COMESA Secretary General Chileshe Kapwepwe said the regional economic bloc counts on President Kenyatta’s support to guide and move forward the implementation of AfCFTA. “As COMESA, we are confident that your commitment and support will play a big role in the realization of AfCTA as we work to ensure COMESA’s voice is heard and its interests safeguarded at the continental level,” Ms Kapwepwe told President Kenyatta. Ms Kapwepwe, who is the country for the 21st COMESA International Trade Fair and High-Level Business Summit, was speaking today when she paid a courtesy call on the President at State House, Nairobi. She said COMESA will continue to play a key role in addressing unemployment and trade imbalance in the region. Implementation of AfCTA was launched early this month at the 12th Extraordinary Session of the Assembly of Africa Union (AU) in Niamey, Niger. President Kenyatta assured of Kenya’s support to COMESA as it moves to consolidate its position as an economic powerhouse on the continent. He reiterated his call for COMESA member states to come together and take advantage of their collective strengths as an economic bloc. “Our success as COMESA member states will largely depend on us stopping to look at each other as competitors and instead unite for economic integration that will make us all winners,” President Kenyatta said. “We must focus on removing the obstacles that are hindering our people from working and doing business together,” he added. At a separate meeting at State House Nairobi, President Kenyatta met...

The recently signed African Continental Free Trade Area agreement (AfCFTA), which came into force on May 30, represents a unique opportunity to grow intra-Africa trade and diversify trade exports with the rest of the world. The agreement establishing AfCTA is not only creating the biggest trade agreement since the World Trade Organisation was established in 1994, but is also the most significant step towards economic integration which has already been achieved in other regions in Africa. The impact of AfCFTA can be seen in the context of the current very low levels of intra-Africa trade. Intra-regional trade represents an average of 15% of global trade across both imports and exports as of 2017. According to the UN Conference on Trade and Development, regional intra-trade accounts for 59% of Asia’s exports and 69% in Europe. With customs procedures eased under the AfCFTA, intra-Africa trade is expected to grow to at least 53% by the mid-2020s, thus effectively contributing in the region of $70bn to the continent’s GDP. The growth in intra-Africa trade will ensure that an increasing proportion of Africa’s more than US$2-trillion economy is traded internally. For the financial sector, there will be increased demand for trade financing to aid the anticipated overall growth in intra-Africa trade. For example, to support the expected increase in intra-Africa trade of $119.6bn by 2022, it will require nearly $40bn in trade financing alone. To achieve growth to the value of $27.9bn in industrial goods by 2022, an estimated $9.3bn in trade financing will...

If you want to build a ship, don’t drum up people to collect wood and don’t assign them tasks and work, but rather teach them to long for the endless immensity of the sea.” Those were the words of acclaimed French author Antoine de Saint-Exupery, who also wrote, “The Little Prince”, one of the most touching short stories ever. Notably, Saint-Exupery loved the vastness of nature. Whether the immense yellow of the Sahara or the limitless blue of the oceans, his descriptions leave a deep impression on the reader and instil a feeling and longing for exploring unknown territories. Throughout the history of the Homo Sapiens, the sea was often the ultimate barrier that a culture had to overcome in order to develop and reach new heights. Usually, the culture that ruled the sea also dominated its political rivals. Just take as an example the ancient Phoenicians who ruled the shores of the Mediterranean from Carthago and were Rome’s main rival for hundreds of years, even though they were a much smaller nation. On the other hand, whenever a nation closes itself from maritime trade, it enters an age of isolationism and decline. Back in the 14th century, China boasted the world’s biggest fleet (more than 1,400 vessels!). But by 1525, the emperors of the Ming dynasty had destroyed its entire naval force and left Britannia to rule the seas. The ensuing economic and cultural slump held China back for centuries. Lengthy history With this lengthy history in mind, spanning...

