Kenya’s exports to EAC stagnate despite opening up of borders

 

Kenya’s value of exports to the East African Community (EAC) is growing at a slower pace compared to the rest of the world.

Data for the past 12 months of trading shows compared to 2009, Kenya’s exports to EAC member states has only grown by eight per cent, way below the country’s exports to other destinations.

Between 2009 and last year, Kenya’s value of exports to the rest of Africa has grown by 33 per cent.

During this period, exports to the rest of the world have soared by 50 per cent.

This makes Kenya-EAC trade almost flat.

According to Barclays Africa Head of Research and Chief Economist Jeff Gable, a lot of opportunities remain unexploited in the region since July 2010’s opening up of EAC borders.

“Opening up EAC was to provide more trade opportunities within the region and for economies of scale. But since 2009, Kenya’s exports to EAC are not even up 10 per cent,” said Mr Gable.

He said the region is vibrant and has many opportunities that are yet to be exploited, especially in the manufacturing sector.

Mr Gable said Kenya stands to benefit more if it can improve its manufacturing sector.

Treated with suspicion

Data collected by Kenya National Bureau of Statistics shows that last year, the country’s export to EAC countries was worth Sh126.8 billion.

This was a marginal growth of 0.78 per cent from Sh125.8 billion in 2014.

Since 2008, when it was at Sh131.4 billion, it only touched the high of Sh134.9 billion in 2012.

Last year, exports to Uganda - Kenya’s largest export market in EAC - recovered slightly from a five-year low of Sh60.7 billion to Sh68.7 billion.

This was even as exports to Tanzania hit a five-year low of Sh33.7 billion.

However, exports to the rest of the world have been growing.

Exports to Europe stood at Sh145.9 billion, up by five per cent from 2014.

Those to America alone hit Sh50.6 billion, being higher by 83 per cent when compared to 2011 when it was only Sh27.6 billion.

According to Mr Gable, the 2009 decision to allow for free movement of goods and people may have treated each other with skepticism and suspicion, leading to the slow pace of growth.

He said while a palpable sense of excitement was sweeping across Kenyan business community at the time, Uganda seemed unsure.

“Visiting Uganda at the time gave a feeling that the business people didn’t want it to happen. They had a feeling that Kenyans would go and take over. To some extent, that narrative has probably played out,” said Mr Gable.

The region also faces a number of challenges, including different currencies, different tax policies and production of similar goods.

This has hindered the development of trade in the region.