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Africa

Germany eyes booming Kenyan market

Kenya's economy is booming, now German companies want to jump on the train. For the first time they can meet at the German-Kenyan Economic Forum in Nairobi.

When foreign investors talk about Kenya, they generally don't mean just one country. That's because Kenya acts as an entry point for investors to the entire East African region.

Kenya is strategically located, and through the port of Mombasa imported goods can be transported to neighboring countries. It also boasts a well developed infrastructure and a functioning administration which is attractive to international investors.

But so far German companies have been holding back.

A man walks past a mobile cash service shop. Photo by Alfred Kiti, DW

Kenya is a front runner in mobile financial services such as M-PESA

The German Chamber of Commerce and Industry only recently opened an office in the capital, Nairobi.

Ingo Badoreck represents the interests of German companies. "We are experiencing a great boom in Kenya, which the German economy has not yet registered," Badoreck said in an interview with DW.

Currently Kenya is undertaking major projects in infrastructure and the health sector, as well as in the field of renewable energies, which are of potential interest to medium-sized German companies.

Chasing the Chinese

With an average growth rate of five per cent, Kenya is considered an important economic motor for East Africa. The technology sector is booming, producing frequent innovations for mobile phones and smart phones.

Some large companies, such as the chemical company BASF, have been in Kenya for many years. The agricultural and construction sectors are the most important markets for BASF, which has been selling pesticides to farmers and chemicals used in building materials. The cosmetics company Beiersdorf produces locally in Kenya for the regional market.

All this is made possible by a large number of well-trained Kenyan professionals.

A farmer tending to a coffee tree. Photo by Tony Karumba /AFP/Getty Images

Agriculture employs 70 per cent of Kenyans in the informal sector

Drago Buzuk represents "German Technology Solution", which groups 30 small and medium-sized enterprises. They are all hoping the East African region, with its many natural resources, will follow the example of China's rapid development, as seen in the last 20 years.

That''s also where the main competition comes from, says Buzuk. According to him, the Chinese act faster when it comes to money and investing. "The problem is that the German economy has completely neglected East Africa, and there are few German companies that can act as a spearhead for the rest."

Business representative Ingo Badoreck sees the competition with Asia differently. For him the key words are "knowledge transfer"; that's where German companies differ from their Asian counterparts, he says.

"We do not only sell our products and goods here, but also try to generate knowledge and build capacity at local level," Badoreck told DW.

Image is what matters

Why is it then that only a few German companies currently operate in Kenya?

Asmau Nitardy, who works with the German-African Business Association, is convinced the reason has to do with Africa's negative image, as conveyed by the media. Her association lobbies for Africa's economy in Germany and is funded by donations from the German economy.

Two men observe remains of a burnt mud built house (Photo by AP/dapd)

Kenya has a history of election-related violence

"If something bad happens in Africa, you see it immediately on television. But anything to do with Africa's economy is hardly discussed in Germany," she says. For example, that Kenya's middle class is growing stronger, and many Kenyans are starting their own businesses. Many educated people who've left the country return later in order to build up something for themselves, Nitardy says.

Negative headlines include reports of more than 1,000 dead, during Kenya's 2008 post-election violence.

Africa-lobbyists are hoping that history does not repeat itself in the next elections scheduled for March 2013, and that Kenya will remain a relatively politically stable country in the region.

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