As Kenya seeks to address its infrastructure needs of almost US$4bn per annum, the private sector is expected to play an increasing role, particularly in electricity generation and transmission, rail and road networks and water access and irrigation. Activity will be supported by a recent improvement in the business environment, a favourable growth outlook and deep financial sector. Challenges include the creditworthiness of key counterparties, corruption, land issues and evolving and relatively untested regulatory frameworks. An improving business climate is supportive of growing infrastructure investment but concerns over corruption and transparency remain. Persistent issues around corruption will be a concern for large, capital intensive infrastructure investment requiring years of planning, land negotiations, permits and regulatory approvals. Kenya has improved the electricity access rate to around 75 per cent in 2018 from 36 per cent in 2014, the highest in East Africa. More than 7,000km of paved roads were added between 2014 and 2018. Major investments in ports and rail seek to improve the economics of trade. Fiscal pressures remain a constraint on the government's infrastructure spending capacity but will create space for private sector participation. Investment to gather pace in electricity, water and road/rail sectors “Electricity generation and transmission, rail and road networks and water access and irrigation will likely be the main beneficiaries of private sector investment, as these are key areas of focus for Kenya's government,” said Christopher Bredholt, vice-president, senior credit officer. Universal access and diversification goals are set to drive electricity policy and require US$15bn investment...

Kenya was last week putting up a brave face after the European Union rebuffed its plan for a variable geometry in the signing of the Economic Partnership Agreement with the East African Community. Nairobi has the biggest stake in the EPA because it is a middle-income country and, without the protection of the deal, it would have to start paying duty for its exports to Europe. Kenya exports mainly cut flowers and vegetables to the EU. Principal Secretary in the Department of Trade Chris Kiptoo was oozing confidence, as Kenya still enjoys a timeless access to the EU market under the Market Access Regulations (MAR) 1529. It allows developing countries that are still negotiating EPAs to access the EU market until the agreement is signed. “Kenya’s market access to the EU remains safe in the foreseeable future until all EAC partner states sign the EPA,” said Dr Kiptoo. The bloc’s member states still hold the key to the stalled trade pact after failing to reach a consensus on the EPA, due to varied economic and political interests. Meanwhile, all EAC countries are accessing EU market duty and quota free, with Kenya under the MAR and the others—which are considered Least Developed Countries—enjoying the Everything but Arms arrangement. Kenya now hopes that its partners will sign the pact in the interest of regional integration. “Now that the EU has said it will go with the original decision for all EAC members to sign, then we just have to wait. I’m optimistic...

Three events held in Kenya in the past week went on largely unnoticed despite their importance to the economy. The first was the Afro-Asia Fintech Festival, which was followed by the launch of the country’s export development strategy. The last was Kenya hosting the Common Market for Eastern and Southern Africa (Comesa) high-level technical meeting on infrastructure. The overarching theme for the three was facilitating trade regionally and globally through both digital and physical infrastructure. This would in turn help countries narrow the trade deficits confronting them, moving jobs abroad, weakening currencies and making imports more expensive. This is where the Integrated National Export Development and Promotion strategy comes in. A look at trade data reveals that Kenya imports Sh1 trillion more than it exports. A host of factors have contributed to this, including lack of an integrated policy to drive Kenya’s ability to produce goods for export. In many areas, the strategy strikes the right chord — focusing on manufacturing, agriculture, livestock, fisheries, oil and gas, and handicrafts. It is therefore almost a throwback to the import substitution policies of the sixties and seventies which came unstuck courtesy of government policies that made import goods cheaper than producing them locally. Putting digital infrastructure at the centre of delivery of the plan presents an opportunity to boost Kenyan exports. The  focus on value addition rather than wholesale reinvention also presents an opportunity for enhancing exploitation of local resources. More needs to be done, however, to grow the contribution of exports...

The world needs fairer – not less – trade to promote shared prosperity, UNCTAD Deputy Secretary-General Isabelle Durant told participants at the largest gathering on sustainable development progress in New York on 17 July. The High-level Political Forum (HLPF) convened at the United Nations headquarters in New York from 9 to 18 July to take stock of the progress made on the Sustainable Development Goals(SDGs) and chart next steps towards a more prosperous world by 2030. Geneva-based trade trio, UNCTAD, the World Trade Organization (WTO) and the International Trade Centre (ITC), told participants at the forum that trade is a powerful means for achieving the global goals. “Trade has been a major catalyst for economic growth, both in developing and developed countries,” Ms. Durant said. She said it has lifted standards of living in developing countries by improving access to food, medicines and education, among other benefits. Bigger pie, but not divided equally However, the benefits of global trade have not been distributed equally, Ms. Durant observed. While the value of trade has increased fivefold and its volume fourfold for the past 30 years, the bottom 50% of the population has captured only 12% of the total economic growth, whereas the top 1% captured 27% of it. In 1990, world trade was about US$5 trillion, whereas in 2018 its volume reached $25 trillion. “Trade has contributed to make the pie bigger, but its shares have not been divided equally,” Ms. Durant said. She noted that some developing countries have benefitted from global trade,...

