Kenya and India are in advanced talks for a loan facility of Sh32.2 billion (USD 250 million) to enhance trade between the two nations, with a significant focus on boosting Kenya’s agriculture sector through value addition. The announcement came from Cabinet Secretary for Investment, Trade, and Industry, Salim Mvurya, during a press conference where he outlined the details of this potential deal and its broader implications for Kenya’s economy.
The loan discussions, according to Mvurya, are centered on expanding the trade and investment partnerships between Kenya and India. Over the past three years, trade between the two nations has seen considerable growth, with Kenya’s exports to India increasing by 50%. Mvurya emphasized that this loan is crucial in sustaining that growth by promoting initiatives that focus on agricultural transformation and industrialization.
Funding County Aggregation and Industrial Parks (CAIPs)
If the loan agreement is finalized, Sh12.9 billion (USD 100 million) of the total Sh32.2 billion will be allocated to support County Aggregation and Industrial Parks (CAIPs). These parks are designed to foster agro-industrial investments and enhance the competitiveness of the agriculture sector. The CAIPs will provide centralized facilities for the aggregation and processing of agricultural products, making them more competitive in both domestic and international markets.
“The loan facility will significantly boost the agriculture sector through value addition, a crucial area for Kenya’s economic growth,” said CS Mvurya. He highlighted that the primary aim of CAIPs is to promote manufacturing in the agricultural sector, attract agro-industrial investments, and ensure that Kenya’s agricultural products are well-positioned in the global marketplace.
The CS acknowledged that Kenya is still in the negotiation phase with India, but he expressed optimism about reaching an agreement soon. “As of now, it is still a discussion, but we are hopeful that it will go through soon,” Mvurya added.
Support for Micro, Small, and Medium Enterprises (MSMEs)
India has also extended another loan facility to Kenya worth Sh1.9 billion (USD 15 million), specifically aimed at supporting Kenya’s Micro, Small, and Medium Enterprises (MSMEs). This move is in line with Kenya’s broader strategy to promote the growth of MSMEs, which play a pivotal role in job creation and economic growth.
Mvurya noted that businesses involved in importing machinery, equipment, and raw materials from India would be given priority under this arrangement, creating more opportunities for local enterprises to expand their operations and enhance their productivity.
“India remains a critical partner in our development agenda, and we look forward to further deepening our trade and investment ties through this loan facility,” Mvurya stated. The loan is expected to unlock more opportunities for Kenya’s agricultural value chains and strengthen its position in the regional market.
Formation of Joint Trade Committee
In addition to the loan discussions, Kenya and India have agreed to form a Joint Trade Committee that will spearhead efforts to boost trade and investment relations between the two countries. This committee will focus on identifying and executing projects that can further strengthen bilateral cooperation. Mvurya announced that the first meeting of this committee will take place in two weeks.
“We want to assure India that we are excited about the deal and are committed to further strengthening our relations,” said Mvurya. He pointed out that the recent surge in exports to India reflects the potential that exists between the two economies and noted that India remains a key market for Kenya.
Strengthening Bilateral Relations
Indian High Commissioner to Kenya, Namgya Khampa, reaffirmed India’s commitment to strengthening its trade relationship with Kenya. Speaking at the press conference, Khampa emphasized that India is keen to identify more areas of collaboration that will benefit both countries.
“We are committed to stepping up our engagement with Kenya and finding projects that can further strengthen our partnership. We look forward to receiving guidance from the Joint Trade Committee on how best we can grow trade and investments,” Khampa stated.
With the potential Sh32.2 billion loan facility and the establishment of the Joint Trade Committee, the relationship between Kenya and India is set to deepen. The move could play a crucial role in positioning Kenya as a key player in regional trade, while simultaneously boosting the agricultural and industrial sectors through value addition and manufacturing. If successful, the loan agreement will represent a significant step forward in Kenya’s efforts to modernize its agricultural practices and enhance its competitiveness on the global stage.
