Kenya looks to protect key sectors & firms in Kenya-US FTA negotiations

Kenya is gearing up for negotiations on the Kenya-US free trade agreement, with a focus on protecting key firms and sectors in the country. The Ministry of Trade has faced criticism for the lack of transparency surrounding the deals, prompting the government to outline some of the key principles it will uphold during the negotiations. This move comes amidst concerns that existing trade agreements, such as the African free trade agreement and the ESC common market protocol, could be negatively impacted by the new deal with the US. Civil society organizations have raised alarm over the potential vulnerability of Kenyan businesses to the financial might of American companies. The decision to pursue a standalone agreement with the US has raised questions within the East African Community (ESC), as other member states may be left at a disadvantage. Countries like Rwanda have previously advocated for a unified approach to trade negotiations to strengthen the regional market. The fragmented nature of trade agreements within the ESC has hindered the community's economic integration efforts, with some nations forging ahead while others lag behind. The issue of rules of origin is expected to be a contentious point in the negotiations, potentially leading to trade barriers if not addressed effectively. The ESC must strive for unity and coherence in its trade policies to avoid discrepancies between decisions made at the summit level and their implementation at lower government levels. Collaborative efforts are crucial to realizing the full potential of the ESC market and promoting sustainable growth across member states. In a separate development, the Central Bank of Kenya has maintained its key lending rate at seven percent, a move that has surprised some market observers. While the central bank's decision may be seen as aligning with government policies and populist sentiment, concerns linger over the actual impact on liquidity and lending. The discrepancy between official reports of sufficient liquidity and the challenges faced by businesses in accessing credit underscores the need for greater engagement with market realities. Despite predictions of a strong post-pandemic economic recovery by the central bank, there are doubts about the feasibility of such optimism. SMEs, which drive Kenya's economy, are grappling with market constraints and limited access to credit, posing a significant hurdle to swift economic rebound. The government's commitment to supporting small and medium enterprises through appropriate policies will be crucial in fostering sustainable growth and resilience in the aftermath of the pandemic.