output from forestry. In 2004 roundwood removals came to 22,162,000 cubic meters. Fisheries are of local importance around Lake Victoria and have potential on Lake Turkana. However, output from fishing has been declining because of ecological disruption. Pollution, overfishing, and the use of unauthorized fishing equipment have led to falling catches and have endangered local fish species.
Mining & Minerals
Kenya has had no significant mineral endowment. The mining and quarrying sector makes a negligible contribution to the economy, accounting for less than 1 percent of gross domestic product, the majority contributed by the soda ash operation at Lake Magadi in south-central Kenya. One of Kenya's largest foreign-investment projects in recent years is the planned expansion of Magadi Soda. Apart from soda ash, the chief minerals produced are limestone, gold, salt, large quantities of niobium, fluorspar, and fossil fuel. Recent exploration of Oil, gas and titanium has however yielded positively. This will greatly give a boost to the economy in the next few years.
Industry & Manufacturing
Although Kenya is the most industrially developed country in East Africa, manufacturing still accounts for only 14 percent of gross domestic product (GDP). The industry and manufacturing sectors have become increasingly important to the Kenyan economy, and has been reflected by an increasing GDP per capita. Industrial activity, concentrated around the three largest urban centres, Nairobi, Mombasa, and Kisumu, is dominated by food-processing industries such as grain milling, beer production, and sugarcane crushing, and the fabrication of consumer goods, e.g., vehicles from kits. Kenya also has an oil refinery that processes imported crude petroleum into petroleum products, mainly for the domestic market. In addition, a substantial and expanding informal sector engages in small-scale manufacturing of household goods, motor-vehicle parts, and farm implements.
The largest contribution to Kenya's electricity supply comes from hydroelectric stations at dams along the upper Tana River, as well as the Turkwel Gorge Dam in the west. A petroleum-fired plant on the coast, geothermal facilities at Olkaria (near Nairobi), and electricity imported from Uganda make up the rest of the supply.
Kenya is East and Central Africa's hub for financial services. The Nairobi Stock Exchange (NSE) is ranked 4th in Africa in terms of market capitalization. The Kenya banking system is supervised by the Central Bank of Kenya (CBK). As of late July 2004, the system consisted of 43 commercial banks (down from 48 in 2001), several non-bank financial institutions, including mortgage companies, four savings and loan associations, and several score foreign-exchange bureaus.
TRADE BETWEEN KENYA AND NETHERLANDS
Cut flowers contribute to close to 80 per cent of Kenya’s exports to Netherlands. Analysts note that growing ties between the two nations show that Kenya is keen on seeking new trade partners, especially those who benefit her most as in the case of Netherlands.
Kenya’s central location in East Africa is attractive to Dutch investors. Investing in this country means access to a market of over 135 million consumers and an abundant, mobile and entrepreneurial young workforce. In recent years, the trade- and investment relation between Kenya and the Netherlands has deepened. In 2014, the volume of trade (total imports and exports) between Kenya and the Netherlands was more than € 510 million. Important Dutch export products are services, chemicals, machinery, transport equipment and engines while major imports from Kenya are horticultural products, flowers, tobacco and raw materials. The Netherlands is the third export market for Kenya.
Dutch private investment in horticulture has led to the emergence of a large competitive horticultural industry (flowers and vegetable production) which contributes to more than 14% of Gross Domestic Product (GDP). In recent years, there is growing Dutch investment outside the traditional horticultural sector, e.g. renewable energy, water and sanitation, infrastructure, logistics, ICT, and financial services.
The relation between the two nations, however, goes beyond trade. According to the Dutch Embassy in Nairobi, the Netherlands funds various programmes in Kenya in art, governance, trade development, agriculture, water and environment sectors.
GOOD REASONS TO INVEST IN KENYA
a) A Range of Tax Treaties and Investment Promotion and Protection Agreements.
Kenya has a number of tax treaties and investment promotion and protection Agreements. Exports from Kenya enjoy preferential access to world markets under a number of special access and duty reduction programmes. Kenya is signatory to various agreements aimed at enhancing trade amongst member states.
b) Multilateral Trade System (MTS)
The World Trade Organization (WTO) is the only international organisation dealing with the global rules of trade between nations. The overriding objective of the WTO is to ensure that trade flows as smoothly, freely and predictably as possible. Kenya has been a member of the WTO since its inception in January 1995.
c) ACP/Cotonou Partnership Agreement
Exports from Kenya entering the European Union are entitled to duty reductions and freedom from all quota restrictions. Trade preferences include duty-free entry of all industrial products as well as a wide range of agricultural products including beef, fish, dairy products, cereals, fresh and processed fruits and vegetables.
d) African Growth and Opportunity Act (AGOA)
Kenya qualifies for duty free access to the United States of America (USA) market under the African Growth and Opportunity Act enacted by USA. Kenya's major products that qualify for export under AGOA include textiles, apparels, handicrafts, etc.
e) Generalised System of Preferences (GSP)
Under the Generalised System of Preferences, a wide range of Kenya's manufactured products are entitled to preferential duty treatment in the United States of America, Japan, Canada, New Zealand, Australia, Switzerland, Norway, Sweden, Finland, Austria, and other European countries. In addition, no quantitative restrictions are applicable to Kenyan exports on any of the 3,000-plus items currently eligible for GSP treatment.
f) Investment Protection Guarantee
The constitution of Kenya guarantees protection of life and private property. The Foreign Investment Protection Act guarantees against expropriation of private property by government. Kenya is a signatory to and Member of the Multilateral Investment Guarantee Agency (MIGA) an affiliate of the World Bank which guarantees investors against loss of Investment to political problems in host countries. Kenya is also signatory to International centre for Settlement of Investment Disputes which is a channel for settling disputes between foreign investors and host governments
The construction of a super highway linking the city of Nairobi to the productive Central Kenya highlands has eased transportation problems to potential markets. Kenya Railways has embarked on the construction of a standard gauge railway line to link the port of Mombasa to the rest of East Africa and the first phase up to Nairobi is already operational. Kenya Airways (Pride of Africa) prays a crucial role in the airlifting of fresh horticultural produce to Europe and the rest of the world. The Lamu Port South Sudan Ethiopia Transport corridor project has already been initiated and will make Kenya a hub of International Transportation.
h) Bilateral Trade Agreements
Kenya has signed bilateral trade agreements with several countries around the world. Some of the countries are already members of existing schemes offering market access/duty reduction preferences as above.
i) Trade Agreements Under Negotiations
1. Argentina 2. Bangladesh 3. Bulgaria 4. China 5. Comoros 6. Congo (DRC) 7. Djibouti 8. Egypt 9. Hungary 10. India 11. Iraq 12. Lesotho 13. Liberia 14. Netherlands 15. Nigeria 16. Pakistan 17. Poland 18. Romania 19. Russia 20. Rwanda 21. Somalia 22. South Korea 23. Swaziland 24. Tanzania 25. Thailand 26. Zambia 27. Zimbabwe 28. Belarus 29. Czech Republic 30. Ethiopia 31. Eritrea 32. Iran 33. Kazakhstan 34. Mauritius 35. Mozambique 36. South Africa