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 Kamar Nor Aini Bt Kamarul Zaman
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 Reuters, Africa
 Kenya oil firm expands ahead of customs union

23/04/2008 (Reuters, Africa), Nairobi - Kenya's leading edible oils processer Bidco is increasing production capacity at a cost of $10 million ahead of the Common Market for Eastern and Southern Africa's customs integration, its boss said on Wednesday.

A customs union for the 19-member COMESA trade bloc -- Africa's biggest -- comes into effect in December to enhance trade across the borders of some of the world's poorest nations.

The firm has already taken delivery of equipment, imported from Belgium, and installation is going on.

"We are putting in roughly $10 million," managing director Vimal Shah told Reuters at the firm's plant in Thika town, 40 kilometres (25 miles) from Nairobi.

The firm, which plans to list locally and internationally at an unspecified future date, lost 30 percent sales when Kenya's disputed December poll sparked violence and paralysed parts of the east African nation.

"We took this decision in February in the midst of the (Kenya) crisis. We believe in Africa and COMESA is a big market," he said.

Once complete, the project will increase the oil processing plant capacity by 400 tonnes per day. It will further add 200 tonnes per day capacity to the firm's soap production line.

Shah said this will help Bidco produce enough output for sale across the expanded market.

The company has procesing plants in Tanzania and Uganda, while its goods are also distributed in Rwanda.

Another regional body, the East African Community, is also introducing a customs union in December 2009 to unify the five markets of Uganda, Rwanda, Burundi, Tanzania and Kenya.

Shah said regional integration alone was not enough to develop the continent. "Africa must be able to process all our products within Africa. Our policy should be -- from the soil to the frying pan," he said.

Some analysts have called for the continent to engage in agribusiness as opposed to agriculture.

Kenya's horticulture industry, which exports directly to Europe, is often cited as an example of the increased revenues farmers can reap from local produce processing.

Bidco has a 5,000 hectares oil palm plantation in Uganda that Shah said is close to maturity. It will substitute all palm oil imports for the Uganda plant.

In Kenya, Bidco runs a seed crushing plant in the country's west, where they work with 5,000 farmers. It guarantees to buy all their sunflower and soya beans produce.

On Kenya's rising inflation, Shah said prices had risen internationally, thus pushing firms like his to pass on the costs to consumers.

But he added that Africa can seize the opportunity to earn more for agricultural commodities by adopting modern scientific methods of farming. "Ultimately, the consumer is the one who pays. But is is also a serious opportunity for farmers,if we can turn Africa from a consuming to a producing continent," he said.



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