OBG talks to Mark Simmonds, Former Parliamentary Undersecretary of State for Foreign & Commonwealth Affairs, British Foreign & Commonwealth Office

Mark Simmonds, Former Parliamentary Undersecretary of State for Foreign & Commonwealth Affairs, British Foreign & Commonwealth Office

Interview: Mark Simmonds

What opportunities exist for increased bilateral investment between Kenya and the UK?

MARK SIMMONDS: The UK government has identified oil and gas, along with the development of the Lamu Port South Sudan-Ethiopia Transport Corridor linking northern Kenya, South Sudan and Ethiopia, as two important high-value opportunities. In addition, financial services and ICT hold huge potential given Nairobi’s emerging role as a regional hub. Several of the UK’s large blue chip companies, including Standard Chartered, Barclays and Tullow Oil, already invest heavily in Kenya. The two countries share the same business language, legal framework, historical links and excellent people-to-people contacts, all of which constitute building blocks for further investment.

However, amongst some UK companies, there remains a view that Kenya is a difficult operating environment. To some degree this view is justifiable. A lack of basic infrastructure remains a challenge, and will continue to hamper increased trade volumes. In addition, inefficiencies surrounding the tax regime are frequently cited as a key area of concern for international investors.

The reality is, however, changing over time, and we are keen to work with Kenya to improve the overall business environment. Small and medium enterprises that have visited the country, and spoken to local companies, know that there are many commercially viable opportunities. We need to expand our partnership with Kenya, in order to advise them in the initial stages. For example, in December 2013 we arranged a UK-Kenya Trade Forum in London and, over the past few months, UK Trade & Investment has organised two trade missions to Kenya to help build connections.

What sort of challenges do markets in Africa face in boosting intra-regional trade and investment?

SIMMONDS: Poor infrastructure and high tariffs are the two major barriers to increasing regional integration. The UK can help to break down these barriers through organisations such as TradeMark East Africa, with support from the Department for International Development (DFID), working to simplify customs processes and break down other barriers to trade.

The UK also works at an international level to push forward World Trade Organisation negotiations, including the most recent deal in Bali centred around lowering the cost of trade. We also believe it is vital for the East African Community (EAC) to sign the Economic Partnership Agreement with the EU. This would put the EAC’s trade preferences on a more sustainable footing, supporting regional integration.

What role can the UK play in encouraging greater transparency in emerging market economies?

SIMMONDS: The UK can help African economies improve levels of public sector transparency by encouraging countries to sign up to initiatives such as the Open Government Partnership, which was launched in 2011 to provide an international platform for domestic reformers committed to making their governments more open, accountable and responsive to citizens. We also intend to support sector-specific initiatives such as the Extractive Industries Transparency Index.

How can economic growth be made more inclusive?

SIMMONDS: Kenya’s poorest communities regularly report that what they would like most of all is jobs and the opportunity to improve their lives. Promoting successful businesses would help drive growth, create jobs and raise revenues from taxation to finance public services. DFID is working to encourage investment in key sectors that create this kind of employment.

DFID has also highlighted the importance of institutions that encourage private investment and export growth: free and fair markets; sound macroeconomic management; clear and consistently applied policies, regulations and laws; secure property rights; and functioning commercial courts. Therefore, this framework will help to ensure that DFID’s programmes in Kenya can facilitate an improvement in the business climate.

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Cover of The Report: Kenya 2014

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