Kenya starts cashing in on Africa free trade
MONDAY SEPTEMBER 26 2022
A Container Terminal within the Port of Mombasa. PHOTO | KEVIN ODIT | NMG
Kenya has shipped its first consignment of locally made batteries to Ghana, two months after it was picked among seven countries to pilot the continental free trade area that seeks to unlock the movement of goods and services in Africa.
The Kenyan-made Exide batteries worth Sh9.24 million ($77,000) landed in Ghana last week, marking a formal start of preferential trading under the Africa Continental Free Trade Area (AfCFTA) framework.
The consignment by Associated Battery Manufacturing EA Ltd is the clearest indication that Kenya can now access markets in West and Central Africa at preferential rates.
Kenya was picked alongside six other nations to champion the trial phase of the framework designed to reduce tariffs on goods and services as well as eliminate barriers on movement among African countries.
“Associated Battery Manufacturing EA Ltd is the first Kenyan company to start trading under AfCFTA, and the first local company to ever export exide batteries to the Ghanian market” said the Ministry of Industrialisation and Trade in a statement.
No trading had occurred since January last year when the AfCFTA was launched as the select countries needed first to identify products that could access the markets.
The delays have been linked to problems regarding rules of origin that remained unresolved, making it difficult to identify products that could enjoy the preferential tariff regime under the agreement.
Other countries selected to participate in the pilot phase of the AfCFTA Initiative on Guided Trade are Tanzania, Tunisia, Cameroon, Egypt, Mauritius, and Ghana.
The pilot phase gives Kenya the opportunity to access markets in Tunisia, Cameroon and Ghana that are in different economic blocs on preferential rates.
Kenya is a member of the East African Community (EAC), Ghana belongs to the Economic Community of West Africa, while Tunisia is a member of the Maghreb.
Products that Kenya has identified for trading under AfCFTA include tea, exide batteries, confectionery, leather bags, incinerators, beaded products, vehicular filters, textiles, sisal fibre, avocadoes and fresh produce.
The entry of Kenya into other continental trade blocks comes amid a shrinking East African market for Kenyan products, with Uganda –which has been the biggest buyer for Kenya supplies— warming up to Tanzania.
Tanzania and Uganda have over the recent years boosted their industrial base, cutting their appetite for Kenya-made goods.
Each trading bloc has been having its own Common External Tariff charged charges on goods coming outside a given region. For instance, EAC charges up to 50 percent duty on goods shipped in from other regions.
Kenya has been looking to strengthen trade ties beyond the bloc with latest official data showing United States has overtaken Uganda as the largest buyer of its goods.
Exports to the US jumped 47 percent to Sh38.8 billion in the first half of the year on the back of increased sales of clothes.
On the other hand, the sale of Kenya-made goods to Uganda dipped slightly at Sh36.2 billion in the period under review from Sh36.3 billion.
Over the past 10 years, Uganda has been the largest buyer of Kenyan supplies, but recent events point to strained commercial relations between the two nations.
In June, the two EAC States were caught in a tussle when Nairobi reintroduced a levy on eggs imported from the neighbouring land-locked country.
This came at a time Kenya and Uganda were yet to resolve a long-standing dispute on milk after Kenya barred Uganda’s dairy products in 2019.
Kampala’s list of imports from Kenya has been narrowing over the years as investors set up factories in the country to manufacture goods previously imported from Nairobi, including edible oils and cement.
Kenya has long sought a full free trade agreement with the US, and negotiations for such a deal to lower bilateral tariffs were launched by the Donald Trump administration with the East African country in 2020.
But the Joe Biden administration, which has shunned traditional trade deals, did not resume those talks.
Kenya enjoys substantial duty-free access to the US market through the Africa Growth and Opportunity Act (AGOA), a preferential trade programme for sub-Saharan African countries, but it expires in September 2025.
