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AfCFTA and export growth opportunities for Kenya and other COMESA countries

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Since the beginning of 2021, Africa officially started trading under the African Continental Free Trade Area (AfCFTA) Agreement. According to the AfCFTA Secretariat, already after a few days from the date when the AfCFTA became operational, on 4 January, two maritime shipments of beverage and cosmetic products have been traded from Ghana to South Africa and Guinea under the AfCFTA rules. In order to increase awareness about the export opportunities arising from this agreement, the International Trade Centre (ITC) published a report that focuses on the COMESA region and explores its potential to export to regional markets so to benefit from the trade opportunities created by the AfCFTA.

According to the African Integration Index, a composite index measuring level of integration in Africa in 5 main dimensions (Trade, Production, Macroeconomy, Infrastructure and Free Movement of People), COMESA is one of the blocks in Africa better integrated in trade.

The implementation of the AfCFTA is expected to further boost such integration, as explained in a recent paper published by COMESA which argues that most of trade in Africa takes place among countries located relatively close to each other, while countries that are members of Regional Economic Communities (RECs) geographically far from each other have less intense trade relations. The report mentions the example of the COMESA trade with ECOWAS, which is indicated as very weak. 

The new ITC report points out that by opening African markets, the AfCFTA has the potential to dramatically spur intra-African trade and to foster regional value chains. One of the regions that is expected to reap the bigger benefits of such openness is COMESA.

COMESA countries such as Kenya, for instance, can benefit from AfCFTA to significantly increase their export potential to other COMESA countries (in case of Kenya by 26% at intra-COMESA level, and by 54% for what concerns its trade with the rest of Africa).

In particular, tea and mate (an herbal tea also known as yerba mate) is indicated by the report as the subsector with the higher export potential to Africa, where the export potential is estimated to grow by $19.4 million, driven by exports of black tea in packs of more than 3kg ($123.2 million).

The other most important subsectors in terms of total export potential in Kenya are processed and preserved food ($249.1 million), and ferrous metals ($228.8 million). In both of these subsectors, the ITC report highlights that a significant part of their export potential to other African countries remains untapped.

In the processed and preserved food subsector, the products with the highest export growth potential are chewing gum ($35.5 million), sugar confectionary not containing cocoa ($18.1 million) and food preparations not elsewhere specified ($17 million). In the ferrous metals subsector, the top export potential products include different flat or flat-rolled products, and bars and rods of iron or non-alloy steel.

Kenya: Total realized and unrealized export potential to Africa, by product:


 

 

 

 

 

 

 

 

 

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