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AfCTFA To Be Unaffected By Anticipated U.S.-Kenya Trade Deal

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A Continental Free Trade Agreement between Kenya and the United States of America (U.S.A) will be useful in increasing the trade volume and investments between the two countries.

This was the result of the meeting between the Presidents of Kenya and U.S,A, Uhuru Kenyatta and Donald Trump, respectively, when they met at the White House yesterday.

According to a statement from the Presidential Communications Service Unit (P.S.C.U), to kickstart this process, the the American Trade Representative, Mr Robert Lighthizer, will first notify Congress, the equivalent of Kenya’s parliament, so as to start trade negotiations with the two countries.

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The existent Continental Free Trade Agreement (AfCFTA) will not undermine a bi-lateral trade deal between Kenya and the United States of America (U.S.A), at Washington D.C. at the U.S.A -Kenya Trade Forum.

According to data from the Kenya National Bureau of Statistics (K.N.B.S), the USA bought goods worth Kshs 26.9 billion from the United States of America, comprising of agricultural products and garments.

“ We are looking forward to concluding the bi-lateral trade agreement between Kenya and the USA and set the base for a new relationship between the two countries,” says President Kenyatta.

But, he was quick to assure that AfCTFA, the trading bloc signed in March 2018 between 28 African countries seeking to create a single market, but also lead to other countries in the continent.

The President’s statement comes even as the AU had earlier stated that it would be in the best interests of the continent to make a trade pact with the USA instead of individual countries. v

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This is because the economies of different countries is not similar and thus likely to be uncompetititive.

According to Brookings, not only is Kenya a member of AfCTFA, but is also one of the four largest members of the trading bloc, other than Cote d’Ivoire, Ethiopia and Morocco.

In July 2019, the Vice-President of Kenya, Mr William Ruto had stated that Kenvya had faced a challenge when it came to getting access for its products and services in global markets. According to the Stanbic Purchasing Managers’ Index (PMI)on manufacturing, Kenyan manufacturers are leaving the Kenyan market due to high rates and an unpredictable environment.

As an example, Parliament last year pushed for the keeping of the interest rate cap that had been present in the 2019 Finance Bill, though President Kenyatta refused to assent to it. His justification was that it would curtail the growth of small businesses in Kenya due to lack of access to credit, which account for more than 80 percent of businesses in Kenya.

But, there have been other taxes that have had an adverse effect on business, svuch as the 15 percent presumptive tax on businesses that amount to Kshs 5 million.

But the AmCham Board President, had this year, while at the 2020 Economic Outlook, lamented at how heavy taxation for business had affected growth for enterprise which is requisite for employmenvt. For instance, according to the World Economic Forum (W.E.F), while Senegal had a Gross Domestic Product (GDP) grvowth rate of 7 percent as of 2018, Tanzania had 6.4 percent.

In his statement, President Kenyatta notes that there is a need for Kenya to start biulding on mechanisms that already do exist. According to the Office of the U.S. Trade Representative, direct investments from the USA to Kenya were $ 407 million.

“ America is the the third import destination for Kenyan products, with a share of about eight percent of a total of Kenya’s exports globally and through it, Kenya has been a key mover of trade between Kenya and the USA under the Agoa Act and there is need to maximise on it five years before it ends,” he says.

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