Kenya and its Trade Economy in 2020


The African nation with an estimated GDP of around $100 Billion and per capita GDP of $2,010 (as in 2019) is the 62nd largest economy in the world. Major industries of the country include agriculture, forestry, fishing, mining, manufacturing, energy, tourism and financial services. The economy showed positive growth in the last 2-3 years majorly   because of expansions in the telecommunications, transport and construction sectors, and a recovery in agriculture. Kenya also has a well-developed social and physical infrastructure in the region.

Influence of Agriculture in Kenya’s Trade Economy

Historically, Kenya has been predominantly an agriculture based economy with the horticultural products and tea forming a major chunk of its trade. Agriculture ($30 Billion) is the second largest contributor to Kenya’s (GDP), after the service sector ($34 Billion.) Even though, being an industrially developed country in East Africa, manufacturing accounts for only 14% of GDP while agriculture holds 18 % of the country’s GDP. Agriculture also employs 75% of working Kenyans. On the other hand, Kenya’s services sector, which contributes about 63% of GDP, is dominated by tourism. It has grown steadily in the last three decades and is one of the principal source of foreign exchange. 

Kenya and its trade partners

According to the statistics released by the Central Bank of Kenya, the countries major trade partners in the African region are Uganda, Tanzania, Egypt, Sudan, South Sudan, Somalia. Outside the African continent, the major trading partners are UK, Netherlands, USA, UAE, Pakistan, Germany, India etc. Kenya’s major export commodities are Horticulture products, Coffee & Tea. The country has exported almost .6 Million Tons of Horticulture products in the first two quarters of 2019. Sudan’s top import commodities include food and live animals, petroleum, manufactured good etc etc. Till June 2019, the country has imported $5 Billion worth of petroleum products.

Trade Agreements in Place for Kenya

  • The government of Kenya is generally investment-friendly and has enacted several regulatory reforms to simplify both foreign and local investment, including the creation of an export processing zone. 
  • Kenya has been a member of the World trade organization since 1995 and is also a member of GATT since 1964. Kenya actively participated in the WTO at several levels. It was the coordinator of the Africa Caribbean-Pacific (ACP) Group in 2014. It currently leads the WTO Accession negotiations for the Greater Horn of Africa. It ratified the WTO Trade Facilitation Agreement in December 2015.
  • The community of Sahel-Saharan States(CEN-SAD) with its main goals is to achieve economic unity through the implementation of the free movement of people and goods in order to make the area occupied by member states a free trade area. Kenya Signed the agreement to become a member of CEN-SAD in 2008.
  • Kenya has signed bilateral trade agreements with several countries:  Argentina, Bangladesh, Nigeria, Bulgaria, China, Comoros, Congo (DRC), Djibouti, Egypt, Hungary, Iraq, Lesotho, Liberia, Netherlands, Pakistan, Poland, Romania, Russia, Rwanda, Somalia, South Korea, Swaziland, Tanzania, Thailand, Zambia, and Zimbabwe.
  • India and Kenya are maritime neighbours. The contemporary ties between India and Kenya have now evolved into a multi-faceted partnership, marked by regular high-level visits, increasing trade and investment as well as extensive people to people contacts.

The current investment Scenario

The UK is the largest foreign investor in Kenya in 2019. There are more than 250 British companies based in Kenya and valued at over $2.61 billion. Kenya Investment authority was able to get over 157 investment projects from India in 2019 worth $ 320 Million. The investments have the potential to create jobs for more than 1 lakh Kenyans. Chinese manufacturing investments have concentrated on activities like building materials and light manufacturing, with an aim to serve growing domestic markets in Kenya and neighbouring countries.