Notwithstanding the tragic September 2013 Westgate mall attack, Kenya has been one of the fastest improving economies of Africa. The country is credited with being the most improved African and sub-Saharan country with its Global Competitive Index ranking moving up 10 places for 2013.

The study, on behalf of the World Economic Forum, cited well-developed financial markets, increased innovative capacity due to increased R&D spending and better collaboration between the business sector and research institutes as key factors contributing to its improved competitiveness. Though its global ranking is low, Kenya showed a significant improvement in investor protection, which also contributed to its increased ranking.

Kenya consumed an estimated 40 kilotonnes of finished lubricants in 2012. However, over the last 10 years lubricant demand has fluctuated between 30 and 45 kt due to growth and contraction in key end-use segments, including mining, construction, manufacturing and transportation.

Due to the importance of the mining, construction and transportation sectors, commercial lubricants dominate overall lubricant consumption. Additionally, minibus taxis called matatus are widely used for transportation and are one of the leading end-users for lubricants in the commercial segment.

By contrast, low personal car and motorcycle ownership mean that consumer lubricants account for no more than 15 percent of overall consumption; however, this could change. The import duty on motorcycles is being reduced, which will help increase growth of the motorcycle population. Imported auto parts used in local assembly are exempted from a 25 percent import duty levied on fully built cars. As a result, Kenya is already home to three automotive assembly plants, with another two new plants being planned by Toyota (Japan) and Chery (China). Consequently, the passenger car population could also grow.

Over 85 percent of the lubricants consumed in Kenya are blended domestically because imported finished lubricants have a higher duty than base oil imports. Generally, lubricant quality is poor, and obsolete and counterfeit products dominate overall consumption. With the formation of Petroleum Institute of East Africa (PIEA), the Kenyan government is attempting to regulate the lubricants industry and tackle issues such as the dumping of substandard lubricants and counterfeiting. A Lubricants Task Force has been established by the PIEA to oversee and implement a framework for licensing, importing, blending, stocking, distribution and sales of lubricants. Moreover, all lubricant blending plants will have to be registered with the task force.

Assuming continuing political stability within the country, Kenyas lubricant market will see strong growth. At just under 9 percent CAGR, growth will be strongest in the commercial lubricants segment driven by continued growth in construction, mining and transportation. This will be abetted by Kenyas Vision 2030 development blueprint, which outlines priority development projects crucial to the countrys modernization. These projects include the expansion of electricity supply and distribution, construction of geothermal plants and wind farms, and large scale road construction.

Additionally, the governments of Kenya, Southern Sudan and Ethiopia have undertaken the building of a mega maritime port in Lamu, Kenya. Known as the LAPSSET (Lamu Port and Lamu Southern Sudan-Ethiopia Transport Corridor), this USD 29.2 billion project will open up significant opportunities to transport oil and gas from the East African region to the rest of the world in addition to being Kenyas second transport corridor. The project is expected to contribute an additional 3 percent to Kenyas GDP growth by 2020.

Further encouraging trade and investment in Kenya is a potential currency union between Kenya, Rwanda, Uganda, Burundi and Tanzania. A protocol for the East African Monetary Union was scheduled to be signed in November 2013. This union, if realized, will reduce transaction costs for regional trade, facilitate aid and lending to these countries and drive joint projects for the exploration and extraction of natural resources. Infrastructure projects and the currency union will enhance Kenyas position as East Africas gateway to the rest of the world, in addition to being a primary logistic hub for the region.

Klines Global Lubricants: Market Analysis and Assessment offers an assessment of global markets for finished lubricants and the suppliers that par-ticipate in them. Additionally, Klines soon-to-be published Opportunities in Lubricants: Africa Market Analysis will provide in-depth analysis of commercial automotive, consumer automotive, and industrial lubricant products, markets, and suppliers in Africa.