AFRICANGLOBE – Kenya is pushing for stronger trade relations with Ethiopia due to its huge market potential, as well as a means of boosting regional security.
A Kenyan delegation led by Cabinet Secretary for East African Community, Tourism and Commerce Phyllis Kandie, accompanied by officials of the Kenya Association of Manufacturers recently visited the country.
Increased bilateral relations will benefit both countries as Kenya is looking to secure a larger market for its companies, while Ethiopia wants to have an alternative transport corridor for its goods.
Ethiopia is East Africa’s most populous nation at 90 million.
The country restricts the entry of foreign investors in its manufacturing and financial sectors as these are not well developed, but the regulation could change with the Special Status Agreement with Kenya.
According to Betty Maina, the CEO of the Kenya Association of Manufacturers, Ethiopia is keener on investment than bilateral trade.
Ms Maina said the mission was to explore investment opportunities in Ethiopia, especially in manufacturing and agribusiness, which the country is ready to open up to foreign investors.
“However, some sectors like financial and retail are not yet open. We are eying the closed sectors as they are to be opened up under the proposed Special Status Agreement. Bilateral trade between the two countries is slow because of poor infrastructure, especially on the Kenyan side,” Ms Maina said, added that Ethiopia is not in the Free Trade Area so tariffs are relatively high.
Kenya and Ethiopia signed the Special Status Agreement in November last year.
The two countries have, in the past three years, signed multiple deals, including the $18 billion Lamu Port-Southern Sudan-Ethiopia Transport project, a power purchase deal and an agreement to build the Nairobi-Addis Highway.
Under the power purchase agreement, Kenya will in the next few years import 400MW of power from Ethiopia, once Gilgel Gibe III hydroelectric dam is completed.
Trade between the two countries remains at $59 million, despite the huge potential, compared with a Kenya-Uganda trade of $904 million.
By: Fred Oluoch