June 17, 2024


Studying business science

Indian SMEs Keen to Explore Kenya

Kenya is the regional trade and finance hub of East Africa. Its market-based economy is characterised by an open external trade system and heavy dependence on the agriculture sector.

Kenyan economy back on growth track

During the 1990s, the Kenyan economy witnessed a sharp decline in its growth rate slipping to a meagre 1.5%.* Rapid population growth and poor infrastructure were largely responsible for the plunge in the country’s GDP.

However, in the past few years, this African country has regained momentum owing to development programmes implemented by the Kenyan government. The country has now emerged as an attractive trade and investment destination for several Indian SMEs looking to expand their footprint in the African continent.

Kenya is an ideal gateway to the untapped East African Community (EAC) countries, which present tremendous growth potential for the Indian SME sector. With interstate tariff set to drop to 0% in the EAC region in the near term, Indian SMEs are looking at exploring new business opportunities in Kenya.

Trends in bilateral trade

India is the eighth largest exporting country to Kenya. Its export basket for Kenya consists of rice, metals, textiles, iron and steel, chemicals, engineering goods and transport equipment. Alternately, Kenya is a major exporter of leather, raw hides, inorganic chemicals and colouring substances to India.

Trade relations between India and Kenya have strengthened in the recent past, courtesy of the increased economic exchanges between SMEs in the two countries. A growing number of Indian SMEs have entered the Kenyan market while several Kenyan SMEs are also keen on forging business ties with their Indian counterparts. As a result, Indian SMEs from various industry verticals are exploring trade and investment opportunities in Kenya.

Thriving sectors

For Indian SMEs looking at tapping the Kenyan market, investment opportunities exist in sectors such as construction, tourism, Chemicals Manufacturers, food processing and textile. In the tourism sector, Indian SMEs can capitalise on the increasing demand for cruise ship tourism and conference tourism in Kenya. Likewise, Indian IT firms can capture the Kenyan market by providing technical support and training to Kenyan SMEs in the IT space.

Recently, the National Small Industries Corp (NSIC) inked an agreement with the Kenya Industrial Estates (KIE) to facilitate greater cooperation in the SME segment. Under the agreement, India will extend technical support to Kenyan SMEs while KIE will market NSIC products in the country. The signing of this agreement is expected to provide a major boost to the SMEs in the two countries.