12 July 2010

Kenya: Lula Seeks Stronger Economic Ties

Nairobi — The recent visit by Brazil's President Luiz Inacio Lula da Silva to Kenya, has reinforced the latter's new foreign policy of closer trade ties with emerging markets in addition to its traditional partners.

Although President Lula only visited Kenya and Tanzania out of the five East African Community countries, it was clear that Brazil -- that has lately taken keen interest in Africa -- is eyeing the integration process and the opportunities it offers in trade and investment.

But Kenya is still disadvantaged by its trade imbalance with Brazil. For instance in 2009, Kenya exported goods worth $947,730 to Brazil compared with the $58 million worth of imports from the country.

President Mwai Kibaki said that Kenya was especially keen on exploiting Brazilian advances in the area of bio-diesel technology, in an effort to become more efficient in the management of the energy sector. The Brazilian president on the other hand was keen on finding out existing opportunities and what Brazil can offer in terms of technological transfer and improvement of the environment.

The two resolved to foster co-operation in the fields of bio-diesel technology, agricultural research and development, information and communication and aviation among others. Kenya opened an embassy in Brazil in 2008 and trade ties have improved since then, with the national carrier Kenya Airways purchasing passenger jets made in the South American country.

The Kenyan embassy in Brazil serves the entire Latin America. The visit by President Lula was a follow-up of two Joint Commission for Co-operation in Brasilia, Brazil in 2005 and Nairobi in August, 2008. At the Second Kenya-Brazil Joint Commission for Co-operation, the two countries discussed various areas of mutual interest concerning economic, social and agricultural issues.

The two parties agreed to co-operate in enhancing their capacities in production of sugar and ethanol from sugarcane; teaching of Kiswahili and Portuguese in both countries, establishing direct flights between the two countries, and creating sports programmes.

The two delegations agreed to implement the so-called Second Half Programme, which shall begin as a pilot project targeting an initial group of 200 beneficiaries among children, adolescents and young adults.

This programme aims at supporting the social development of low-income citizens through the practice of sports, with special attention to football. Under the programme, the Brazilian Ministry of Sports will provide technical assistance to promote sporting activities in the country. Kenya will also benefit from technical support for the management of stadiums.

At the conclusion of the bilateral consultations, the two countries signed four agreements for the implementation of various projects, namely: strengthening the HIV Aids Response in Kenya; support to the Programme on Malaria Prevention and Control; Institutional Strengthening of the Kenya Wildlife Service, the City Council of Nairobi fire brigade and the Kenya Airports Authority, Fire and Rescue services; and an Agreement between Kenya and Brazil on visa exemption for holders of diplomatic, official or service passports.

Other investment opportunities available in Kenya for Brazilian investors include those in agriculture, especially the sugar industry, value addition of agriculture products, manufacture of farm machinery and equipment, energy (biofuels, wind and geothermal), investments in ICT and other knowledge-based industries, exploration of natural resources, petroleum and mineral and housing.

In Tanzania, Brazil is eyeing vast arable land for mechanised agriculture, bio-fuel, mining and tourism sectors, besides investment in renewable energy. Tanzania has allocated over 200,000 hectares for agro-fuels, however, the country lacks appropriate technology and capital to invest in the sector. The trade imbalance between Brazil and Tanzania is however quite huge.

In 2008, Tanzanian exports to Brazil amounted to only $30,000 compared with $12.1 million worth of goods the country imported from Brazil. President Lula indicated that there is a possibility that Brazil could cancel Tanzania's long standing debt of $240 debt borrowed in the 1980s. The initial amount borrowed was $49 million and the rest is interest accrued over 30 years.

If cancelled, the money could be used to construct the 250km Morogoro-Dodoma road.

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