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Kenya Airways : Deal with Ghana a stepping stone to Ecowas market

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Nearly one year after Kenya signed a free trade pact with Ghana as part of what President Uhuru Kenyatta's administration calls "Africa-focused diplomacy", Nairobi-based firms are preparing

to make a major move to the West African nation.

The firms — in energy, construction, professional services, agriculture, manufacturing and tourism — are already seeing beyond Ghana into the wider regional market.

The hope is that they will be able to use the pact to sidestep some of the tariff and administrative barriers that have previously blocked their entry into the 350 million-people Economic Community of West African States (Ecowas).

"Ghana gives Kenya's businesses an opportunity to connect with a wider target audience, and introduce new products for international markets," the Kenya Private Sector Alliance (Kepsa) chief executive Carole Kariuki said.

As West Africa's second largest economy (after Nigeria), Kenya hopes to leverage on Ghana's wide access to the ECOWAS market to expand the horizons for its private firms.

Just like Kenya, the World Bank has consistently ranked Ghana as one of the top five destinations for doing business in Sub-Saharan Africa.

Kenyan firms have generally shunned Ecowas as a "difficult" market owing to the multiplicity of non-tariff regulatory barriers in the region.

Official trade statistics show that Kenyan firms exported goods worth Sh479 million to Ghana last year, a 24.2 per cent drop from the previous year. Imports from the West African nation increased to Sh369 million, up from Sh255 million in 2013.

Last year, Kenya which belongs to the East African Community signed a free trade agreement with Ghana at an African Union meeting in Addis Ababa.

The bilateral agreement enables the two nations to cooperate in key economic areas such as trade, energy and mineral exploitation as well as in agriculture and livestock development.

The pact also has components on cooperation in education, health, tourism and culture; science and technology; security and military; as well as foreign affairs, legal and judicial matters.

A visit to Nairobi by Ghanaian President John Dramani Mahama last December was designed to cement the agreement.

To test the waters, Kepsa has partnered with the Association of Ghana Industries and the Private Enterprise Foundation to arrange the first Kenya Trade Expo in Accrabetween November 2 and 4.

The trade fair is being organised jointly with the Ghanaian Government and Kenya's foreign affairs and international trade ministry.

The national carrier, Kenya Airways, has offered a 10 per cent discount on flight tickets to the Kenyan delegates flying to Ghana for the Trade Expo. Kenyan nationals do not require visa to travel to Ghana under the last year's treaty.

Crane Consulting House, Nairobi-based firm consultancy which assists firms to enter new African markets, says Kenyan entities should exploit the trade fair to make first contacts in the industries covered by the bilateral treaty.

"In agriculture, Ghana imports 90 per cent of its meat products and has a near total dependence on bulk milk imports," says managing director of Crane Consulting House David Karanja.

Kenya is a key exporter of long-life milk in Eastern Africa. Mr Karanja said the Kenyan firms must also plan to invest in hatcheries and processing plants for poultry segment; processing and value addition of produce, export of inputs and development of storage facilities in Ghana.

"In tourism, Kenya's seasoned hotel owners and tourism experts can partner with the Ghanaians who own the land and know the country, to develop this tourism industry," said Mr Karanja.

In Ghana, the consultancy says, tourists spend at least Sh18,900 ($180) a day for top-end accommodation facilities and another Sh15,750 per day to enjoy their stay in Ghana.

Similarly, residential property prices are higher than in Kenya, ranging between Sh73,500 and Sh78,750 per square metre with average retail rent between Sh6,300 and Sh6,825 per square metre while the average price for an office space spread from Sh3,675 to Sh4,200 per square metre.

Unlike in Kenya where property owners mainly collect rent on monthly basis, the tradition in Ghana is full payment for a period of one to three years.

Kenyans also have the opportunity make inroads into ICT, hospitality training, healthcare and manufacturing where they enjoy competitive advantage over the West African rivals.