NAIROBI: Kenyan small businesses have been challenged to exploit market access opportunities available under the recently renewed African Growth and Opportunity Act (AGOA) 2015 to increase Kenya’s export volumes in the USA market.
Kenya has exported less than 10 of the 6,300 products allowed into the US market under the preferential status for the last decade, a situation the government is keen to turn around.
Closing an MSME’s forum aimed at educating the sector on trading under the AGOA market, Cabinet Secretary, Industrialization and Enterprise Development Adan Mohamed said the government has worked on the structural problems that hinder entrepreneurs to venture into the American market.
According to Mohamed, Kenyan entrepreneurs had not fully exploited the market access opportunities under AGOA in its last term due to competitive disadvantages within the economy.
“In the last five years, we have reduced the standard cost of doing business by reinforcing transport, ports and electricity while reducing regulatory burdens like licensing procedures to enable our entrepreneurs trade, ” said Mohamed adding that Kenya has spearheaded collaborative initiatives with American authorities to deal with the major cost drivers impacting African competitiveness.
Further, he opined that Kenya has made strides in streamlining its standards in alignment with global processes to reduce cumbersome product approval process Kenyan entrepreneurs face abroad.
“The Ministry through Kenya Bureau of Standards has issued standardization mark permits to Kenyan firms to increase global market access of the Kenya products which will simplify the approval process and adds credibility to transact in the American market,” added the Cabinet Secretary.
He said President Obama’s Trade Africa platform has given the two trading parties an opportunity to ensure value addition within the AGOA cycle which will attract American capital and also appropriate incentives to mobilize domestic capital for economic transformation.
“Recently, we launched the Cold Chain program in partnership with the U.S government, key in upgrading Kenya’s cold chain infrastructure aimed at fast tracking Kenya’s desire to expand its export portfolio in the US and ensure compliance with U.S standards and regulatory requirements in perishable exports,” said Mohamed.
Bilateral trade with USA has benefited massively through the AGOA Act with Kenya currently exporting 90% of its products to the USA under the mandate.
Kenya’s trade profit increased from Kshs.17 billion (USD163miilion) in 2000 to Kshs.83 billion (USD875million) in 2010 primarily due to AGOA third-party country provisions that the country capitalized on the Textile and apparel sector.
Kenya is targeting Kshs.100 billion (USD1billion) in export earnings in the next two years and Kshs 1 trillion (USD 10billion) by the time the renewal expires.
SME’s are crucial to this endeavour as it is the fastest growing sector in the country contributing 30% of the annual national GDP.
The Renewal of the Generalized System of Preferences section, under the AGOA act caters for duty-free importing for over 5000 agricultural and non-agricultural products.
Specific key industry sectors have already benefited from the Act in the past few years. Textile and Apparel imports led the way in 2014 at Kshs.38 billion, Coffee fetched Kshs.3 billion while Titanium Ores and concentrates making Kshs.2.1 billion.
The Ministry of Industrialization and Enterprise Development has made big strides towards improving the ease of doing business in the country. Recent World Bank’s Doing Business report placed Kenya at 108th, 28 places up from last year and the 3rd most reformed economy in the world.
The government also set up the Micro and Small Enterprises Authority to regulate SME’s and facilitate economic growth through improved market access and financial support.
