Recently, the European Union and Kenya signed an interim Economic Partnership Agreement, a trade and development agreement negotiated between economic blocs and countries or countries and regions. It’s a tool to strengthen competitiveness, expand industrialization, improve export performance and enhance the investment climate. The EU had previously been the world’s largest trade union before the African Continental Trade Area (AfCTA) agreement came into place and is currently in the process of implementing seven economic partnership agreements with fourteen African countries. The aim of the EPA with which the renewed economic partnership is being carried out is to leverage trade and investment for sustainable development. Business Edge looks at the Economic Partnership Agreement and what it sets to accomplish with Kenya, the East African Community and Africa as a whole. Tolulope Adeleru-Balogun is joined by Ken Gichinga, Chief Economist at Mentoria Economics.
“Kenya is the hub of the region, the largest economy and the headquarters of many companies in the region”, says Ken Gichinga of the EU commencing the EPA from the East African country. As the economic powerhouse of the EAC, Kenya’s track record appears to have been seen favourably by external partners, such as the EU and consequently, it bears some responsibility for the rest of the countries surrounding it. “It’s a win-win for both Kenya and the EAC, and the EU,” he added. However, the ratification of this agreement is subject to all members of the bloc acceding to it- with Tanzania being reticent to do so. Gichinga says this is because there are concerns of productivity being reduced if a trade agreement means goods and services would be imported from Europe in the process of having a renewed economic partnership with Africa while adding that some of those concerns are now being addressed.
“Trade, not aid” has long been the call African countries have made through the years, going with the belief that instead of receiving help, these countries are capable of creating value with their goods and services. The progression is being made from aid to trade and investment but still there are questions of if the trade is equitably balanced. “The aid approach hasn’t worked from the EU to African countries and the trade option has the potential of being balanced. We’re starting to see market-based solutions where investors and recipients are able to have meaningful relationships,” says Ken Gichinga.
Watch the full episode above.
