Kenya trade ‘chilling’: Are intra-Africa exports hampered by high tariffs?
For 2019, 19 per cent of Kenya's total trade was with other African countries, mostly with countries in the same free trade area (COMESA FTA) or customs union (EAC). Limited exports to African countries outside these trade arrangements might be attributed to high Most Favoured Nation (MFN) or general tariffs in destination markets. Kenya's exports to these African countries might be ‘chilled’ by high tariffs.
A trade chilling exercise reveals products where trade is low due to high tariffs. This identifies products for tariff liberalisation under the African Continental Free Trade Agreement (AfCFTA) negotiations.
The initial analysis is of the tariff and trade data for Kenya and the group of African countries outside the COMESA FTA & EAC. 46 products show supply and demand potential. The average tariff for these products in the destination markets is mostly higher than 10 per cent. Half has an average tariff higher than 20 per cent. 0.2 per cent of Kenya's world exports of the 46 products are to the African country group. 0.1 per cent of world imports by the African country group are sourced from Kenya. High tariffs on and low trade values of most products indicate trade chilling.
Products facing high tariffs in destination markets include pineapples, clothing items, beans, tobacco, spices, macadamia nuts, and paints and varnishes. Some may be sensitive goods. This can also be the case under the AfCFTA negotiations. Examples: pineapples (South Africa), clothing items (most African countries), and tobacco.
Manufacturing of paint and varnishes in numerous African countries (especially west Africa) are increasingly being protected by high import tariffs.
7 products have an average African tariff of 6 per cent and lower. Most show good existing supply (Kenya) and demand (African countries outside COMESA FTA & EAC) and low tariffs but hardly any trade. The products include copper & aluminium waste and scrap, bran sharps, and iron and titanium ores.
If tariffs are not impeding trade, what are the obstacles?