x Abu Dhabi, UAE Friday 21 July 2017

The new iPod shuffle

The UAE has emerged as Kenya's major trading partner and is its largest single source of imports.

Joseph Muchai demonstrates a tape recorder in his shop in Nairobi. He is one of hundreds of businessmen who travel to the UAE to buy products to sell in his home country.
Joseph Muchai demonstrates a tape recorder in his shop in Nairobi. He is one of hundreds of businessmen who travel to the UAE to buy products to sell in his home country.

Each month, Joseph Muchai takes two empty suitcases and boards an Emirates airline flight to Dubai. In the next three days, he fills those suitcases with car stereos, speakers, DVD players, calculators, electric shavers and clock radios. Back in Nairobi, Mr Muchai sells the electronics at a 15 to 20 per cent mark-up. There are hundreds of Kenyan businessmen like him, lured to the UAE by inexpensive products and the chance to make a quick profit.

"Doing business in Dubai is not bad," said Mr Muchai, who has been trading goods from the UAE for eight years. "My livelihood is from that. It keeps food on my table." In the past 10 years, Kenya has emerged as a big trading partner for the UAE. Small-time traders like Mr Muchai flock to Dubai for electronics. Major importers from Kenya ship cars and containers full of products from the UAE, while Middle Eastern investors see Kenya as a potential market for the banking and telecommunications sector.

Last year, Kenya imported US$800 million (Dh2.9 billion) worth of goods from the UAE, the largest single source for Kenyan imports, according to the Kenya Business Advisory Committee of the UAE, a trade group set up by the Kenyan Embassy in Abu Dhabi to represent Kenyan business interests in the Gulf state. Trade between Kenya and the Emirates has increased every year since trade restrictions and foreign exchange regulations were lifted by Kenya's government, 10 years ago.

According to the business advisory committee, about 1,000 used cars are exported to Kenya each month through Sharjah's expansive car market. That figure is likely to increase when a new law comes into effect in the UAE next year, banning the transfer of ownership of cars more than 10 years old. "There is a huge demand for quality secondhand cars in Kenya," said John Makau, the secretary general of the committee. "Secondhand car dealers in Sharjah have been the major sources in meeting this increasing demand."

Njuguna Ndung'u, the head of the Central Bank of Kenya, toured the UAE in April to try to strengthen trade and investment links between the two countries. "The Gulf region has a very potent combination of capital and expertise, while Kenya presents several profitable investment opportunities," Mr Ndung'u said. At the beginning of the year, Gulf African Bank, Kenya's first bank based on Islamic law, opened in Nairobi. The bank was set up with investors from the Gulf region, including Istithmar and Gulf Cap, two UAE investment companies.

"Africa is an attractive emerging market for growth of Islamic finance," Abdul-Malik al Khalili, the bank's chairman, told Reuters. "There is a lot of liquidity in the Gulf, and we are making a bridge between the two." Other Emirati investors have pounced on Kenya's emerging telecommunications market. Alcazar Capital, an equity firm based in Dubai, reportedly bought 11 per cent of the shares in Safaricom, a leading Kenyan mobile phone company that recently went public. In November, the firm invested $58m in Telekom Kenya, a Kenyan phone company.

The UAE has also become a market for Kenyan agricultural products such as coffee, tea and flowers. Products from the emirates, especially electronics, are more expensive than those from China, but Kenyan importers say the UAE market is more convenient. "When you buy from China, you need large quantities, like a whole container of just one product," Mr Muchai said. "When I go to Dubai, I can buy a carton of this and a carton of that. It takes less time and it's closer than China."

Mr Muchai is a frequent flyer on Emirates, which has daily flights between Nairobi and Dubai - about a five-hour trip. Kenya Airways also has twice-daily flights on the route. Both airlines offer extra baggage allowances for traders bringing products back to Kenya. "East Africa is a big market for us, especially for traders going to buy and sell," said Sally Sawe, a spokesman for Emirates in Nairobi. "We give them baggage allowance breaks and negotiated fares. For traders it's a big plus."

Kenyan businessmen in the emirates have also set up shipping agencies to cater to traders. Mehboob Manji, who owns an electronics store in a bustling Nairobi neighbourhood, uses his Kenyan contacts in Dubai to send him TVs and DVD players by containership each month. "There are a lot of Kenyans in Dubai doing business," he said. "We use them to send us our products. You trust your own people more."

@Email:mbrown@thenational.ae