PREVIEW
After multiple setbacks President Ruto can celebrate some economic boosts during his trip to China
Kenya will overtake Ethiopia as East Africa’s largest economy this year, the IMF has said. Kenya’s gross domestic product will be US$132 billion in 2025, compared to Ethiopia’s $117bn, according to the Fund. That will be seized upon by President William Ruto as he seeks to convince a deeply sceptical public counting the costs of higher prices and higher taxes about his government’s economic stewardship. He has also just completed what he claims is highly investment-seeking trip to China.
The EU is using the Kenyan economy to push its much-criticised economic partnership agreements to other African states. Brussels claims that it expects EU-Kenya trade to double after the two sides ratified an EPA last year (Dispatches, 20/12/23, Nairobi goes ahead with pioneering Brussels deal).
‘What we have seen with other countries where EPAs were signed with the EU, they had incredible increases in trade volumes, in comparison to countries that didn’t have an EPA,’ EU Ambassador Henriette Geiger told Bloomberg News last week.
Kenya exported €1.4bn to the EU in 2023 – mainly vegetables, fruits, and flowers – and imported €2bn worth of mineral and chemical products and machinery.
Geiger’s remarks will get a mixed reception from African economists. Few of the economic partnership agreements (EPAs) that the EU offered to African regional blocs two decades ago have been agreed and implemented. They have been criticised for focusing too much on opening market access (AC Vol 58 No 21, Terminal EPA delay).
‘The EPAs were never designed for industrialisation,’ says Carlos Lopes, a former advisor to the African Union. ‘They reinforced raw commodity export patterns and limited African states' ability to use tariffs and subsidies strategically,’ he adds.
The imposition of tariffs on cars and goods trade by the Trump administration in the United States will mean the EU looking to ‘diversify’ its trade partnerships, says the European Commission.
‘We are still waiting for the EU to signal readiness for a genuine reset. So far, the bureaucratic reflex to defend legacy agreements has prevailed over any strategic recalibration,’ adds Lopes.
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