What will a Kenya-US Free Trade policy mean for businesses in the region?

The United States and the Republic of Kenya have formally begun negotiations on a new trade deal. This will be replacing the Africa Growth and Opportunity Act (AGOA), which sunsets in 2025, and it is hoped that this will be a model for bilateral deals with other countries on the continent.

This will be the United States’ first free trade agreement with a sub-Saharan African country. During a visit to the white house in early February, Kenyan President, Uhuru Kenyatta, and the US President, Donald Trump announced the intention to commence formal talks on the new trade deal. However, some Kenyan firms have expressed concerns that goods produced cheaply by more advanced factories in the US could put them out of business. The Kenyan Private Sector Alliance (KEPSA), however, stated that the new planned US-Kenya trade deal would lead to increased opportunities for export and import.

This deal presents businesses in Kenya an opportunity to access a bilateral trade volume of about one billion dollars. This increase in import and export opportunity is a plus for development not just in Kenya, but also across the East African region. This will also mean more significant investments in Kenya from the United States, as the US seeks to counterweight the influence of China on the continent.

Major Kenyan export commodities include coffee, cocoa, tree nuts, and tea. While significant imports from the US range from heavy machinery and agricultural equipment to consumer goods and food. Nevertheless, this trade deal has the potential to widen the spectrum of commodities currently being traded between the two countries. There are equally huge benefits for neighboring Tanzania, Burundi, Ethiopia, and Somalia, as Kenya is the economic center of the East African region. When Kenya grows, the effect cuts across the region.

More significant trade between the US and Kenya will benefit businesses in many ways as they will be open to more markets and opportunities. It will also be beneficial to consumers who can then purchase commodities online and have it cheaply delivered to their doorstep since there would be minimal restrictions on shipping. With that said, however, one downside of bilateral trade with African countries is that it could undermine the effort to build the African Continental Free Trade Area (AfCFTA), which seeks to create a single continental market for goods and services.

Though the process may take a few years before final signatures are appended and approved by Congress, the US free trade policy with Kenya presents an opportunity for increased trade, investments, and prosperity.

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