Kenyan MSMEs Explore Access to EU Market Opportunities Under EPA

The EU-Kenya Economic Partnership Agreement has entered into force. The agreement is aimed at boosting bilateral trade in goods, increasing investment flows, as well as facilitating mutually advantageous economic relations sustainably. For more, CNBC spoke to Victor Otieno, Managing Director, Viffa Consult.' The EU is Kenya's second trade partner, with a trade worth around â¬3 billion as of 2023, which is a 16% increase between 2018 and 2020. So the four key provisions under the EU-Kenya Economic Partnership Agreement, number one is workers' rights and decent work, as espoused in the ILO framework, climate change and environmental protection, as per the Paris Agreement. We have deepened cooperation as well as sustainability. And lastly is gender equality and women empowerment, as per the UN framework. This is quite big for Kenyan businesses, Victor. But then what potential do we see here in terms of the potential challenges that maybe we should look into? You know, maybe some of the businesses, Kenyan businesses, might not be able to be onboarded onto the European imports market. Maybe, what are some of the challenges that we can talk about here, and how can we go about them? I think it's the prerogative of the Ministry of Industry and Trade, together with the MSME and cooperative ministries, as well as other relevant ministries, to be able to give a clear roadmap or a program that can allow MSMEs to be able to be onboarded and be able to take advantage of the economic agreement between EU and Kenya. So this would require maybe the Ministry or the government to be able to provide market intelligence in terms of products and services that MSMEs can be able to take advantage of, capacity building programs to ensure that they are ready to access that particular market, business development in terms of market access to corporate as well as retail market, as well as providing, you know, infrastructure through the county industrial parks, as well as, you know, aligning financing through the various frameworks that current government has, or, you know, credit guarantees scheme, HASPA fund, Affirmative Action funds, just to ensure that SMEs are able to take the advantage and be able to compete with their EU counterparts. All right, and in terms of the job creation here, Victor, maybe what are some of the sectors that we see that are likely going to benefit in terms of this EPA, you know, rise in employment due to the EPA here? I think currently the traditional sectors are the ones that are going to benefit, at least in the short term. So this, you know, sectors under coffee, tea, minerals, vegetables, as well as cut flowers, where, you know, Kenya exports 70% of its cut flowers to the EU. So that, in the short term, would be the main beneficiaries. But I think it also presents an opportunity for Kenya to be able to expand its export product portfolio to high value sectors such as agribusiness, manufacturing, you know, business process outsourcing in terms of technology. So this is an opportunity for Kenya to be able to really move away from traditional sectors and just introduce other sectors that can be of socioeconomic benefit to the country. Yes, and job creation is one thing, and also Kenyan businesses being on the EPA is another. But in terms of the friendly policies here, Victor, what are we seeing? How is this friendly for us, for Kenyan businesses? I think access to market is a major challenge for Kenyan SMEs, who we know are the backbone of the economy. So I think what my proposition would be is an alignment of policies to ensure that SMEs are able to be market ready to enter EU. That would mean, you know, tax support, that would mean capacity and other type of programmatic support that would allow for Kenyan SMEs to be competitive, to enter into EU as well as other export markets. And there is quite an impact that we are seeing in terms of the East African community, being it solely that this partnership is, or agreement rather, is based on the EU-EAC-EPA. So how does this bilateral deal, you know, between Kenya and the EU affect the wider EAC trade dynamics? I think number one is market, you know, the market fragmentation, in the sense that, you know, EU is a 500 million market. And Kenya, you know, having an EPA directly with EU, the power balance is not balanced as such, because Kenya has a population of around 50 million vis-a-vis 500 million. So this, in effect, would bring market, you know, being fragmented, but gaining power for even the other member states becomes weaker, because they are, again, if you are to compare the EU population against the respective countries, the power balance is not working as such. And I think there might be or may be a negative impact in terms of the continued call for economic cooperation within the East African community. And as we come to the tail end of our conversation, Victor, there's a lot when it comes to the sustainability commitment. So maybe from where you sit, what are we seeing there? How will these commitments be monitored and also enforced at the same time to ensure both economic growth and environmental protection, and also the long-term implication that we are seeing here between Kenya and the EU in terms of working together to ensure success of this agreement over time? What are some of the factors that are at play here? I think Kenya, in the long run, I think possibly if Kenya can be able to have this economic partnership agreement within the ESE bloc, that can ideally give Kenya a good standing or a good beginning point. And this is the rallying cry also under the CFTA in Africa. From a monitoring perspective, I think the respective ministries are the ones that are going to follow up to ensure that the agreement is actually actioned. So Ministry of Labour, Ministry of Environment, as well as the National Treasury, just ensuring that they're able to monitor the numbers. And of course, then they can be able to take action based on the happenings that we see in actual trade, when we see actual people starting to trade based on the EPA.

The EU-Kenya Economic Partnership Agreement (EPA) has entered into force. The agreement is aimed at boosting bilateral trade in goods, increasing investment flows, as well as facilitating mutually advantageous economic relations sustainably. For more, CNBC Africa's Tabitha Muthoni spoke to Victor Otieno, Managing Director, Viffa Consult.

Access to EU market opportunity for Kenyan MSMEs 

The EU-Kenya Economic Partnership Agreement (EPA) has entered into force. The agreement is aimed at boosting bilateral trade in goods, increasing investment flows, as well as facilitating mutually advantageous economic relations sustainably. 

Access to EU market opportunity for Kenyan MSMEs

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