Nairobi: A three-kilometre drive on Nairobi’s Lang’ata Road from the southern end of Uhuru Highway, a giant poster of Ivorian footballer Didier Drogba stands alongside an assortment of Samsung electronic gadgets. True to design, the image of this electrifying Chelsea striker still remains a key distraction to users of this slow-traffic route almost two weeks after the last match of European Football Associations’ (UEFA) championship was played.
But the billboard means the Seoul-headquartered Samsung Group is currently holding the ace in the scramble for the eyeballs of thousands of people who pass near its bustling vicinity each day.
The Samsung’s ad reads: “LCD (Liquid crystal display based) LED TV: It is Drogba’s choice.”
On this 20-km stretch, not even the equally imposing posters of Siemens AG, East African Portland Cement, the Kenya Revenue Authority or Mr Price’s latest fashion arrivals appear to strike as much aura at the moment.
For a start, UEFA championships are known to light up fanaticism among youth, almost to levels previously reserved only to the idea of supernatural or ideal polity.
The attention to Mr Drogba’s image—in real life Africa’s face in the recent UEFA matches held several miles away in England where his goal helped in handing Chelsea the coveted top prize— was assured.
It even became a more formidable bet after word went out about plan to ditch his successful English club next month.
That it took a South Korean conglomerate to seize the opportunity of using Africa’s poster child of the moment in promoting its products speaks volumes of the smart moves that have helped Asian firms to dominate local market.
From this deft display of tactical ingenuity on Lang’ata Road, it may not be difficult to understand what have propelled Asian brands to household names in Kenya. Whether it is a visit to Tuskys Supermarket’s T-Mall on Lang’ata Road or Nakumatt chain’s Galleria outlet located farther west on this road, the presence of Asian products in Kenya’s key retail outlets is mind-boggling.
A drive deeper south through Magadi Road to Kiserian Township, some 30kms from Nairobi’s Central Business District (CBD) only serves to reinforce this observation.
Ready examples of this market dominance exist in electronics sections of almost every retail outlet which stock products ranging from electric cables or iron boxes to complex ones such fridges, cookers or flat screen TVs.
In almost all the outlets visited electronic products on sale were mainly Korea’s Samsung and LG Corporation or Japan’s Sony and Sanyo which are steadily pushing those of European firms such as Philips Global out of local shelves.
Most stores in Kenya stock Asia-made motorcycles and bicycles-including models for children.
Even low value goods such as torches, dry cell batteries, utensils, pens, match boxes, tooth brushes and even toothpick all bear the “Made in China” in most small shops.
“For electronic goods, the Asian products are volumes driver for any retail outlet because they are affordable and most of them give customers guarantees of up to two years,” an attendant at electronics section of Naivas Supermarket in Ngong said, adding that only Philips’s iron boxes appear to have weathered competition from Asian products.
But one doesn’t have to go this far from Lang’ata Road to appreciate influx of Asian goods into the Kenyan market.
Imports from Asia
A simple sampling conducted at every five minute-intervals through the traffic snarl-up of Lang’ata Road discovers that 10 vehicles in sight at any one go are all Toyotas except three of them which have equal chances of being a Nissan, Mitsubishi, or Subaru.
Not even the recent government policy of exchanging fuel guzzlers of its top officials with German’s Volkswagen has tilted statistics in favour of models from Europe or US models; Kenya’s other key trading partners.
Several yards of used motor vehicle that are dotting the route from are a tale of small Toyota villages in Kenya.
So when the Government released official economic data two weeks ago, it was as though merely meant to confirm that Kenya was literally awash with Asian products.
The Economic Survey 2012 prepared by Kenya National Bureau of Statistics (KNBS) shows that Asian firms took 63 per cent of the Sh1.3 trillion import bill that all importers served to Kenya in 2011.
Imports from Asia leapt phenomenally by 44.5 per cent from Sh567.9 billion recorded in 2010 to a total of Sh821 billion last year or 31.5 per cent of Kenya’s GDP.
This level of import to just one destination is equivalent to 31.5 per cent of Kenya’s GDP and exceeds a total of Sh511 billion that Kenya exported to all destinations of the world last year.
These figures may still look conservative. For one, they do not include medical bills running into millions of shillings that Kenyans spend to seek specialised treatment in India each year. Also unrecorded is billions of shillings worth of illegal trade in fake goods.
