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Pact to boost Kenya revenue by Sh600b

By Frankline Sunday | Feb 26th 2021 | 2 min read
By Frankline Sunday | February 26th 2021


Workers at the Shona Garments factory situated at Export Processing Zone in Athi River , makes face masks ordered by the government following the covid19 outbreak. The government has warned people to be aware of the quality of face masks they are using. [Peterson Githaiga, Standard]


Kenya stands to gain Sh600 billion in real income over the next 15 years if the Africa Continental Free Trade Area (AfCFTA) is fully implemented. 

According to a new World Bank study, AfCFTA could also help lift 4.4 million Kenyans out of poverty, with the country emerging among the top beneficiaries of the ambitious trade pact.

“Under the AfCFTA scenario, real income would increase by seven per cent by 2035, relative to the baseline for the Africa region - a sizable gain,” senior World Bank economists Caroline Freund and Albert Zeufack said in the study.

Unevenly distributed

In monetary terms, the gains represent around $445 billion (Sh45 trillion) in Africa by 2035, while the rest of the world is expected to record an increase of $76 billion (Sh7.6 trillion) in real income.

“The gains are unevenly distributed across the Africa region,” explains the study.

“At the very high end are Côte d’Ivoire with gains of 13 per cent and Zimbabwe with gains of 12 per cent, followed by Kenya, Namibia, Democratic Republic of Congo and Tanzania at more than 10 per cent.”

Conceptualised in 2012, AfCFTA officially kicked off last January 1, with the 55 member states expected to begin trading under the agreement.  

The trade deal is expected to be the most significant achievement in intra-African trade, creating a market with a combined gross domestic product of Sh250 trillion and more than 1.2 billion consumers on the continent.

World Bank further says implementation of the trade facilitation agreement guiding AfCFTA will reduce costs for importers and exporters in Kenya by up to 10 per cent, with the time taken to clear goods in customs expected to go down by 10.9 per cent.

“Cameroon, Egypt, Ghana, Morocco and Tunisia are expected to benefit from the fastest growth of intra-AfCFTA exports... with exports doubling or tripling with respect to the baseline,” said the study.

The smallest export expansions are expected in Democratic Republic of Congo, Mozambique and Zambia, which will record between 10 per cent and 30 per cent growth in exports.

“In monetary terms, intra-continental trade grows from $294 billion (Sh29 trillion) in 2035 in the baseline scenario to $532 billion (Sh53 trillion) after implementation of AfCFTA in 2035,” the report said.

“By 2035 under AfCFTA, the biggest increase in the value of exports to the regional partners is expected to benefit, in descending order of value, Egypt, Morocco, South Africa, Nigeria, Kenya, and Côte d’Ivoire (between (Sh4.8 billion and Sh1.1 trillion).”

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