International Trade in Kenya

News Related to International Trade in Kenya

Business outline for Kenya

Economic Overview

After weakening due to the country's political unrest in 2007-2008 and the world recession, the country's growth increased again to 4.1% in 2010 and should strenghten in 2011. The drivers of the growth are the agricultural sector (horticulture and tea), tourism and remittances from the Kenyan diaspora.

Kenya and IMF have signed an accord under the Extended Credit Facility program to implement a three-year program for 2010-2013. Priority is given to investment into infrastructure and energy (geothermy), as well as to spending related to the implementation of the new Constitution. A gradual reduction of the fiscal deficit and a tighter control of the inflation are also planned. The country enjoys reasonably well developed infrastructures, an educated workforce and  a strategic geographical location, factors which favor economic growth. However corruption, poverty and inter-ethnic conflicts are the main factors that the country has to overcome.

Kenya remains a poor country, half of the population living under the poverty line and unemployment affecting probably a quarter of the population.

FDI in Figures

Foreign investments in Kenya are meagre and in 2008-2009 fell sharply due to the political upheavals in the country, in 2007 and 2008. FDI flux should improve progressively in the coming years.

Political tensions, corruption and security problems are some of the barriers Kenya has to overcome in order to increase FDI in-flow. Even though most sectors are open to foreign investments, infrastructures and media areas largely continue to be monopolized by the State.

The banking and tourism sectors are the ones that attract most of the FDI. The United Kingdom, the Netherlands, Belgium and South Africa are the main investor countries.

Foreign Trade Overview

Kenya is open to foreign trade, which represents 60% of the GDP (2009). The government's trade policy aims at further liberalizing the economy and making public spending more transparent.

Most non-tariff barriers have been removed and customs duties are not very high. They range from 0% for raw materials, to 50% for certain products like imported matches, for exemple. Raw materials, capital goods, energy saving bulbs and tractors for agriculture are exempt from customs duties. Goods imported from COMESA (Common Market for Eastern and Southern Africa) member countries enjoy preferential tariffs. 

The country has some advantages that should enable it to promote trade, namely a skilled labor force and the implementation of a privatization policy. Nevertheless, some barriers remain such as the lack of transparency in tariff administration and high energy and labor costs.

Kenya imports more than it exports, which translates into a largely deficitary trade balance.

The country's main trade partners are COMESA member countries, the Gulf Cooperation Council and the United States.