Issue 14 | August 2019

In Focus

Logistics Bolsters as the Sun Shines on the Kenyan Economy

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Logistics is playing a pivotal role in bolstering the Kenyan economy, as it gradually transforms into a hotbed for global trade. With a combination of self-owned offices and elaborate agent networks in East Africa and around the world, ECU Worldwide is perfectly positioned to augment the burgeoning Kenyan economy.

The devolution of county governments and passage of new constitution in August 2010, ushered in a new era of economic and political stability in Kenya. The landmark decision paved the way for greater foreign investments in the grassroots of the system paving the way for the development of a consolidated economy. Consequently, Kenya cumulatively gained 42 spots in the World Bank’s ‘Ease of Doing Business Index’ in 2016 and 2017 respectively. Increasing regulation of industries coupled with a continuous inflow of foreign investments into the country, has made Kenya the biggest and most advanced economy in Central and East Africa. According to estimates, the country will continue registering moderate Gross Domestic Product (GDP) growth of approximately 6% in 2019.

These trends have resulted in big players across different industry domains setting up their bases in Kenya. With a huge inflow of foreign organisations, trade is further expected to gain pace in the country and logistics is set to don a central role in supporting the Kenyan economy. With its extensive portfolio of services, wide-spanning network, and sophisticated digital capabilities, ECU Worldwide Kenya is helping Kenya transform into a global trading powerhouse.

Booming Logistics Lays the Foundation for a Sturdy Economy

The discovery of oil in the South Lokichar basin in 2012 opened new and lucrative opportunities for the Kenyan government to capitalise on. According to the estimates, the basin holds a total of 560 million barrels of crude oil which could potentially translate to 60,000 to 100,000 barrels of production per day. Over the years, the crude oil industry has been regulated and suddenly the country has transformed into a producer from a net importer. All the heavy equipment, machinery, and other required tools for setting up sophisticated crude oil refineries are being imported into the country.

Kenya is highly reliant on its imports with the import-to-GDP ratio for the country being approximately 24%. The country imports everything from used automobiles to consumer goods and pharmaceuticals. However, the trend is gradually changing as Kenya continues to intensify its exports. “In 2018, Kenya imported almost 600,000 TEUs, but only exported 150,000 TEUs. Although small, there was a slight increase in the total volume of exports in 2018 when compared to 2017. This indicates that the import-export deficit will gradually decrease in the foreseeable future,” elucidated Sanjeev Sukumaran, MD, East Africa, ECU Worldwide.

The rapid changes in the economic dynamics of the country are being supported by a slew of infrastructure developmental projects. One of the biggest developments on this front was the unveiling of the Standard Gauge Railway. The 470km long railway line connects Mombasa to Nairobi and is enabling speedy and efficient transportation of cargo between the two destinations. A second phase of the project is still under development and will connect Nairobi and Naivasha. Also, the construction of the KPA Container Terminal in Mombasa will provide a significant boost to the logistical set up in the country.

ECU Worldwide Scales Kenyan Future

ECU Worldwide has a strong presence in East and Central Africa with offices in Uganda, Nairobi, Mombasa, and Tanzania. Its elaborate agent network operating in Rwanda and the Democratic Republic of Congo enables it to function efficiently across the sub-Saharan continent. Backed by the strong presence of the ECU Worldwide network around the world, they are perfectly placed to handle voluminous trade in and out of the country.

ECU Worldwide Kenya offers services such as warehousing, customs clearance and delivery, re-export services, T/shipment services (Air freight), temporary storage, and Dangerous Goods (DG) packaging. With the demand for third-party logistics on the rise, ECU Worldwide Kenya is equipped with all the capabilities to help organisations manage their supply chain and logistics requirements including inventory management and shipping services. Shedding light on the current and future prospects of expanding the business in the country, Mr. Sukumaran stated, “While our focus remains on continued growth of our core business i.e. Less than Container Load (LCL) imports, where we are currently the market leaders in East Africa, there are three other areas we are really focusing on to develop our business: Full Container Load (FCL) import, LCL export and the air freight business.”

Technological advancements, geographic location, and incremental economic growth of countries around Kenya suggest that the logistics sector in the country will remain buoyant in the years to come. Although manufacturing in the country continues to battle with sluggish growth, e-commerce in the region continues to witness healthy growth. Consequently, Kenya is becoming the warehousing hub and distribution centre for East Africa with big players like Jumia expanding operations in the region. ECU Worldwide in Kenya has established itself as the leading logistics provider in the region, by offering an array of services to help scale Kenyan economy and new players entering East African markets.

Quick Bytes

1
The passing of the new constitution in Kenya in August 2010 ushered in an era of political and economic stability which has helped the Kenyan economy achieve sustained business growth.
2
A slew of infrastructure developmental projects funded by the Kenyan government isproviding the logistical sector in the country a much-needed boost.
3
With its extensive portfolio of services, strong presence in East Africa and the World, and significant experience, ECU Worldwide Kenya is perfectly positioned to help new and old players set up their businesses in the emerging economic hub of Africa.
4
ECU Worldwide Kenya plans to consolidate its LCL business while expanding its FCL business to help its clients capitalise on the lucrative opportunities available in the region.

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