Germany firms in Kenya bullish about trade prospects in the coming months
Germany companies operating in Kenya are expecting increased trade opportunities in the country as the economy gradually shakes off the impacts of the COVID-19 pandemic hit.
A survey by the Delegation of German Industry and Commerce for Eastern Africa (AHK) indicates that the majority of German firms remain optimistic about their future business prospects even with the upcoming August 9, general election.
“In the coming 12 months, a majority (56 percent) expect their business development activities to remain constant and a third (33 percent) see it to be better,” the report reads in part.
“Approximately a tenth (11 percent) assess the local economic developments to be better while slightly less than half (48 percent) assess it to be worse,” notes the survey.
The majority (70 percent) of the respondents were drawn from the service sector, with slightly more than a tenth (11 percent) from the trade sector and less than a fifth (19 percent) from the construction sector.
Of those surveyed, 40 percent assessed their current situation to be good, and over half (56 percent) assess it to be satisfactory.
A marginal 4 percent cited it as poor which is still an improvement compared to last October when 18 percent said the business environment was poor.
“These numbers show that German companies are resurging from the effects of the COVID-19 pandemic,” said Maren Diale-Schellschmidt, a delegate for AHK. “Companies have put in place measures and adjusted their operations hence few assess their current business situation as bad with most having a positive outlook.”
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Maren said German firms operating in Kenya view the next 12 months as a period of maintaining operational stability in Kenya and not a period of expansions or new investments.
The effects of Russia’s invasion of Ukraine is also felt strongly by businesses with 80 percent of those surveyed saying it has led to higher cost of energy, commodities, and intermediate expenditure.
Half of the respondents said the war in Ukraine has led to disruptions in supply chains and logistical hardships, while 32 percent said it had depressed intermediate expenditure.
“All in all, the survey once again demonstrates that German companies understand that the economic times are not favourable in the short term,” said Maren.
“However, as they have established themselves in Kenya as the regional hub in Eastern Africa with a long-term perspective, their resilience in harder economic times will pay off in the future.”
Data from the Kenya Economic Survey indicates that Kenyan exports to Germany stood at Sh14.2 billion in 2021, a Kes265 million drop compared to 2020.
The European Union country, however, accounts for the third largest single export market for Kenyan goods in Europe after the Netherlands and the United Kingdom.
“With the looming election, German companies are hoping that peace, stability, and a smooth transition are maintained as they are imperative for the local economy to fully recover from the shocks witnessed during the COVID-19 pandemic and for the further development of Kenya as a hub for FDI from Germany,” said Thomas Wimmer, Deputy German Ambassador to Kenya.
