Building capacity to help Africa trade better

Kenya and South Africa sign deals to deepen bilateral relations


Kenya and South Africa sign deals to deepen bilateral relations

Kenya and South Africa sign deals to deepen bilateral relations

Economic integration is vital for Africa. The domestic markets of many African nations are small; several are Least Developed Countries (LDCs), land-locked, or island economies. Economic integration provides for market access benefits and trade expansion. For this to become possible sovereign states have to conclude the necessary international agreements. Preferential trade agreements will liberalise trade in goods by reducing tariffs and removing non-tariff barriers, by facilitating trade and by improving customs administration and border measures. Trade in services should also be liberalised and the movement of natural persons and capital across borders be allowed. The successful implementation of these arrangements depends on additional inter-state institutions and bespoke agreements.

Intra-African economic integration is typically pursued through Regional Economic Communities (RECs),[1] bilateral agreements and through more ambitious initiatives such as the African Continental Free Trade Area (AfCFTA) and the Tripartite Free Trade Area (TFTA).

The AfCFTA and the TFTA are not yet operational. As a result, firms in countries such as South Africa and Kenya do not have preferential access to each other’s markets. Trade between these two countries is conducted under the most-favoured-nation (MFN) rules of the World Trade Organisation (WTO). The absence of a preferential trade arrangement between SACU and the EAC prevents trade expansion between the economies of these two important regional configurations. Trading under AfCFTA and/or the TFTA preferences should therefore be a priority.

In the meantime, some of the AfCFTA State Parties are strengthening other kinds of relationships. This is true of Kenya and South Africa, both being member of customs unions and therefore constrained by the duty to protect the integrity of the respective Common External Tariffs. Kenya is a party to the East African Community (EAC), which is officially a common market, and the Common Market for Eastern and Southern Africa (COMESA), a free trade area (FTA). South Africa is a member of the Southern African Customs Union (SACU) and of SADC. The latter has several dedicated Protocols and regulates trade in goods through the SADC Protocol on Trade, which implements an FTA among the Parties thereto. The SACU member states are all SADC members and must act collectively when concluding trade in goods agreements with third parties. (Tanzania is in a unique position in the sense that it is a member of SADC as well as the EAC.)

South Africa and Kenya are taking steps to promote bilateral relations and to pursue strategic and political objectives. On 9 November 2022 the South African President visited Kenya and held talks with President William Ruto to explore areas of mutual interest and cooperation. They agreed on a reciprocal visa-free entry deal that will be rolled out from January 2023. Kenyans will be allowed to enter South Africa on a visa-free regime for up to 90 days per calendar year. South Africans do not need visas for Kenya. The two Presidents also signed several Memoranda of Understanding (MoU’s) and mentioned agreements and MoU’s signed earlier.[2]

In November 2021, Kenya and South Africa signed eight bilateral agreements.[3] They included MoUs on transport, health, diplomatic consultations, and training as well as tourism and migration. A Bilateral Air Services Agreement (BASA) was concluded, as well as MoUs on Government Printing Works and the return of nationals refused entry and illegal entrants. These agreements followed after discussions in the Joint Commission of Cooperation (established in 2007[4]) held in Nairobi in August 2021.

Institutions to support special relationships of this kind are important. In their absence bilateral relations are unlikely to be endorsed on a regular basis. Another such institutional arrangement has now been added; a “presidential task force” to address visa-related challenges. It must report back after six months. The task force will, as a first step, focus on easing travel by business community, students and those seeking medical attention, as they seek to find solutions for the bolder issues of easing visa restrictions within six months.

Will trade between SACU and the EAC benefit from these recent developments? Trade related initiatives such as the ones recently announced by Kenya and South Africa should be welcomed, but a proper trade deal between them is not yet in place. There are no official plans to conclude a bilateral trade agreement, which is understandable. Both these two countries are members of customs unions and are active participants in the negotiations to finalise the outstanding AfCFTA negotiations on tariff reductions and rules of origin. Once trade under AfCFTA rules becomes possible, preferential trade in goods and services among all the AfCFTA State Parties, including the members of SACU and the EAC, can begin.

The recent discussions between South Africa and Kenya are positive developments and signify a special relationship between these two countries. But for the moment these efforts constitute ad hoc deals. More needs to be done to unlock the potential of preferential trade in and for Africa.

[1] The African Union (AU) recognises 8 RECs: The Arab Maghreb Union (UMA), Common Market for Eastern and Southern Africa (COMESA), Community of Sahel–Saharan States (CEN–SAD), East African Community (EAC), Economic Community of Central African States (ECCAS), Economic Community of West African States (ECOWAS), Intergovernmental Authority on Development (IGAD), and Southern African Development Community (SADC). Not all of them are Free Trade Areas (FTAs) yet.

[2] https://ewn.co.za/0001/01/01/kenya-and-sa-agree-on-90-day-reciprocal-visa-free-entry-deal

[3] https://allafrica.com/stories/202111240165.html. For the official South African communique, see https://www.thepresidency.gov.za/press-statements/joint-communiqu%C3%A9-occasion-state-visit-h.e.-uhuru-kenyatta%2C-president-republic-kenya%2C-south-africa%2C-22-24-november-2021

[4] https://mfa.go.ke/kenya-and-south-africa-sign-pacts-to-deepen-and-broaden-relations/

About the Author(s)

Gerhard Erasmus

Gerhard Erasmus is a founder of tralac and Professor Emeritus (Law Faculty), University of Stellenbosch. He holds degrees from the University of the Free State, Bloemfontein (B.Iuris, LL.B), Leiden in the Netherlands (LLD) and a Master’s from the Fletcher School of Law and Diplomacy. He has consulted for governments, the private sector and regional organisations in southern Africa. He has also been involved in the drafting of the South African and Namibian constitutions. He grew up in Namibia.

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