Travel restrictions big drawback for German firms in Kenya: Survey

Maren Diale-Schellschmidt, Delegate of German Industry for Eastern Africa. [Courtesy]

Eight out of 10 German businesses in Kenya have cited travel restrictions as the major negative effect of the Covid-19 pandemic.

Due to this, 70 per cent of them said depressed demand was the greatest risks to their economic development, according to a survey by the Delegation of German Industry and Commerce for Eastern Africa (AHK), a business lobby.

The Covid-19 pandemic has reduced economic activities owing to the containment measures that have been implemented by various governments to curb the spread of the disease.

Nonetheless, a good number of the businesses, 45 per cent, were satisfied with their current situation even as a third described their position as good.

The survey was conducted in the first weeks of April.

Maren Diale-Schellschmidt, a delegate of the lobby, said the numbers showed how the German businesses in Kenya are set for successful operation.

“German companies are here to stay and even grow their business further. What is especially encouraging is that we notice less mention of shortage of skilled workers as a hindering factor,” said Diale-Schellschmidt.

German Ambassador to Kenya Annett Guenther said the recent German investments in pharmaceutical, manufacturing, insurance and after-sale service centres are signs of increased interest in Kenya.

[Graphics: The Standard]

The interest, she added, was despite the strains brought on businesses by the coronavirus pandemic.

“The German government accompanies these efforts by German businesses with a co-operation that aims at improving the business environment in Kenya as well as the employability of Kenyan youths in TVET (technical and vocational education and training) centres of excellence,” Ms Guenther said.

Allianz, an insurer, is the latest German company to enter the Kenyan market after it completed the purchase of a 66 per cent stake in Jubilee General Insurance Kenya from the parent company Jubilee Holdings, which will retain a 34 per cent stake.

In the survey, 36 per cent of the firms cited cancellation of orders as a concern while 33 per cent listed problems in the supply chain.

Full recovery

Most of the companies do not expect the Kenyan economy to return to the pre-Covid-19 level until next year. About 49 per cent said they expect the recovery to happen in 2022 and 36 per cent later.

Only nine per cent expect the economy to recover in 2021, and six per cent do not expect a full recovery at all.

This week, the International Monetary Fund (IMF) reviewed downwards Kenya’s economic outlook to 6.3 per cent from 7.6 per cent, citing the continuing effects of the pandemic.

“IMF staff now project the economy to expand by 6.3 per cent in 2021. The coronavirus shock has unfortunately also reversed some of the poverty reduction gains Kenya achieved in recent years and debt remains elevated,” said the leader of the IMF delegation to Kenya, Mary Goodman.