Enterprise Ireland in East Africa

With East Africa consistently positioned as a significant growth sector globally, we chatted with Douglas Injugu a trade consultant based in Kenya, about what value he sees in the partnerships formed by Irish and East African companies.

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Q: What are some of the most significant opportunities for Irish companies in East Africa, and what are the most critical growth sectors?

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A: The most significant opportunities are around technology, aviation and agriculture. Agriculture and technology are currently the leading and biggest growth sectors.

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For example, Agriculture is the largest sector in the Kenyan economy, contributing to almost half of its GDP; key areas of opportunities in this sector include the availability of quality inputs (animal feeds, fertilizer, seeds, pesticides, etc) and understanding modern methods of ploughing and farming equipment.

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In the technology field, Kenya has invested heavily in the ICT sector, with over 9000km of terrestrial fibre optic coverage and six submarine fibre optic cables, making Kenya the leader in connectivity in East Africa. Mobile phone penetration here is at over 80%. This sector's opportunities include Fintech solutions, digital infrastructure, digital skills and digital enterprise solutions. The country is ready for technological innovation. In Kenya, the use of financial technology has enhanced financial access to a high of 83.7% as of 2022. The quality and use of fintech products and services are seen to deepen over time. This is because of the impact MPESA has had on the sector over a long period. M-Pesa, Kenya's largest Innovation export. M-Pesa had become the largest mobile money network in the world. M-Pesa has managed to do annual revenues of $1 billion U.S. dollars, out of this $300 billion flowed through the platform last year, and it has an open API with 60,000 developers. It has over 50 million customers in 7 countries and is involved in over 70% of Kenyan transactions, out of which has over 5 million businesses and 59% of Kenya’s annual GDP flows through the mobile payment platform

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With Ireland being a global leader in the aviation sector, there are several opportunities in the region as well. Kenya has the second largest number of aircraft in Africa at 196, the first being South Africa (based on last available figures from 2019). Also, the Kenyan government has removed VAT on aircraft parts to promote the sector's growth.

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All the above sectors are poised to grow significantly as the government fully supports them, encouraging local and international investment in this market.

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Q: We understand that Aviation presents massive opportunities in the East African market, and there has been a lot of collaboration between Kenyan aviation and Irish companies. Can you provide some insights into this?

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A: Kenya is the aviation leader in the East, Central and West Africa. The country boasts over 158 aircrafts, excluding those with the national carrier; it has over 4 Aeronautical colleges and universities, over 10+ engineering universities and over 14+ TVET institutions offering technical courses. As of 2022, Kenya has over 12,500 flying licenses, according to the Kenya Civil Aviation Authority. It also has eight Class A airports with the capacity for an Aviation services Airport.

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The relationship between Irish and Kenyan aviation companies extends back to the 1980s, with many great partnerships between the national carrier and some of these companies. The Enterprise Ireland team has also brought members of the Kenya national airline carrier together with Ireland's leading aviation companies through visits to Ireland and during major events such as the Dubai Air Show.

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It is through these relationships that strong partnerships have been formed, increasing the number of Irish parts and aviation solutions provided to Kenya. Key growth areas are in MRO (maintenance, Repair and operation) Services, aircraft infotainment and aircraft management software.

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Q: Why do you think aviation companies in the region are open to working with Irish businesses?

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A: Ireland is known to be a global leader in aviation, with 9 of the top 10 lessors in Ireland and over 50% of the world's leased aircraft managed and owned in Ireland. Ireland is also home to Aviareto, which manages the international registry of mobile assets. African aviation companies find it easy to work with Irish companies because they share common goals and interests, laying the groundwork for fluid working relationships.

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Q: Can you share any stand-out partnerships in Aviation?

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A: In 2021, Inflight Dublin was awarded a three-year contract by Ethiopian Airlines, the largest African aircraft carrier. Up to that point, Inflight had been providing other services to Ethiopian Airlines, and the extension of this deal highlights the value that Ethiopian Airlines ascribes to its relationship with the Dublin-based company. You can read the full story HERE.

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Q: Beyond aviation, which is the next big market in Kenya and, subsequently, East Africa, where do you believe investment from Irish companies will have a positive impact?

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A: I would say technology. Kenya plans to Install 100,000km of high-speed fibre optic infrastructure to provide internet to all schools, government institutions/offices, Metro-cities, health facilities, rural businesses, homes and public spaces, providing a vast market opportunity for companies in the data and infrastructure space. Establishing cloud data centres in Kenya by major global players such as Oracle and AWS is paving the way for innovation.

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Other notable technology areas include:

1.????? Regional Submarine Cable Maintenance Depot is being sought to ensure adequate maintenance support for submarine cables serving the Africa Region

2.????? Development of a regional Smart ICT Hub- to provide faster IP exchange and data storage for the African region.

3.????? Kenya has the most significant number of banks in Africa, showcasing the opportunities available for Fintech solutions.

4.????? Kenya has a mobile penetration of over 80% of the population, an excellent opportunity for mobile-based solutions.

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Q: If you were to impart any advice to an Irish business looking to work with companies in East Africa, what would it be? Any tips for them?

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A: Patience.

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Companies who experience success in first-world nations often expect a similar result when exploring opportunities in Africa. Patience is vital when working in East Africa because there are nuances from culture to the nature of businesses, and it takes time to build trust. Companies in East Africa prefer to work with individuals they know and trust, which is critical to success.

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Some tips for partnering in Africa include:

1.????? Conduct market research: First, understand the needs and wants of the companies in the region.

2.????? Understand regulatory rules and frameworks. Being in the know will help the process of trading or conducting business in the region.

3.????? Build local partnerships: This is critical; when partnerships with local companies exist, they help navigate bureaucracies and offer access to established networks.

4.????? Local talent investment: Hiring individuals with local knowledge and expertise is always best.

5.????? Understand culture: African business models can differ significantly from a European setup, from business practices to communication styles.

6.????? Be adaptable: Companies must be willing to adapt their products for the local market to meet local preferences, payment methods and distribution channels.