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Kenya-UK trade deal heralds new era of sustainable growing market

Tea

Women sort tea leaves before weighing at Rwatheini tea buying centre in Nyeri County on October 19, 2020. 

Photo credit: Joseph Kanyi | Nation Media Group

What you need to know:

  • The Kenya-UK EPA heralds a new era of trade and development cooperation post-Brexit.
  • We are on the verge of a significant leap in economic and social prosperity, supported by increased export earnings and expanded FDI in our priority sectors.

After months of negotiations, Kenya and the United Kingdom have concluded a Strategic Economic Partnership Agreement that will support our exporters to expand their presence in the UK and European Union markets.

The Kenya-UK EPA heralds a new era of trade and development cooperation post-Brexit. Our neighbours stand to benefit, too, as the new framework replicates the East African Community EPA with the EU that facilitates free access of our exports to Europe without duty and quota restrictions.

The deal, signed on November 3, marks a significant step towards realising the vision and mutual benefits that President Uhuru Kenyatta and British Prime Minister Boris Johnson envisaged when they agreed on a long-term trade and economic partnership to cement our long-standing relations after the UK exits the EU on December 31.

Negotiators ensured that our framework is consistent with the EAC Customs Union and supports Africa’s quest for a continental economic community in which African countries will freely exchange goods and services as envisaged by the African Continental Free Trade Agreement (AfCFTA).

Comprehensive package

The Kenya-UK EPA will deliver a comprehensive package of benefits, including secure, long-term and predictable market access for EAC exports and enhanced privileges for agricultural goods, even if they pass through the 27 EU countries. Our farmers and business community, particularly agribusiness, such as flowers, tea, coffee and fresh produce, are assured of a sustainable growing market.

Moreover, the UK and other foreign investors have an opportunity to bring more foreign direct investment (FDI) into EAC, anchored on Kenya’s strategic position as the regional financial, technological innovation, and economic powerhouse. Investments in our key productive sectors — particularly agriculture, manufacturing and technology — boosting job opportunities for our youth and improve the growth of our economy.

We are on the verge of a significant leap in economic and social prosperity, supported by increased export earnings and expanded FDI in our priority sectors. The UK has assured us of their commitment to increasing their development cooperation to support the government’s “Big Four Agenda” projects and Kenya Vision 2030 development programmes, providing further stimulus for equitable socioeconomic transformation.

The UK is, by far, the largest foreign investor in Kenya. The value of British investment in Kenya was estimated at £2.7 billion (Sh385 billion) billion in 2017 with over 220 UK firms setting up house in the country.

Overall, the UK is one of the leading trading partners for Kenya outside the EAC. The two countries trade Sh70-90 billion worth of goods annually. Kenya exports to the UK cut flowers, fresh vegetables, tea, coffee and other products. In turn, it imports machinery, vehicles, pharmaceutical products, electrical and electronic equipment, beverages, textiles, paper and paper products from the UK.

Trade balance

We earn more from our exports to the UK than we spend on imports; so, the trade balance is in our favour. January to August figures show that, despite the impact of Covid-19 on international trade, Kenyan earned Sh34.9 billion from exports to the UK and spent Sh18.9 billion on imports from there. The net was Sh18.9 billion for Kenya.

Other important issues tackled in the deal include barriers to free trade flow and shared approaches to trade and investment, like the need for common rules of origin and broader acceptance of product standards. In the future rounds of trade talks, we will pursue discussions on investment, services and e-commerce, critical to enhancing value chains, as well as the need to deepen domestic reform and trade liberalisation.

The EPA is a great opportunity to build on these deep and mutually beneficial relations. Besides, for EAC, it will be our springboard for deepening market access to other developed markets in Europe, America and Asia.