The signing of a trade agreement between Kenya and the European Union (EU) is a welcome move that will boost the country's economic activities on the global stage. The Economic Partnership Agreement (EPA) has been long coming with the initial pact having been signed almost 10 years ago.
Once ratified by the Kenyan and EU parliaments, Kenya will receive duty-free and quota-free access to the EU, where it sends about a fifth of all its exports. Official data shows that the EU is Kenya's second-largest trading partner, with total trade in 2022 at EUR3.3 billion (Sh545 billion), an increase of 27 per cent compared to 2018. It is therefore a commendable milestone for the government to enter into a bilateral deal to boost these numbers.
One of the biggest hurdles to global trade is that the lucrative global markets are often fenced by restrictive tariffs and conditions that make it especially hard for developing countries. Access to the EU will open up significant opportunities for Kenyan firms to sell their products to one of the world's biggest markets under eased terms.
Increased exports are critical to Kenya's economy, especially now where there is a crippling shortage of dollars in the market. Foreign exchange inflows will not only increase the country's revenues but also help to buttress the shilling against further depreciation.
But for the deal to really make an impact, Kenya must seek to diversify its exports beyond the traditional agricultural exports, which account for the bulk of sales to the EU. The country must aggressively implement value addition so that the products that end up on the EU shelves are by Kenyan manufacturers, rather than sending raw materials that benefit processors abroad.
Local firms must also be protected from noncompetitive imports, even dumping, as EU manufacturers will also have access to the market. These are some of the concerns that stalled the signing of the EPA with the East African Community, and Kenya needs to address the issue. Hopefully, the other regional states will come on board soon to jointly reap the benefits.
