Germany follows in US footsteps to set up regional hub in Kenya

Kenya is positioning itself as a regional economic hub for not only US-based firms but also European nations eyeing to set up their African headquarters.

Industrialization and Trade Cabinet Secretary Betty Maina in a recent media interview with a local newspaper revealed that the government is negotiating a deal that will lay the ground for a manufacturing base for US firms with a key focus on tech factories.

“With all the changes globally, the US firms are looking at identifying new production bases for their products. They are diversifying out of their traditional production places in the Far East, particularly China. This gives us an opportunity as a country to attract these new investments. That is why it [proposed deal] is called trade and investment partnership that is informed by the need for US firms to diversify their production bases and for us to find new products [for export].” Said Ms Maina.

A German-based outdoor power tools manufacturer The Stihl Group is the latest entry into the Kenyan market.

The firm has chosen Nairobi as its first choice to establish its second subsidiary in Africa.

This new subsidiary dubbed Stihl East Africa will be its Eastern Africa hub servicing countries within the East African region.

According to Stihl East Africa Chief Executive Officer Francois Marais says Kenya is the gateway into Eastern and Central Africa and its Infrastructure allows for entry into these markets.

“Our plan is to distribute our products from Kenya into the traditional East African Market as well as Ethiopia and the Horn of Africa countries. We are also looking at the new partner state in EAC the DRC and we will have representatives on the ground in all these countries ultimately looking after our customers via the dealership model,” comments Marais.

The firm established its first Africa sales subsidiary in 1996 in South Africa,now plans to officially set up its second office in Kenya later this month.

 “Kenya is a stable and vibrant economy with a lot of growth potential, furthermore the local talent in Kenya has really allowed us to expand our business through their expertise and local insight,” he noted.

The STIHL Group develops, manufactures, and distributes outdoor power equipment for forestry, agriculture, landscaping, construction and cleaning customised for professionals and discerning consumers.

The firm is targeting the booming Agriculture and construction sectors in the region, as governments continue to increase investments in these areas.

“Our approach in the East Africans market is a little bit different from other areas of the world because of the specific needs that we have identified in East Africa. We are very well known for our forestry and consumer products but Stihl has also developed a huge range of agricultural products specifically in the emerging market. Our focus in East Africa will be to establish this product range throughout the region to bring mechanisation to farmers that haven’t been able to afford it in the past,” he added.

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Agriculture is a sector that is central to the EAC economy, contributing between 24 and 44 per cent of GDP in partner states, while also accounting for the livelihood of about 80 per cent of the region’s population.

The combined East African Community (EAC) has 300 million people following the entry of the Democratic Republic of Congo which has over 90 million people. The bloc also has a combined Gross Domestic Product (GDP) of $250 billion.

In addition to chain saws, they also develop other hand-held outdoor power tools that include cut-off machines, brush-cutters, hedge trimmers, grass trimmers and earth augers among others.

“This is a new strategic direction, we guarantee a broader and diverse product portfolio, enhanced access through a well-supported robust dealership network and the DNA of STIHL which is quality that delivers work and product safety in all its applications,” said Stihl EA Sales Manager John Wachira.