EAST African Business Council (EABC) has hailed President John Magufuli and his Kenyan counterpart Uhuru Kenyatta for their quest to promote the role of private sector in the East African Community (EAC) integration process. EABC Chief Executive Officer (CEO) Peter Mathuki issued the laudatory message to the two leaders who are part of the EAC Heads of State Summit, saying that the duo has demonstrated and reiterated their commitments to the EAC integration during their recent meeting in Chato, Geita. “Their words and action have re-energised optimism and reassured the East Africans of their deep commitments to uphold the spirit of the EAC regional integration process,” said Mr Mathuki yesterday. He further commended the EAC Summit for recognising the role of the private sector as the engine and driver of economic growth, reaffirming commitment to the principles of the EAC Common Market. The principles include nondiscrimination of nationals of other partner states on grounds of nationality, equal treatment of nationals of other partner states and transparency in matters concerning other partner states. “Indeed, political goodwill is critical to accelerate and boost intra-EAC trade and opportunities that lie on our own doorsteps. Together, we remain as one people, one destiny,” said Mr Mathuki who is also a former East African Legislative Assembly (EALA) member. Policy predictability and maintaining a liberal stance towards the Freedoms and Rights enshrined in the Common Market Protocol shall increase cross border trade and investments and significantly contribute to employment creation, export growth, revenue collection, wealth creation...

Our relations with Tanzania have not always been the strongest. A few weeks ago, MP Charles Njagua, also known as Jaguar, ruffled feathers with his xenophobic remarks about Tanzanians working here. However, his populist statements were quickly condemned by the government and all those who recognise that there is no place for such intolerance in Kenya. After all, the trade and tourism exchange between Tanzania and Kenya make a big contribution to our economy. According to Magufuli, there are 504 Kenyan-owned companies in Tanzania, valued at $1.7 billion (Sh170 billion). Moreover, these companies provide 50,000 Tanzanians with jobs. At the same time, 24 Tanzanian companies in Kenya are valued at $189 million (Sh19 billion). Last year alone, 10 per cent of the more than two million tourists to Kenya were Tanzanian, totalling 222,216 visitors. That’s the second largest group after Americans. We won’t accept dirty cash, UK tells money launders But despite this mutual dependence, relations have not always been smooth, especially regarding trade. In July 2016, Tanzania declined to participate in the Economic Partnership Agreement (EPA) with the European Union, leaving Kenya and Rwanda to sign with the EU individually rather than as a fortified trading bloc. More recently, protectionist policies have made it difficult for foreign traders to access Tanzanian markets. Though we are both members of the East African Community (EAC), traders going in both directions have been frustrated by duties on some goods, bans on certain commodity imports and cargo hold-ups at border crossings. Close terms But...

Local business leaders have decried the low level of penetration and application of ICT among the business community across the East African Community (EAC) saying that this was among the major impediments to doing business in the region. This was observed Thursday during a dialogue dubbed ICT for Business, which was organised by the East Africa Business Council (EABC) a regional body that brings together private sector associations and corporates from EAC partner states. The meeting was aimed at collecting views from business owners on the best approach that can be used to fast-track the adoption of ICT in their daily business dealings at the regional level. Dennis Karera, the vice chairman of the council said that though governments have championed the campaign on ICT penetration and adoption, there has been slow uptake in this area among the private sector across member states. “We are all aware of the benefits ICT can bring to our businesses from time-saving to being compliant with government regulations  like paying taxes on time but it is regrettable that still, you conduct business with someone and they invoice you using a pen,” he said. Karera also warned business leaders, that if they continue to shun ICT, it will be very difficult for their businesses to survive, saying that governments are striving to broaden the market through initiatives like the African Continental Free Trade Area. “We therefore have no option but to embrace ICT,” he said. Going forward, Daniel Murenzi, the Principal Information Technology Officer at...