Take full advantage of new trade agreement with UK

Trade Cabinet Secretary Betty Maina (Kenya) and International Trade Minister Ranil Jayawardena (UK) sign trade deal in London in December 2020.

Lawmakers in Kenya and the United Kingdom have ratified the Economic Partnership Agreement (EPA) between the two countries.

The UK is Kenya’s fifth-largest export market, taking up an average of Sh39 billion worth of goods over the past five years. The EPA could expand this value several times over in the next few years, creating millions of jobs and giving more Kenyan firms an international footprint.

For this to happen, however, Kenyan policymakers and the private sector need to have a comprehensive and cohesive trade strategy for engaging with London. Other trade pacts signed in the past have fallen short of delivering what they promised, and the UK-Kenya EPA should not suffer the same fate.

For example in 2000, Kenya was one of the first African countries to qualify for United States African Growth and Opportunities Act (Agoa). By 2003 Kenyan exports to the US had more than doubled. In the past years, however, export volumes have plateaued and Kenyan exporters are barely utilising 10 product lines out of a range of 6,500 available under Agoa.

The government says the UK-Kenya EPA could boost Kenyan exports to London by up to Sh1.2 trillion by 2025. This is an ambitious target that will require an overhaul of the country’s manufacturing and agricultural sectors. Kenyan manufacturers and agro-processors face significant hurdles which has kept the cost of doing business high and prohibitive for growth or new entrants.

While a lot of work has gone into building rail and road infrastructure, this is not enough and there is need to enhance capacity and service delivery in several other areas. In the first place, the cost of energy in Kenya remains high for manufacturers despite the country adding more than 600MW of new capacity to the national grid. There is also need to build local knowledge and skills to adapt to the changing global demands.

Micro, medium and small enterprises should also not be left behind. Following the Covid-19 pandemic, Kenyan entrepreneurs struggling to rebuild their businesses are finding it hard to get financing from commercial lenders.

The UK market is a massive opportunity and it has space for both large and small exporters. The government and the private sector associations that routinely lobby for more trade opportunities should ensure Kenyans reap maximum benefits from the new deal.