Uganda has been named Kenya’s largest single export destination accounting for 11% of total exports during 2016. Uganda has held this position for several years now, but a new report says non-tariff barriers remain a nuisance in the East African Community (EAC) and continue to thwart further trade expansion.
According to a report by the Institute of Chartered Accountants in England and Wales (ICAEW), Kenya exported a fifth of its exports to the EAC countries with the largest percentage being bought by Uganda. Uganda has one of the most liberalised economies in the region.
A monitoring tool identified 19 non-tariff barriers that remain unresolved, ranging from restrictions on Kenyan beef exports to Uganda, to the requirement that companies exporting to Tanzania should register, re-label and retest goods already certified by other partner states.
The report, commissioned by ICAEW and produced by partner and forecaster Oxford Economics, provides a snapshot of the region’s economic performance. It focuses specifically on Kenya, Tanzania, Ethiopia, Nigeria, Ghana, Ivory Coast, South Africa and Angola.
According to the report, the African continent accounted for 41% of Kenya’s exports in 2016 while Europe and Asia each accounted for approximately a quarter of total exports.
Michael Armstrong, ICAEW Regional Director, Middle East, Africa and South Asia said: “Kenya stands to benefit from stronger growth in the East Africa region as it is well positioned to take advantage of rising demand for manufactured goods. Furthermore, its location and relatively developed transport infrastructure will allow the country to act as the gateway into the East Africa region.”
The EAC is considered the most progressive trade bloc in Africa. Collaboration on regional infrastructure has reached a level rarely seen on the continent with construction of the $26 billion Lamu Port – Southern Sudan – Ethiopia Transport (LAPSSET) corridor underway.
Furthermore, a Single Customs Territory (SCT) system will take effect across the EAC from July 31, facilitating trade between member states by electronically connecting countries’ custom clearance systems. According to the report, a pilot programme involving certain goods and entry points has generated positive results, and if implemented successfully, the SCT could significantly stimulate trade in the region by reducing the cost of doing business.
However, the bloc is not without its challenges as the United Nations Economic Commission for Africa (UNECA) recently cautioned against the signing of the Economic Partnership Agreement (EPA) between the EAC and the European Union (EU) in its current form, which does not bode well for the EPA’s implementation.
Kenya stands to lose the most without the agreement as it is not classified as a least-developed country; it would not receive duty-free and quota-free access under the EU’s Everything-But-Arms initiative.