How to make Kenya a green economy in just a few decades

Low-value addition is exacerbated by non-trade barriers. [Courtesy]

The seventh devolution conference running on a multi-level theme “governance for climate action” has just ended in the beautiful County of Makueni.

Delegates, including public and private sector players, engaged on climate change and exploring avenues on sub-national mobilisation of resources to unlocking full potential of climate action during and after pandemics. The looming climate crisis calls for countries to transition to a green economy.

These transitions can take place through trading out and up, enabling firms and countries to upgrade, while simultaneously attaining greener net zero value chains. However, this is a complex task in Kenya. Especially when the unfair global environmental governance policies (like Environmental Good Agreement 2014 and sustainability standards) marginalise participation of Kenya in global value chains.

Kenya’s participation is contingent on primary sectors such as natural resources and agriculture. On one hand, these sectors are associated with high environmental costs, such as falling water tables, degraded soil quality and reduced biodiversity. On the other, participation in these sectors often occurs upstream in the value chain, thereby engendering, low value addition.

Low-value addition is exacerbated by non-trade barriers, such as imposing an array of standards from phytosanitary standards to private international supermarket standard in Europe and the US, to voluntary sustainability standards (e.g. Fairtrade, GlobalGAP) on Kenyan suppliers. For example, research at the University of Manchester shows that farmers exporting avocados and beans are squeezed due to high compliance costs, which outweigh the socio-economic-environmental benefits.

Additionally, the introduction and expansion of other instruments such as carbon border adjustments, target several primary sectors, which adds to the precarity of Kenya’s participation. There is a lack of voice of Kenya, in one of the most important global policies, the Environmental Goods Agreement (EGA), launched in 2014, by the World Trade Organisation (WTO).

EGA aims to create tariff free trade, thereby incentivising green exports. The list of environmental goods have been expanded into a universal list of about 408 goods (WTO 2011), but what products are included, and what/how liberalisation structures are implemented, is skewed towards 46 high and middle-income countries who participated in the WTO negotiations.

One of the most powerful ways to understand green competitiveness is through unpacking the revealed comparative advantage (RCA). RCA is when a country exports more than its fair share with respect to the exports from rest of the world. The RCA for Kenya is computed yearly between 2016-2020. If Kenya has an RCA every year between 2016-2020, then the product is considered a ‘cash cow’ i.e. a major strength for the country; and if Kenya has had an RCA 3-4 times between 2016-2020, it is considered a ‘sunrise product’ i.e. with potential to expand exports.

 -The writer is a Hallsworth Research Fellow at the University of Manchester.