Bid to boost trade between Ethiopia, Kenya faces hurdles

Foreign Affairs CAS Ababu Namwamba and Ethiopian Ambassador Meles Alem during celebrations to mark 55 years of trade ties at the embassy on June 26. PHOTO | FRANCIS NDERITU | NMG

What you need to know:

  • Long bureaucratic procedures, bans and sanctions has slowed bilateral trade.

Kenya and Ethiopia are still struggling to conduct robust trade between them despite penning a number of bilateral agreements and instituting several trade-friendly measures.

This is according to Foreign Affairs Chief Administrative Secretary Ababu Namwamba, who singled out non-tariff barriers for the current subdued bilateral trade. The barriers include long bureaucratic procedures, bans and sanctions.

Another hindrance cited is a strict foreign currency regulatory regime by the National Bank of Ethiopia, which cuts across all the foreign nationals, especially those doing small enterprises.

Mr Namwamba was speaking during the commemoration of the Ethiopia-Kenya 55-year relationship in Nairobi midweek.

In 2012, the CAS said, Kenya and Ethiopia signed an agreement for preferential access aimed at fostering economic co-operation. The deal placed emphasis on trade, investment, infrastructure, food security and sustainable livelihoods.

The two countries established the Joint Ministerial Commission (JMC) tasked with driving bilateral ties, in addition to more than 30 agreements and MoUs spanning nearly all economic, social and political spheres including security, defence and trade, movement of people, transport, and culture.

“Despite all these very impressive agreements and JMC, regrettably the bilateral trade between our two countries remains quite low,” said Mr Namwamba.

Ethiopian Ambassador to Kenya Meles Alem said: “Ethiopia and Kenya complement each other. As we celebrate 55 years of strategic partnership, this is the beginning of more to come. We are not rivals. Maybe the only thing we compete each other on is athletics,” he said.

“Commemoration of the 55-year relationship is not only about reflections but reaffirming our commitment to further deepen the relations we have. These two countries have excellent diplomatic relations which are a vehicle for a strong economic bond,” he said.

He added that the economic dividends between Kenyans and Ethiopians, were insignificant “but commemoration of 55 years is an affirmation of the commitment to further deepen our traditional ties and above all make our economic and business ties stronger”.

Mr Alem said his focus will not only be improving economic ties between the two countries, but also the social relationship among Kenyans and Ethiopians as well as boosting the relationship between Kenya’s institutions of higher learning with their Ethiopian counterparts.

The recent entry of Equity Bank into the Ethiopian market is seen as a boost for Kenyans intending to venture into the Ethiopian market. KCB was the first Kenyan bank to open a representative office in Addis Ababa four years ago.

“I see this as a breakthrough, starting to clear the way in getting rid of some of the non-tariff barriers that have limited full exploitation of the trade potential between our two countries. We will continue to pursue ways of boosting trade figures and to narrow the existing gaps,” said Mr Namwamba.

Current reforms and liberalisation in Ethiopia, and Kenya’s adoption of an open-door policy for Africans, are also expected to further enhance the relationship, he said.

Kenya, Ethiopia and South Sudan are jointly implementing Lamu Port South Sudan Ethiopia Transport corridor project launched in 2012. The project seeks to link the three countries through infrastructure.

“Plans are underway to launch operations of the Port of Lamu during the next visit by Prime Minister Abiy Ahmed in Kenya in the next few months,” said Mr Namwamba.