By Kenya’s Trade Prospects Brighten Despite Overall Dip in Trade Attractiveness
Apprehensions related to fiscal policy changes and social unrest, most notably the June 2024 Finance Bill protests, have contributed to a slight dip in Kenya’s overall trade attractiveness according to the latest Stanbic Bank Africa Trade Barometer (SB ATB).
In the report that evaluates 10 key AfCFTA signatory nations, which together account for 66% of Africa’s GDP, Kenya moved from 5th to 6th position compared to last year’s SB ATB report.
“While Kenya has faced some challenges in trade competitiveness, especially related to inflation and infrastructure, the thriving services sector demonstrates our capacity for growth. By addressing key barriers like access to finance and improving trade infrastructure, Kenya can regain its competitive edge and further boost its regional leadership,” said Paul Mungai, Head of Trade & Africa China Banking at Stanbic Bank Kenya.
Larger businesses perceived government supports more favourably than smaller enterprises, possibly due to their capacity to leverage available resources and navigate complex regulatory landscapes.
Kenya’s Trade Prospects Brighten Despite Overall Dip in Trade Attractiveness
Despite initiatives to embrace trade agreements and policy reforms to facilitate trade and reduce barriers, the need for tax relief and improved customs efficiency remains a key concern for businesses striving to engage effectively in cross-border trade.
In tandem, there has been a noticeable shift towards digital payment systems, with mobile money increasingly being used for cross-border transactions, particularly among small businesses. Mobile money usage for trade has risen to 44%, while the reliance on cash for transactions has decreased by 17%, reflecting growing concerns over security and currency volatility.
The decline in the trade infrastructure index, which dropped from 53 to 48, highlights the urgency of improving Kenya’s transport and logistics systems to support more resilient trade operations. Businesses have voiced concerns about the state of roads, ports, and rail infrastructure, which were significantly impacted by the floods.
“Despite these challenges, Kenya’s cross-border trade continues to expand, buoyed by trade agreements with the European Union, China, and within the East African Community (EAC). Although the trade openness index saw a slight drop from 50 to 49, trade relations with Tanzania and Southern Africa are strengthening, providing new market opportunities for Kenyan exporters. The 2024 FOCAC Summit is also expected to enhance trade partnerships with China, offering a framework for increased cooperation,” said Mungai.
Standard Bank (trading in Kenya as Stanbic Bank) leveraged its presence and expertise across the continent to create the Stanbic Bank Africa Trade Barometer (SB ATB), which focuses on South Africa, Namibia, Mozambique, Tanzania, Nigeria, Kenya, Zambia, Ghana, Uganda, and Angola.
The report examines trade performance across several vital categories, such as trade openness, access to finance, macroeconomic stability, and infrastructure development. In Kenya, 235 businesses were surveyed. 59% of these businesses were in Nairobi, 9% in Mombasa, 12% in Nakuru, 11% in Kisumu and 9% in Eldoret.
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