The trade imbalance between exports and imports to the rest of the continent is one of the reasons that could deny Kenya the benefits of the African Continental Free Trade Area (AfCFTA).
This is according to a new study published by the East African Business Council (EABC), a private sector lobby for businesses operating in the East African Community partner states.
This is even as the study positions Kenya as a favourite market for businesses interested in capitalising on the benefits of AfCFTA.
The study says Kenya is better placed among the other EAC Partner States to trade with the rest of the continent based on a complementarity index.
Established seven years ago, AfCFTA seeks to improve intra-African trade of goods and services, mimicking how continents like Asia and Europe trade within themselves. The study titled Study on Opportunities and Threats of the African Continental Free Trade Area to the East Africa Community analysed data between 2002 and 2003.
“Business enterprises interested in tapping into the African market presented by AfCFTA could consider setting up in DR Congo, Kenya, and Tanzania respectively, which already have the highest share of exports to the rest of Africa,” it reads.
The document adds that these businesses could also consider tapping the underutilised export potential in Uganda, Burundi, and Rwanda by investing in the countries. The study, done in partnership with Afreximbank, notes that Kenya has the highest potential for future growth in exports to trade with other African countries but is not fully utilising this potential.
“The business community should explore the reasons behind the low levels of trade between Kenya and Africa and invest in areas that would improve the intensity of trade between Kenya and other African countries,” reads the study published on March 18.
This is based on data shared in the study, which ranked Kenya third with 19 per cent in EAC’s exports contribution to the rest of the continent. The Democratic Republic of Congo (DRC) has the lion’s share of contribution at 44 per cent followed by Tanzania’s 21 per cent.
When it comes to imports, Kenya’s share of what EAC imports from the rest of the continent stands at 16 per cent. Uganda tops on this front with 37 per cent, while DRC has 17 per cent.
“Kenya’s share of exports to other African countries generally was less than her imports for the same period, except for 2020, when her exports from the rest of Africa exceeded her imports,” the study states.
The study recommends that it may be necessary for the business community to assess the nature of export and import trade between EAC countries and the rest of Africa, arguing the possibility of unfriendly policies disadvantaging the country.
