Kenya struggles to tap into EU market potential amid non-tariff barriers

Published September 18, 2024

KENYA – Kenyan exporters face significant non-tariff barriers that hinder their ability to fully access the European Union market, despite recent trade agreements, according to Kenya Institute for Public Policy Research and Analysis (KIPPRA).

The report reveals that these barriers are undermining the potential benefits of the EU-Kenya Economic Partnership Agreement (EPA), which went into effect on July 1, 2024.

The EPA offers Kenyan products duty-free access to the EU’s 27-member market, a potential customer base of 500 million people.

In return, Kenya will gradually open its markets to EU products over a 25-year period. According to the Ministry of Investments, Trade, and Industry, led by CS Salim Mvurya, the EPA is the most ambitious deal negotiated with an African nation regarding sustainability. It is seen as a model for future sustainable trade agreements.

However, KIPPRA highlights that Kenyan exporters are struggling with non-tariff barriers despite the agreement’s potential.

“The more rules exporters need to meet, the higher the compliance costs, which can deter exports or reduce competitiveness,” KIPPRA explains.

The report notes that while several EU countries offer attractive tariff reductions for Kenyan exports—such as Bulgaria (8.75%) and Slovenia (8.49%)—they also impose numerous non-tariff barriers.

These include technical regulations, rules of origin, and anti-dumping measures that complicate market entry for Kenyan products.

Kenyan exporters encounter challenges with labelling requirements, proof of origin, and phytosanitary controls.

These barriers not only increase compliance costs but also disproportionately affect small and medium-sized enterprises (SMEs), making it harder for them to compete in the EU market.

“Increased regulatory complexity makes it more difficult for Kenyan businesses to access the EU market,” says KIPPRA. “These barriers tend to favour larger firms that can manage the costs, while smaller businesses struggle.”

While some EU markets, like the Czech Republic and Finland, maintain fewer non-tariff barriers and thus are more accessible to SMEs, Kenya’s overall export performance to the EU remains significant.

Last year, Kenya’s exports to the EU rose to Sh150.1 billion, driven by increased sales of cut flowers, avocados, and beans. However, export earnings from Russia declined sharply due to reduced tea exports.

The Kenya Integrated National Export Development and Promotion Strategy aims for a 25% annual growth in exports.

CS Mvurya announced plans for a nationwide sensitisation programme to educate Kenyan businesses about the opportunities and requirements of the EPA.

EU Ambassador to Kenya, Henriette Geiger, emphasized the EPA’s potential benefits, stating, “Once fully embraced and adopted, this agreement will significantly increase employment opportunities and strengthen economic ties between Kenya and the EU.”