Reprieve for Kenyan firms as Uhuru averts fallout with neighbours

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President Uhuru Kenyatta flew to Tanzania on Friday on a two-day private visit at the invitation of his counterpart John Magufuli. Kenyatta’s visit followed explosive remarks by a Kenyan lawmaker about Tanzania’s running businesses in Kenya.

Charles Njagua, the MP for Starehe constituency in the capital Nairobi and a member of Kenyatta’s ruling Jubilee party was heard in a video shared online addressing a crowd and threatening to kick out of the country foreign nationals running small businesses in city markets. The lawmaker singled out traders from Tanzania, Uganda and China, accusing them of giving Kenyan traders unfair competition.

Diffusing tensions
The remarks by Njagua kicked up a storm in Tanzania, with authorities there summoning Kenyan envoy to the country to explain the lawmaker’s remarks. The Kenyan government distanced itself from Njagua’s remarks, but President Kenyatta still appeared to feel that more needed to be done to diffuse tensions between Kenyan and Tanzania. In Tanzania, Kenyatta spoke of the importance of a united East Africa community and his host Magufuli praised the action the Kenyan government took against Njagua following his xenophobic remarks. MP Njagua was arrested as he was leaving parliament buildings and kept in police custody for several days.

Tanzania is a key market for Kenyan businesses, which explains why Kenyatta swiftly tried to normalize the relationship between the countries after Njagua’s divisive comments. Kenyans operate more than 500 companies in Tanzania. Some of Kenya’s major companies with footprints in Tanzania include lenders Equity Bank (EQTY) and Kenyan Commercial Bank (KCB), and paints manufacturer Crown Paints (BERG), beer maker East African Breweries (EABL) and investment firm Centum (ICDC). Equity is expanding its operations in Tanzania with the acquisition of banking businesses from British holding company Atlas Mara Limited in the country.

Uganda and South Sudan setting up dry ports in Kenya
Before Kenyatta flew to Tanzania, he hosted his South Sudan counterpart Salva Kiir in Nairobi and announced that the government of South Sudan will construct an inland port at the Naivasha special economic zone called Naivasha Industrial Park. A number of large Kenyan companies, including Equity and KCB, operate in South Sudan. Many more like Crown Paints also plan to expand into the country.

In March, the Kenyan governments also announced that Uganda will build a dry port at the Naivasha Industrial Park. Uganda and South Sudan use Kenya’s coastal port of Mombasa to receive the goods they import from overseas. The Naivasha inland ports are expected to make it easier for Uganda and South Sudan to collect their imports that flow through Kenya.

Equity shares rose 0.13% on Friday to close at Ksh40. East African Breweries shares jumped 0.13% on Friday to close at Ksh195.25. KCB shares fell 0.37% on Friday to close at Ksh40, and Centum shares declined 0.92% on Friday to close at Ksh32.40.

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