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French firms step up quest for big trade deals in Kenya – Business Daily

President Uhuru Kenyatta is received by his French host Emmanuel Macron at Elysee Palace at the start of his official visit to France on Wednesday evening. PHOTO | PSCU
French companies scouting for investment opportunities in Africa have tended to look towards the west of the continent, owing to historical ties that have similarly seen their British counterparts frequent the East African region.
The European Union’s second-largest economy is, however, making a concerted effort to deepen its presence in East Africa, signified by France President Emmanuel Macron’s state visit to Kenya in March 2019 — the first ever by a French leader to Nairobi.
Major French multinationals have long operated in Kenya and East Africa, particularly in the manufacturing and energy sectors.
Oil giant TotalEnergies is one of the key players in the Kenyan market, while others such as logistics firm Bolloré Group, automaker Peugeot S.A, NAS Servair and food group Danone — which owns 40 percent stake in Brookside Dairies — have a visible and significant presence in the local market.
French private equity and development finance institutions such as Proparco and Amethis Finance have also made investments in Kenyan firms over the years, including retailer Naivas, Kenafric Industries, Equity Group and Kericho Gold maker Global Tea.
Overall, more than 100 French firms have established a presence in Nairobi, up from 30 a decade ago.
These forays to East Africa are, however, still characterised by weaker linkages with local medium and small-sized enterprises, which would ideally unlock new capital for the locals and opportunities for the French.
French public investment bank and credit export agency Bpifrance has now been tasked with opening up new links for the country’s firms in the East Africa region, partly by offering guarantees to those that are establishing new trade channels with Kenyan buyers.
Mourad Chouiqa, Bpifrance regional manager for Eastern, Southern Africa and the Indian Ocean, told the Business Daily that since 2015, the agency has been financing deals between French and foreign companies, from one million euros for private firms to five million for public sector players.
“It’s a financial bridge that we are trying to bridge between French and foreign companies to strengthen partnerships between France and Africa. For the moment this is something that we do a lot in West Africa because of historical reasons because that’s where you find more French companies partnering with local firms,” he said.
“We opened this office in Nairobi two years ago because we want to push more French companies to explore this market because there is high potential.”
Such initiatives would also open up opportunities for Kenyan businesses looking to export goods to France, which would help further reduce the shrinking trade deficit with the European country.
Last year, Kenya exported goods worth Sh9.72 billion to France versus imports of Sh22.5 billion, data from the Kenya National Bureau of Statistics (KNBS) shows. This cut the trade deficit to Sh12.8 billion from Sh19.1 billion five years earlier, when exports stood at Sh7.7 billion and imports Sh12.8 billion.
It would also help France close the gap with Kenya’s other major European trade partners in terms of volumes.
The Netherlands, courtesy of its position as the main landing point for Kenyan flower exports, is the country’s biggest trade partner in Europe with exports valued at Sh61.7 billion and imports worth Sh46.8 billion last year.
Exports and imports from the United Kingdom stood at Sh49.4 billion and Sh33.6 billion respectively last year, while Germany sent goods worth Sh43 billion to Kenya while taking up Sh14.3 billion worth of Kenyan goods.
Unlocking these trade and investment billions, Mr Chouiqa says, will require a significant increase in investment by French firms in Kenya, targeting a wider range of sectors such as ICT, agribusiness, healthcare and financial services.
He added that Bpifrance has also been looking to promote a network for businesses to interact, through trade missions that allow local delegations to cut private deals directly with French businesses.
In October 2020, the agency hosted the Inno Generation 2020 business forum in France, which was attended by President Uhuru Kenyatta. It brought together up to 60,000 French entrepreneurs to explore investment opportunities abroad.
In the public sector investment space, French firms have been eyeing projects in the transport sector, including through the Public Private Partnership (PPP) model.
During Mr Kenyatta’s visit to France in 2020, the two governments signed three bilateral agreements, the main one being the PPP deal for the construction of the Nairobi-Nakuru-Mau Summit highway signed between the Kenya National Highways Authority and French infrastructure firm Vinci Concessions.
Others were agreements for the development of the Nairobi central business district to Jomo Kenyatta International Airport commuter railway line and the 400kV Menengai-Rongai electricity transmission line.
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