Kenya has announced plans to set up warehouses in Rwanda, Burundi and the Democratic Republic of Congo in an elaborate strategy to tighten its grip on the regional export market.
The warehouses in Kigali, Bujumbura and Lumbubashi are expected to drive more exports and ward off competition from neighbouring countries that are threatening Kenya’s dominance of the key markets. The warehouses are expected to smoothen challenges that come with cross-border transportation of goods.
“We intend to take up space at a free trade zone that the government has set up for us at the border with DRC in Gatumba, which we are marketing to Kenya’s private sector,” Kenya’s ambassador to Burundi Ken Vitisia told The EastAfrican in Bujumbura.
Burundi has allocated the Kenyan government land for the construction of an embassy, part of which will be used to construct the trade centre.
The free trade zone offers Kenyan companies an easy access to the Burundi market, which is a gateway to the populous DRC market.
Kenya currently controls six per cent of the combined Rwanda and Burundi markets worth $8 billion, but is facing competition not only from neighbouring Tanzania and Uganda but also from countries like China, India and Saudi Arabia.
Tanzania has already overtaken Kenya as the leading exporter to Burundi, a market where Kenyan brands are 16 per cent more expensive than products from competing countries.
Nairobi’s exports to DRC stood at Ksh15 billion ($130 million) in 2018, down from Ksh18.8 billion ($162.7 million) in 2017, as per data by the Kenya Export Promotion and Branding Agency (Keproba).
Rwanda and Burundi provide Kenya access to markets with a population of 25 million and growing at a rate of 2.4 per cent and 3.3 respectively. DRC, one of Africa’s most populous countries, has a population of 81 million.
The main Kenyan exports to Rwanda and Burundi are iron sheets, steel, oils, perfumes, paints, paper, confectionery and cigarettes.
The cost of manufacturing in Kenya has been on the rise compared with other EAC countries, with electricity costs and taxes having a huge impact on retail prices of products.
“The implications of Kenya’s declining exports to the region are dire due to a drop in forex reserves, loss of job opportunities and reduced tax revenues,” notes the Keproba report.