Kenya has called on small businesses to exploit market access opportunities available under the recently renewed African Growth and Opportunity Act (AGOA) to increase the country’s export to the U.S. market. Adan Mohamed, Cabinet Secretary for Industrialization and Enterprise Development, said the government has worked on the structural problems that hinder entrepreneurs to venture into the U.S. market.
“In the last five years, we have reduced the standard cost of doing business by reinforcing transport, ports and electricity while reducing regulatory burdens like licensing procedures to enable our entrepreneurs trade,” Mohamed said at a small and medium-sized enterprise forum that concluded in Nairobi on Monday.
AGOA is a preferential market access system given to specific countries in Africa and the Caribbean by the U.S. Under the trade agreement, most of Sub-Saharan African countries are allowed to export over 6,000 products duty-free to the United States. According to Mohamed, Kenyan entrepreneurs had not fully exploited the market access opportunities under AGOA in its last term due to competitive disadvantages within the economy.
Data from the Export Promotion Council indicates that Kenya’s non-textile exports to Washington mostly consists of coffee, fruits, precious stones, nuts, cut flowers and tea, while its imports include machinery and other capital goods. Mohamed said that Kenya has made strides in streamlining its standards in alignment with global processes to reduce cumbersome product approval process Kenyan entrepreneurs face abroad.
“The Ministry through Kenya Bureau of Standards has issued standardization mark permits to Kenyan firms to increase global market access of the Kenya products, which will simplify the approval process and add credibility to transact in the American market,” he said. Kenya’s trade profit increased from 163 million dollars in 2000 to 875 million dollars in 2010 primarily due to AGOA third-party country provisions.
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Kenya plans to disburse equipment worth three million U.S. dollars to micro and small-sized enterprises by the end of 2015 to enhance their competence, officials said on Monday. Micro and Small Enterprises Authority (MSEA) CEO Patrick Mwangi said that the modern equipment will be used to promote value addition in the sector.
“The aim is to make the small firms produce goods that can be competitive in the market,” Mwangi said during the National Capacity Building forum for the Africa Growth and Opportunity Act (AGOA) Export market. According to the MSEA, one of the biggest problems facing Kenya’s informal sector is the inability to produce standardized products.
“This denies them access to lucrative export markets that require large quantities of goods delivered regularly,” Mwangi said, adding that the equipment will be used in the agri-business, manufacturing and services sectors. Mwangi said his authority is also in the process of setting up a fund to be used to guarantee loans for the small companies. “Our research has shown that banks have a lot of cash set aside for SME lending but the firms can’t access the funds,” he said.
Source: Coast Week

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