Kenya Trade

Subchapters:

  • Business Relationships
  • Foreign direct investment
  • FTAs ​​and Treaties
  • Development Cooperation
  • Prospective fields of study (MOP)

Business relations

Trade relations with the EU

The European Union grants Kenya preferential market access. The preferences are non-reciprocal and take the form of lower tariffs or duty exemptions as long as they do not discriminate against EU member states. Although the trade balance with the EU is strongly in favor of the EU, the EU remains the second largest market for Kenyan exports after COMESA. Germany, the Netherlands and France are the main destinations for Kenyan exports to the EU. The EU is Kenya’s main import partner, particularly for industrial products, data processing equipment, medical technology, etc.

  • Allcountrylist: Overview of major industries in Kenya, including mining, construction, transportation, tourism, and foreign trade.
2017 2018 2019 2020 2021
Exports from the EU (million EUR) 1,528.30 1,659.20 1,621.00 1,874.70 1,896.90
Imports into the EU (million EUR) 930.1 925.4 987.8 992.1 1,074.50
Balance with the EU (million EUR) -598.2 -733.8 -633.3 -882.7 -822.4

Source: European Commission

Trade relations with the Czech Republic

The Czech Republic provides Kenya with preferential access to the market. The preferences are non-reciprocal and take the form of lower tariffs or duty exemptions. The preference helps Kenya, especially in the areas of agricultural products such as tea, coffee. Nevertheless, Kenya’s trade balance with the Czech Republic is in favor of the Czech Republic, thanks to the export of the Czech defense industry.

2017 2018 2019 2020 2021
Exports from the Czech Republic (billion CZK) 0.1 0.6 0.5 0.6 ON
Imports to the Czech Republic (billion CZK) 1 0.1 0.1 0.1 ON
Balance with the Czech Republic (billion CZK) 0.8 -0.5 -0.3 -0.5 ON

Source: CZSO

Trade relations with countries outside the EU

Trade relations between Kenya and China, the UAE and India are very active. South Africa, Russia and Turkey are other important trading partners for Kenya.

2017 2018 2019 2020 2021
Exports from countries outside the EU (million EUR) 3,355.2 3,368.3 3090.0 2,983.5 3,699.5
Imports to countries outside the EU (million EUR) 12,659.9 12,917.9 13,082.8 11,317.0 13,942.5
Balance with non-EU countries (million EUR) -9,304.7 -9,549.6 -9,992.8 -8,333.5 -10,243.0

Source: EIU, Eurostat

Foreign direct investment

South Africa is the second largest direct investor (foreign direct investment FDI) in Kenya, after Mauritius, which is often used as a tax haven for African investors.

Order of FDIs by size:

  1. Mauritius – USD 1.92 billion (20.8% of total FDI)
  2. South Africa – USD 1.38 billion
  3. Great Britain – $1.12 billion
  4. France – $750 million
  5. The Netherlands $480 million

In the second half of 2021, efforts to complete President Kenyatta’s ongoing infrastructure projects have increased. These are mainly the “Nairobi Expressway” – an elevated, toll highway running through the center of the city, which should relieve traffic in the center and speed up transportation from one end of the metropolis to the other (primarily to the airport). The expressway is being built by Chinese investors and will be completed in the second quarter. Outgoing President Kenyatta would also like to complete other major infrastructure projects. Outside the capital is another major infrastructure project, the Kipevu Oil Terminal, which cost Kenya USD 385 million and is also being built by Chinese investors. The construction of the Naivasha ICD-Longonot rail link has also been completed, which will connect the existing rail line to Mombasa (592 km) with the reconstructed but narrow gauge line. When fully completed, the standard railway from Mombasa to Malaba (on the border with Uganda) will have a total of seven branches and cover a total of 2,046 km. The oil pipeline project from northern Kenya to the port of Lamu and the ambitious “Lamu corridor” project have been greatly delayed. In Spring 2021, President Kenyatta opened the first of 32 wharves at the new Lamu Port, the country’s second deepest port. The ability to create enough jobs for the adolescent youth generation will be critical to the country’s economic recovery after the COVID 19 pandemic. the second deepest harbor in the country. The ability to create enough jobs for the adolescent youth generation will be critical to the country’s economic recovery after the COVID 19 pandemic. the second deepest harbor in the country. The ability to create enough jobs for the adolescent youth generation will be critical to the country’s economic recovery after the COVID 19 pandemic.

