SUMMARY REPORT OF THE KENYA UK TRADE RELATIONS
● The entry into force of the recently ratified Kenya UK Economic Partnership Agreement (EPA) is a milestone achievement for the bilateral economic relations. The Agreement guarantees long-term Duty Free and Quota free (DFQF)market access to the UK for all Kenyan exports except arms and agreed quantitative restrictions on tuna. The agreement confers similar benefits accorded to Least Developed Countries (LDC’s) including the other EAC Partner States but the agreed rules applicable to Kenyan exports such as rules of origin and standards are more beneficial, predictable and sustainable.
● The UK has traditionally been one of the Kenya’s leading export destination markets and is also one of Kenya’s leading trading partners outside the EAC. The value of annual trade between the two countries is estimated at between Sh70-90 billion Kenya shillings. Kenya has continuously enjoyed a favourable trade balance since 2016. The highest was Sh8.6 billion in2018, when the value of Kenya’s exports was Sh40.2 billion, relative to imports valued at Sh31.6 billion
● It was ranked third in 2020 accounting for 7.8% share of Kenya’s total exports. Generally, Kenyan exports to UK have been characterized by a narrow range of products mostly comprising of low value raw or semi-processed products, while imports from UK is characterized by a more diversified and high value products.
● The main exports to UK in 2020 were comprised of tea(38%), vegetables (24%), and cut flowers (16%), all three accounting for 78% of total exports to UK in 2020. Top 10 products accounted for 95% of Kenya’s total exports to the market in 2020. Kenya’s total imports from UK amounted to US $ 336 million in2020.
● It is important to note that in 2020, UK’s total exports globally was USD 402 billion while total imports were worth USD 632billion. On the other hand, the volume of trade between UK and Kenya in 2020 was USD 0.75 billion. Out of which; USD0.34 billion were exports to Kenya and USD 0.42 billion represented imports from Kenya. The share of Kenya’s exports to the UK has accounted for an average of about 0.06% market share in the UK between 2011 and 2020.
● On the other hand, the top 10 import products from UK in2020 included; motor vehicles (26.4%), mechanical machinery (12.6%), electrical equipment (9.5%), pharmaceuticals (6.5%), paper board and articles (5.8%),beverages/spirits (4.7%); mineral oils (3.1%), chemical products (2.9%),measuring instruments (2.4%), and edible preparations (2.2%), all accounting for 76% of total imports. It should be noted that the top 20 import products accounted for 90% of Kenya’s total imports from UK in 2020.
● Overall, Kenya exports to the UK for the period between January and September, 2020 compared to the same period in 2019 increased by25% from Kshs 29,907 million to Kshs. 37,496 million accounting for 6.7% and7.8% of the total Kenyan exports. The UK now ranks 3rd most important export destination for Kenyan goods. This was a significant achievement for Kenyan export performance considering the global economic impact resulting from the Covid-19 pandemic.
● The UK is the largest foreign investor in Kenya, with a portfolio estimated at £2.7 billion (Sh385 billion). Over 220 British companies have invested across all sectors and regions of the country, contributing to Kenya’s economic and social prosperity through jobs, incomes and economic growth. Some of the UK Companies that continue to operate in Kenya include;Williamson Tea Limited, Kapchorua Tea Company, BAT, Unilever, Kakuzi, Tullow Oil, Diageo, Control Risks Vivo Energy, among others.
● The entry into force of the EPA presents an opportunity for Kenya to expand and diversify her exports into the UK given that unlike the previous EU Market Access Regulation (MAR) regime. it’s now therefore possible to export value added products that previously attracted duty. The UK is particularly focused on diversify source market to ensure sustainable supply of imports due to the Brexit fallout. There is need therefore for a multi stakeholder strategic approach focused towards identifying niche market for Kenyan products in the UK in order to benefit fully from the new Economic Partnership Agreement.
KENYA HIGH COMMISSION, LONDON, APRIL, 2021