“It is not easy quantify actual imports from Asia because even some mobile phone handsets labelled in the market as Motorola or Nokia are in actual sense imitations from China,” Allan Njogu Kamau, chairman of Kenya Anti-Counterfeit Agency told the Business Daily in an earlier interview.
But even at this recorded level, this commercial relationship still raises eyebrows when weighed against a paltry Sh95.5 billion worth of hard currency that Kenya earned in exchange from Asian countries over the same period.
Primary agricultural produce like tea, horticulture and coffee topped Kenya’s list of exports while finished goods such as petroleum, industrial machinery and motor vehicles – the last two mainly from Asia.
This mismatch worsened Kenya’s trade balance by 49.7 per cent in 2011 compared to 21.3 per cent in 2010, piling pressure on shilling which weakened to record 107 against the dollar in October last year.
“Kenya is running on one engine, with high imports but weak exports. It will succeed economically and be less vulnerable to shocks only if it balances its economy through stronger exports,” Wolfgang Fengler, Lead Economist for the World Bank’s Kenya programme said when the institution released Kenya’s economic outlook 2012.
The report titled: “Navigating the Storm, Delivering the Promise”, says the current account deficit (gap between imports and exports) widened above 10 per cent of GDP in 2011, higher than in Greece’s.
It continues, “Kenya is well positioned to make new products such as textiles, chemicals and automotive parts and enter new markets such as Asia if it continues to improve its infrastructure and investment climate.”
Generally, Kenya has entered into economic integration deals with most countries in Africa – including a common market arrangement with its East African neighbours and a free trade Area with 19 countries from eastern and southern Africa (Comesa).
These deals lifted the country’s exports to Africa to Sh247.6 billion or 48.5 per cent of last year’s total exports becoming the single largest destination for its goods.
Out of this, the four East African countries absorbed Sh137.2 billion worth of goods or 35.6 per cent of Kenya’s exports to Africa growth. On the import side, however, imports from African countries trail Asia at distant Sh302.9 billion followed by Europe at Sh255.4 billion.
The irony of the situation is that Kenya and other EAC partners have for the last 10 years rejected a legal text of Economic Partnership Agreements (EPAs) for fear that it could open floodgates for EU products at the expense of domestic industrialisation.
As expected, however, these skewed figures have sparked off fresh debate as to whether Asia – mainly India and China – are better economic partners to Africa.
“We are entering a new phase in our ties with Africa– from a shared history of struggle against colonial oppression and economic exploitation to achieve freedom— to a relationship based on economic partnership in a globalised, deeply interconnected world,” Pinak Chakravarty, a secretary in charge of public diplomacy at India’s external affairs ministry said a statement sent to Business Daily two weeks ago from Dar es Salaam.
This is the same belief that has led to the launch of INDIAFRICA an initiative which seeks to tap these shared sensibilities, histories and intertwined cultures between India and the African Continent. In Kenya, the presence of Asian corporation transcends the boundary of trade.
Chinese firms have built superior highways including Thika Road, the Museum Hill interchange, and Lanet Highway (Nakuru) which have significantly reduced traffic jams, Kenya’s other economic headache through which billions of shillings is lost every year.
Back to Lang’ata road, it is the Sh3 billion road expansion project by Chinese contractor—China Wu Yi – which is causing the heavy traffic at the moment.
Upon completion by end of this year, the same contractor is expected to start building the controversial Southern bypass through Nairobi National Park to ease traffic on Lang’ata Road.
The Sh17 billion project commissioned in March by President Kibaki in March is being financed through a concessionary loan advanced by China.
In trade, however, the local importers are divided over the quality of goods obtained from China.
“Farmers who initially buy these equipment because they are cheap rarely make repeat orders on realising they don’t last long on Africa’s difficult conditions,” said Geoffrey Nyaberi, technical and sales manager at Rhino Agrimac & Equipment Ltd.
Mr Nyaberi’s firm located on Mombasa Road supplies farm machinery and implements like ploughs, harrows, shredders, sprayers, rakes, mowers, fertiliser spreaders, harvesters, feed mixers, milking machines and balers which he mainly imports from Europe.
But Kenya can still get a beneficial lesson from its newfound economic engagement with Asia, says the World Bank.
“Kenya is globally competitive in a number of sectors–especially tea, tourism and horticulture–but it has not ventured sufficiently into new products, especially light manufacturing, where opportunities could materialise as Asia’s emerging economies start to graduate from these sectors.”