Kenya-UK trade activities suffer glitches due to new policies

Workers from Naivasha based Van Den Berg prepares roses for export ahead of Valentine. [Photo: Antony Gitonga]

Trade between Kenya and the United Kingdom has been declining for a decade because of a ban on local horticultural products, a report has said.

According to the report by the Export Promotion Council and the UK’s Department of International Development (DfID), exports to the UK started to decline in 2008 after the European Union reduced the levels of a pesticide residue that is legally tolerated in food exports referred to as ‘maximum residual levels’.

The decline, the report says, has also been as a result of the UK gradually finding other markets.

A Kenyan shipment was intercepted for violating the new standards and this led to the ban on Kenyan products to the EU. The country was given until 2014 to put its house in order. “Despite meeting EU requirements, horticulture exports of beans continue to fall (over 40 per cent between 2012-2016),” says the report.

During the period under review, Britain started sourcing flowers from Ethiopia and Columbia and getting coffee from Cote d’Ivoire.

Between 2000 and 2010, Kenyan flower exports had been growing by 12 per cent annually to 120,000 tonnes, but over the past few years, exports have fallen back to a growth of less than two per cent as Ethiopian flowers benefit from massive subsidies and lower production costs.

Geopolitical changes

Ethiopia has become a major force in global floriculture in the past two decades, with its flower exports currently focused on Europe, making it Africa’s second-biggest producer after Kenya and fourth worldwide.

Kenya-UK trade relations have also been affected by geopolitical changes since the Mwai Kibaki regime opted to cooperate more with China, a policy that has continued under President Uhuru Kenyatta. “There has been a constant decrease in the share of UK in Kenyan imports, from almost 10 per cent in 2001 to less than three per cent by 2014. This suggests that Kenya is diversifying by increasingly trading with other countries while continuously losing export markets with the UK,” says the report. However, due to escalation of global trade wars and the decision by the UK to leave the EU, Kenya is reaching out to its former colonial master to boost exports.

“We must ensure our trade negotiation is strengthened and we have support from the UK government to support that council,” Trade Principal Secretary Chris Kiptoo said during the release of the report in Nairobi last weekend.

Surprisingly, exportation of services to the UK has increased 3.6 times in value terms between 2001 and 2012.

Transportation and travel services make up the largest share of exports (almost 86 per cent of the total) of services to the UK followed by insurance and financial and government services respectively.

“Our strength is trade in services and from the latest figures, I have seen that we have a surplus of $4 billion (Sh400 billion). However, trade in goods we exported was less than we imported last year. Imports were $17 billion (Sh1.7 trillion) and exports were about $6 billion (Sh600 billion), leaving us with a deficit of $11 billion (Sh1.1 trillion),” said Dr Kiptoo.

The PS said the country wanted to increase exports and would start a new strategy to take advantage of the African Growth and Opportunity Act to improve trade to traditional markets in the United States.

“During the Trade Week, we are going to launch our second AGOA national strategy. We want to see how to utilise the remaining seven years,” he said.