TRALAC - Trade Law Centre

'Kenyan SMEs to win big if proposed FTA with the US is adopted' – AMCHAM

Monday, 03 August 2020

Source: Capital FM Kenya

Small and Medium Enterprises (SMEs) will be some of the biggest beneficiaries of the Free Trade Agreement that is currently being negotiated between the governments of Kenya and United States.

American Chamber of Commerce in Kenya (AMCHAM) CEO Maxwell Okello says SMEs will benefit from increased trade opportunities for both export and import.

According to the CEO, SMEs will have the opportunity to become distributors of American products, which are renown for high quality and innovativeness.

They will also benefit from Foreign Direct Investment and partnership opportunities with counterpart SMEs as well as larger U.S. companies.

“American companies wanting to do business in Kenya will be looking for partners with knowledge of the local market and supply chain systems; this is where SMEs come in,” he said.

Okello sees more gains for SMEs in the form of transfer of knowledge, expertise and technology from American businesses.

According to the CEO, this will in turn enhance the quality and competitiveness of their goods and services, thus spurring growth,” Okello said.

Experts have however warned Kenya to be careful with the deal.

East Africa Business Council Chair Nick Nesbitt has previously termed the proposed deal as ideal but has urged the government to be aware that it is negotiating with a superpower whose interests it will be seeking to guard.

Kenya and US launched negotiations for the landmark agreement early last month, paving way for trade and investment relations between the two countries.

Under the deal, Kenya’s exports will retain duty and quota free access to the US market, cementing the gains achieved during the African Growth and Opportunities Act (AGOA) that enabled Kenya to diversify and increase the value of exports to the US market.

Between 2009 and 2019, the value of Kenya’s exports to the US increased from Sh17.4 billion to Sh51.9 billion.

Over 70 percent of these earnings were from horticulture, apparels and textiles.

The US has 14 FTAs with 20 countries across the world.

In Africa, Morocco was the first in 2004 to conclude an agreement, hence, Kenya will be the second African country upon successful conclusion of the negotiations.

The negotiations come ahead of the anticipated lapse of the African Growth and Opportunities Act, popularly known as AGOA, on September 30, 2025.

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