Kenya's flower industry blooms

Kenya's horticultural sector is experiencing a significant boom, with the Kenya National Bureau of Statistics reporting a 12% increase in earnings from horticultural exports to Ksh101.51 billion in 2016. Flower sales alone contributed to a remarkable 70% of that total, reflecting the country's strength in the floral market. Marcel Youngore, a research analyst at Zimele Asset Managers, shed light on the market movements and investment trends in a recent CNBC Africa interview. The interview highlighted key themes such as the flight of pension schemes to government treasuries amidst market challenges and the positive outlook for the horticulture industry in Kenya. Let's delve into the insights shared by Youngore during the discussion. In the interview, Youngore discussed the shift of pension schemes towards government securities as a safe haven amid a subdued equities market performance. He explained that during bear markets, fund managers prioritize returns for the trustees overseeing pensions. As a result, the movement of funds from stocks to government securities becomes a strategic decision to maximize short-term gains, given the favorable interest rates offered by the government. The transition to government securities by both retail and institutional investors has been notable, impacting the equities market but providing a potential rally opportunity as companies prepare for the earnings season in March and April. Moreover, Youngore projected a positive trajectory for the NSE (Nairobi Securities Exchange) in late 2017 and early 2018, anticipating increased investor interest post-election period as stability prevails. Despite the 6% drop in NSE shares in 2017, the market's resilience is expected to improve as investors capitalize on undervalued stocks. Regarding horticultural exports, Youngore underscored the significance of the sector's growth, particularly noting the massive contribution of flower sales to Kenya's export earnings. With exports amounting to approximately Ksh101 billion, Kenya's position as a key player in the horticultural market has been reinforced. The focus on securing agreements such as the EPA (Economic Partnership Agreement) highlights the government's commitment to nurturing this lucrative industry. While challenges exist in finalizing agreements with East African partners like Tanzania, Kenya's leadership in horticultural exports underscores the importance of such trade deals for the country's economic growth. As Kenya continues to harness its competitive advantage in the horticulture sector, the prospects for sustained growth remain promising. The robust performance of flower sales and the strategic investments in government securities by pension schemes reflect a dynamic market environment with opportunities for investors to capitalize on emerging trends. With a positive outlook for the NSE and the horticultural industry, Kenya's economic landscape is poised for continued expansion and diversification.