Kenya's Economic Shift: Tanzania's Gain And East Africa's New Trade Dynamics
Africa
Business
Kenya is the gateway and hub to the East and Central Africa region. Known as the athletics nation of Africa, Kenya has shown great potential over the years in different industries. It is also referred to as the Silicon Valley of Africa due to its technological developments in e-commerce and cashless transactions in the era of M-pesa developed by Safaricom. In agriculture, it has been known to produce the best tea for global consumption and ranked third after China and India in its global production, with production estimated at 537 million kilograms of tea per year. Tourism has also made Kenya a top tourist destination in Africa due to its vast wildlife and rich cultural diversification. The renewable sector has also seen Kenya being ranked among the top renewable energy nations in the world, due to its expansion of geothermal activities and tapping of wind and solar energy. Infrastructure and real estate construction have also made the country a hub for big infrastructural projects as it races against time to meet its 2030 vision dream of making the country a middle-income nation. While Kenya’s aspirations continue growing, it's also experiencing major drawbacks in different sectors by losing major economic opportunities to its neighbouring countries, with Tanzania being the country at the centre stage. Kenya has been an entry point to East Africa in the logistics space by relying on the port of Mombasa. The Port of Mombasa has experienced a decline in cargo to other East African countries. This has been attributed to competition from Tanzania’s port of Dar es Salaam due to its cheaper costs and faster clearing of goods at the port, which has attracted both importers and exporters to rely on the port. Kenya greatly relies on tourism as one of the major sectors that contributes to its GDP. However, its tourism stakes are declining while Tanzania gains from it. The new taxation policies that have also targeted the tourism industry in the country have led to an increase in entry prices to the national parks and game reserves. With Tanzania offering the same ecosystem, tourists who had planned to visit Kenya have cancelled their visit and bookings and have opted for the cheaper tourist destinations in Tanzania. This has resulted in regional economic shifts with countries such as Uganda, Burundi, Rwanda, and the Democratic Republic of Congo refocusing their business from Kenya to Tanzania. The efficiency of infrastructural capabilities in logistics in Tanzania has made Tanzania a new economic hub in the East Africa region attracting a huge pool of investors. A new route between Tanzania and Burundi is in development through a standard gauge railway that will connect the two countries in a 7.6 billion project. Another ambitious project by Tanzania, expected to be completed by 2045, will rival Kenya as an economic hub for the East African Region. The Bagamoyo Port Project being carried out by China and Oman at an estimated cost of $11 billion, will make the port the largest port in Africa, capable of handling more than 20 million containers annually. The construction of the crude oil pipeline between Uganda and Tanzania adds to the economic woes that Kenya is currently facing. The current economic policies in Kenya, have pushed a chunk of investors from the country. The loss of business by Kenya to Tanzania and other regional sectors will affect different sectors in the country. For Kenya to regain trust as a leader and a giant economic hub in various sectors in the East Africa Region, it will have to re-evaluate its strategic investments, and policy reforms, focusing on achieving efficiency and competitive advantage over other African countries.
ABOUT 2 MONTHS AGO