FTAs and treaties

Treaties with the EU

The Economic Partnership Agreement (EPA) is a trade and development agreement negotiated between the EU and the East African Community involved in regional economic integration processes. Negotiations with the East African Community (EAC: Burundi, Kenya, Rwanda, Tanzania and Uganda) were completed in October 2014. The EPA includes provisions on trade, customs, sanitary and phytosanitary measures, sustainable development of agriculture and fisheries. The agreement should increase the EU’s share of total EAC imports from 10.6% to 12.6%. The EAC-EU EPA provides immediate duty-free and quota-free access to the EU market for all EAC exports and partial and gradual opening of the EAC market to EU imports, safeguards allowing each side to re-impose tariffs if imports from the other threaten to disrupt its economy. The EPA contains detailed provisions on sustainable agriculture and food security and sustainable use of fisheries resources. A chapter on economic and development cooperation is included. The parties undertake to conclude negotiations on the environment and sustainable development, services, investment and private sector development within five years of the entry into force of the agreement. Several articles refer to institutional arrangements and dispute settlement mechanisms. The EPA falls under the Cotonou Agreement: Violation of one of its “fundamental elements” involving human rights, democratic principles and the rule of law could result in the suspension of the EPA’s trade preference for the country concerned. The signing of the EPA agreement has been suspended due to discussions within the EAC. However, the EPA agreement has not yet entered into force and negotiations on its implementation are ongoing.

Contracts with the Czech Republic

In 1996, Kenya accepted the succession of the Czech Republic to the following agreements: Agreement on scientific and technical cooperation, Agreement on legal assistance in civil matters, Agreement on mutual extradition of criminals, Agreement on cultural cooperation, Agreement on air services, Agreement on cooperation in the field of tourism . Although the Czech Republic does not have a double taxation agreement or an investment protection agreement with Kenya, this fact does not prevent the development of trade relations, which is evidenced by the growing exports of the Czech Republic to Kenya and the positive balance of the trade balance.

Developmental cooperation

In the context of foreign development cooperation of the Czech Republic, Kenya is not one of the priority countries. Thus, no large bilateral projects are implemented in the country. The Czech Republic occasionally provides funding within the program of small local projects.

More information about the possibilities of involvement in small local projects can be obtained at: https://www.mzv.cz/jnp/cz/zahranicni_vztahy/rozvojova_spoluprace/dvoustranna_zrs_cr/sektory_projekty/male_lokalni_projekty/index.html

Prospective fields of study (MOP)

Healthcare and pharmaceutical industry

Healthcare was a government priority even before the outbreak of the pandemic. As part of the economic measures adopted by the government, the priority position of the sector for the following period was confirmed. The Kenya Health Policy (2014–2030) is a program that defines the long-term intention to achieve universal coverage of basic health services that would meet the standard of a middle-income country. The intention to achieve universal health care was also confirmed as part of measures to combat the consequences of the crisis. Thanks to the increase in expenses, the number of insured persons is to increase from the current 16 million to 25 million insured persons. Increased spending on healthcare represents an opportunity for Czech suppliers, given that most healthcare equipment is imported to Kenya.

Agricultural and food industry

Agriculture employs 75% of the workforce and accounts for a full 30% of GDP. The export of tea, coffee and fresh flowers forms, together with tourism, the pillars of the Kenyan economy. The sector’s importance to the Kenyan economy will not change even in the post-coronavirus era. The country has both freshwater and marine fish farming that it would like to develop. Opportunities are also offered in dairying, cattle insemination, grain milling. East Africans are also beer lovers, so there are opportunities for cooperation in establishing mini-breweries, potentially also exporting Czech beer.

Construction industry

In Kenya, investment is rampant in the construction of both commercial and private buildings. The country has a great shortage of affordable housing, which must be addressed mainly in large urban agglomerations. Therefore, there is a great demand for construction materials and construction machinery.

Environment, water management and waste industry

Large urban agglomerations such as Nairobi, Kisumu or Mombasa are struggling with irregular water supplies, large losses in the water supply network, poor access to sewage and waste treatment. Cities are literally “drowning” in hordes of growing garbage, polluted water escapes further into nature. Solving these problems is not only a strategic goal of the Kenyan government, but also an interest of development donors.

Defense industry

The potential for defense industry supplies arises from the threat of terrorist attacks by Somalia’s Al Shabaab. For this reason, even in the post-coronavirus period, the government will pay close attention to financial resources for equipping the army and the police. The Ministry of Defense will be allocated 115.48 billion Kenyan shillings (KSh) for the current fiscal year, i.e. a similar amount as in the previous two years (121 billion and 116 billion respectively), despite the negative impact of the covid-19 pandemic on the Kenyan economy. However, within the framework of the budget, the amount for strategic expenses will be fundamentally increased. Thus, despite the effects of the crisis, Kenya is sticking to its five-year plan for the technical modernization of the army’s equipment and remains, as in the last five years, the regional leader both in the size of the budget and in the growth dynamics of expenditures.

Kenya Trade