German company plans 500 million shilling office in Nairobi

The German company Stihl Group is investing 500 million shillings to open an office in Nairobi in view of new business opportunities in Kenya and the East African region.

The company, which manufactures agricultural and construction equipment and boasts of products such as harvesters, tillers and sprayers, says the investment will be used to sublet warehouses as well as pay for offices in Kenya.

The money will also be used to ship equipment into the country, train dealers and pay the salaries of nearly 30 staff they plan to work with in East Africa.

“We have invested 500 million shillings to establish ourselves in the Kenyan market as a regional hub for East Africa. The investment is spread among other things on warehouses, training centers and staff recruitment,” Stihl East Africa Managing Director Francois Marais said on Wednesday.

The company is banking on Kenya’s vast infrastructure, booming construction and agriculture sectors as a launching pad for its products to neighboring countries.

Kenya is the largest economy in the region, benefiting from an extensive rail and road network that continues to attract multinational companies seeking to tap into the East and Central African market.

The company sees great potential for growth in the East African Community, including the Democratic Republic of Congo, which joined the East African bloc earlier this year. In Uganda and Tanzania Stihl has importers while in Rwanda it works with dealers. The company also plans to have footprints in Ethiopia, Eritrea and South Sudan in due course.

“At Stihl, we believe that the threshold for mechanization should be lower than that of a farmer who simply buys a tractor and a plow. And as a result, we have developed a range of products that bring mechanization to farmers for less than $1,000 (119,950 shillings),” Marais said.

The company is looking to leverage the huge contribution from agriculture and other sectors including construction and high population of the combined economies of the East African Community (EAC) to boost its sales.

Agriculture contributes between 24 percent and 44 percent of gross domestic product in the EAC Partner States and is the source of income for about 80 percent of the region’s population.

East Africa is also undertaking major infrastructure projects, including building roads and railways and upgrading ports, providing a ready market for Stihl’s products.

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