Opportunities For Kenya’s Economic Regional Blocs Under AFCFTA

The paper examines Africa continental free trade area (AFCTFA) ; its objectives, challenges being addressed, available opportunities and how Kenya through its regional economic blocks can explore opportunities  under the AFCFTA

The AFCFTA is a significant achievement to the socio-economic development of the African continents as it seeks to integrate the highly fragmented continental market by creating a preferential trade area for goods and services.

This trade agreement builds upon the progress achieved in Regional Economic Communities to create a market of US$2.5 trillion for goods and services with over 1 billion people.

The objectives of the agreement as per article 3 of the framework includes but not limited to to; Create a single market for goods, services, facilitated by movement of persons in order to deepen the economic integration of the African continent, create a liberalised market for goods and services through successive rounds of negotiations, promote industrial development through diversification and regional value chain development, agricultural development and food security among others

The challenge that the continent continues to grapple with is two fold; one hand is very low intra Africa trade that is less than 16 percent against global trade at 84 percent, the other is Africa’s current trade portfolio is dominated by primary commodities, which are subject to cyclical price fluctuations on the international market. Even when prices of these commodities are high, they are typically lower than those of higher-value goods. To put this into context; Industrial goods constitute 60 percent of Africa’s import bill  while 70 percent of Africa’s export remain raw/unprocessed natural resources.

Priority sectors identified under AFCTA include ; Business and professional services, education , health and Social services, communication, energy, tourism, construction, environmental services, transport and distribution financial, movement of natural persons.

Finally, the AFCTFA will be realised through the following proposed model; Governments to consult with stakeholders and negotiate the Agreement. Governments to provide trade facilitation functions, regulate sectors and businesses and ensure an enabling environment. Businesses, innovators, and workers create and trade goods and services.

Kenya’s national strategy is underpinned on Vision 2030 that aims to transform the country to middle income status by 2030. AFCFTA affords Kenya access to a much larger market in the continent for its existing goods and services as well as new products to be developed by the country’s highly innovative entrepreneurship ecosystem.

Although the current model envisioned under AFCFTA of national governments consulting stakeholders then proceeding for negotiations is recommended; this may not be the most optimal approach based on Kenya’s socio-economic architecture that is devolved. There may be instances where national priorities differ with counties such as priority sectors for investments leading to lack of coherence hence wasted of resources.

To address this Kenya can rely on devolving the consultation to the various economic blocks of; Frontier Counties Development Council (FCDC) comprising of seven (7) counties namely; Garissa, Wajir, Mandera,Isiolo, Marsabit, Tana River and Lamu.  North Rift Economic Bloc (NOREB) comprising of seven (8) counties namely Uasin Gishu, Trans-Nzoia, Nandi, Elgeyo Marakwet, West Pokot, Baringo, Samburu and Turkana.  Lake Region Economic Bloc (LREB) comprising of thirteen (14) counties namely Migori, Nyamira, Siaya, Vihiga, Bomet, Bungoma, Busia, Homa Bay, Kakamega, Kisii, Kisumu, Nandi, Trans Nzoia and Kericho.  Jumuia ya Kaunti za Pwani comprising of six (6) counties namely, Tana River, Taita Taveta, Lamu, Kilifi, Kwale and Mombasa South Eastern Kenya Economic Bloc comprising of three (3) counties namely Kitui, Machakos and Makueni. Mt. Kenya and Aberdares Region Economic Bloc Comprising of ten (10) counties namely Nyeri, Nyandarua, Meru, Tharaka Nithi, Embu, Kirinyaga, Murang’a, Laikipia, Nakuru and Kiambu.

The economic blocs are intended to spur economic growth within the respective regions through policy  alignment and resource mobilisation.

First based on two philosophies; selling and marketing the economic blocks can consult stakeholders within the region in light of AFCFTA.  Selling concept involves identifying goods and services that the region is currently producing, matching with ready market in the continent and forwarding to national government for onward negations under AFCTA. This approach will work best if the goods and services are aligned to the priority sectors identified under AFCTFA.

Marketing concept on the other hand involves market intelligence on the priority sectors and actual market and demand within the member states then creating products to meet the demand.

In order to achieve this through either selling or marketing approach the economic blocs must anchor this on a strategy and resource allocation.  This will require harmonisation and alignment of each regional economic bloc’s county Integrated Development Plan (CIDP) which is a plan prepared by all counties to guide development over a five-year period and without which based on the Public Finance Management Act, 2012 no public funds can be appropriated.

The CIDP for the regional economic block’s member counties must be aligned in terms prioritisation of AFCFTA as a development priority hence inform the annual budget process, particularly the preparation of annual development plans, the annual county fiscal strategy papers, and the annual budget estimates.