Growing demand for quality products attracting investors
24 November 2014, 16:16
Nairobi - Impressive returns on investments, particularly in manufacturing, value addition and technology from various counties in the country is attracting both local and international investors due to the residents’ growing demand for quality products and services.
Investors rushing to invest in such unexploited counties full of minerals, good climatic conditions for agricultural produce among other resources are mostly attracted by incentives such as tax breaks, free land and undemanding company registration processes.
For instance, such investments have been identified as key in transfer of knowledge from investing companies to the locals thus raising the living standards while setting the pace for businesses in dire need of better services and products.
The Equity Bank Chief Operating Officer, Julius Kipng’etich said the national government has not given the deserved attention to resources in most counties to make prospective investors to directly engage with governors.
“The scramble for these goldmines especially because of aggressive marketing has caught the eye of many investors who are keen on the highest form of return from the investment,” said Kipng’etich.
“Finding resources concentrated in one area in large quantities and accessing the right infrastructure to exploit them has become the counties’ selling point,” he added.
Kwale County is among the beneficiaries of these investments with the Base Titanium Company having already set up its operations for exploration and mining of titanium. It has also benefited from the Pacific Wildcat Resources Corps (PAW) which operates budgets that are injected into the County’s economies.
A total of KES 760 million has been invested in Kwale community projects such as schools, hospitals and boreholes in the last one year of investors operations.
In Murang’a County, where government invests in creation of modern value addition factories to tap into the robust agricultural activities because of its good climate, multinational companies have already set up shops that are directly benefiting the residents.
Soft drinks manufacturer chocking under prohibitive import duty for fruit pulp, a key ingredient in their products, have decided to buy the fruits directly from the farmers.
Coca-Cola has also introduced higher farm gate prices to passion fruit farmers while New Zealand-based Olivado Company that manufactures edible oils, has incentivized Murang’a farmers with free trainings, high quality seeds and higher prices for their produce.
A Germany investor in leather and apparel business, Bert Sieberg said, “It becomes easier to deal with the counties because for us we are very particular about meeting the actual people we are doing business with and engaging directly with them.”
“Working with the people of Isiolo County where we buy most of the hides and animal skin has assisted us to identify more opportunities and understand the dynamics of sourcing hides from Kenya,” he added.
Sieberg said direct engagement with locals has for example enabled them to look into the issue of livestock health and cleanliness of abattoirs which he insisted help iron out their business engagements.
However, investors have raised concern over some unfriendly policies and legislations in some counties, for example, imposing new taxes on every investor and commodity to create an increasingly unpredictable business environment.
The Shippers Council of Eastern Africa has raised complaints regarding the proposed levy by Mombasa County to charge $2 per tonne or $10 per consignment for cargo shipped from the port saying the additional tax would raise the cost of trade.
Despite such investment challenges, counties have also misplaced spending priorities at the expense of development and infrastructure which the investors count on for ease of doing business.
A report by the Office of the Controller of Budget released earlier this year indicates that certain counties are spending unto 80 percent of their budgets on recurrent expenditure such as payment of wages and a paltry 20 percent on development.
“The counties need to put their acts together. Investors need to be baited by seeing mature and efficient governments that prioritize development,” said Kipng’etich.
The two entrepreneurs were speaking during the inaugural Kenya International Investment Conference 2014 in Nairobi that brought local and international investors together to learn about investment opportunities and business climate in the country.
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