Egyptian-Kenyan Economic and Trade Relations
Monday, August 26, 2019
Egyptian-Kenyan Economic and Trade Relations

Economic and trade relations between Egypt and Kenya are of a special importance within the strategy Egypt has been adopting in order to beef up cooperation with African nations. Long decades ago, Egypt has developed economic partnership with Kenya at both bilateral and multilateral levels within regional economic blocs gathering the two countries. Egypt and Kenya are both members in the COMESA and their relations have seen a positive development since then. Egypt has also taken the direction towards Africa to cover her needs of goods and products from African markets, believing, therefore, in the importance of inter-African cooperation in favor of African peoples.

The COMESA

The Common Market for Eastern and Southern Africa (COMESA) remains one of the most successful blocs in Africa. The COMESA was established in 1994 to replace Preferential Trade Area (PTA) for eastern and southern Africa that was established in 1981.

  • The COMESA started as a preferential trade area among the member states, to be developed later into customs’ union then a common market. Egypt joined the COMESA on June 29, 1998 and started applying tariff exemptions to imports coming from other member states by February 17, 1999 on reciprocity-based principle for goods that had certificate of origin and certified by the bodies concerned in each member state.
  • On October 31, 2000, nine countries joined the agreement on a free trade area, including Egypt and Kenya, then Rwanda and Burundi which joined on January 1, 2004. Within the COMESA, member states apply full tariff exemptions on all goods exchanged between them provided that the goods have a COMESA Certificate of Origin.

 

Trade Exchange 

The volume of trade exchange between Egypt and Kenya has varied at different given times. Egypt did achieve a tangible increase in exports and imports with Kenya in the period from 2007 till 2010. However, value dropped in 2011 owing to the circumstances afflicting the Egyptian economy at that time. As of 2015, and thanks to the State’s interest in bolstering ties with African countries, including Kenya, the volume of trade has been on the rise.

  • In 2007, the volume of trade between Egypt and Kenya reached USD 230 million. The volume of Egyptian exports into Kenya hit 48.9% to reach USD 176 million. For the first time in 20 years, trade balance has been in favor of Egypt with a surplus of USD 34.4 million.
  • In 2008, the volume of trade hit USD 378.3 million. Statistics show that Egyptian exports into Kenya amounted to USD 156.2 million, while imports from Kenya hit USD 222.1 million with a surplus of USD 65.9 million in favor of Kenya. Such an unprecedented increase in the value of Kenya’s exports into Egypt in 2008 was owing to the increase seen in tea exports into the country. It is a fact that Egypt is the largest exporter of Kenya’s tea.
  • In 2010, Egyptian exports into Kenya increased after the sharp decline seen in the trade exchange between the two countries in 2009, which was part of the decline seen in Egypt’s trade exchange with the world countries over the global financial crisis in 2008. Egypt’s exports into Kenya in 2010 amounted to roughly USD 232.35 million versus USD 120 million in 2009. Egypt’s imports from Kenya also increased at the same year, as they increased from USD 149 million by the end of December 2009 to USD 228.66 million by the end of 2010.
  • In 2018, the volume of trade exchange between Egypt and Kenya hit USD 640 million versus USD 553 million in 2017, with an increase of 15.7%. Egypt’s exports into Kenya dramatically increased by 21.7% to reach USD 353 million versus USD 290 million in 2017.
  • Egyptian imports from Kenya slightly increased by 9.5% in 2018, hitting USD 288 million versus USD 263 million in 2017. Items of Egypt’s export list to Kenya include sugar, diapers, detergents, glass bottles, writing boards.
  • The list also includes: iron and metal products, tires and batteries, paper products, detergents and chemicals, cables and conductors, electric transformers, medicines, engineering equipment, insulation materials, home appliances, carpets, oils, paraffin wax, air conditioners, linings, beddings, paintings, ceramics, TV sets, cement, soaps, fertilizers, wheat, chocolates, juices and jams.
  • As for items on the list of Egypt’s imports from Kenya, they include: tea, tobacco, chemical substances, oils, fresh fruits and vegetables, cut flowers, dried flowers, and printers’ inks.

Egypt and Kenya have been exerting strenuous efforts to double the volume of trade exchange between them, of these efforts are:

  • In July 2019, an Egyptian delegation participated in the COMESA summit held in Nairobi, Kenya within Kenya’s 3rd Trade Fair held from July 17 to 21, 2019. The Fair was attended by presidents of Kenya, Uganda, Zambia and Mauritius, and Vice-President of Seychelles, in addition to representatives by other COMESA member states, let alone 200 exhibitors. The Egyptian delegation stressed the support of the leaders of the two countries to the efforts aimed at promoting economic and trade cooperation between Egypt and Kenya within the COMESA and other efforts aimed at the merge of the three economic blocs: the COMESA, the SADC and the EAC.
  • In May 2015, the Egyptian Ministry of Trade and Industry organized Egypt Export Expo in Nairobi with the attendance of ambassadors of Arab countries accredited in Nairobi, Mr. Kiprono Kittony, Chairman of the Kenya National Chamber of Commerce and Industry, and the Undersecretary of Kenya’s Ministry of Trade. Egypt’s then Ambassador to Kenya Mahmoud Talaat opened the exhibition and reiterated the importance of continued visits by Egyptian businesspeople to explore the Kenyan market. He pointed out the need of such visits to inform the Kenyan consumers of Egyptian products. He also called on Kenyan investors to visit Egyptian factories and investment zones. The Ambassador reiterated the need of much cooperation to improve trade balance between the two countries, referring to efforts aimed at luring Egyptian importers into the Kenyan market. He also said transportation remained one of the obstacles facing Egyptian products exported into Kenya.
  • For his part, Mr. Kiprono Kittony Chairman of the Kenya National Chamber of Commerce and Industry said Kenya would serve as an access point for Egyptian businesspeople and products to six neighboring states with millions of consumers. Being the main entry for landlocked African nations, Kenya has a strategic location for countries such as Rwanda, Burundi, and South Sudan for trade exchange via Mombasa Port, the largest in East Africa. He also called for addressing trade imbalance, asking Egyptian importers to pay attention to other important products in Kenya. More than 52 firms representing 6 export councils participated in Egypt Export Expo, namely: Egyptian Home Textiles Export Council, Egyptian Furniture Export Council, Engineering Export Council of Egypt, Textile Export Council, Chemical and Fertilizers Export, and Export Council for Building Materials, Refractory & Metallurgy Industries, in addition to Chamber of Cereals Industry.
  • In September 2011, the Egyptian El-Nasr for Import and Export said it would increase branches in African countries, particularly those in Nile Basin countries, including Kenya. The company said it would turn one of its properties in Nairobi into a trade center for Egyptian products in Kenya to showcase all Egyptian goods, especially those by reputable companies in such areas as furniture and home and electric appliances. In fact, El-Nasr for Import and Export has a head office in Nairobi and a regional office in the city of Mombasa to follow up the process of containers’ loading to and from Egypt into the port. The company has been operating in Kenya for long and is in charge of exporting Kenyan products into Egypt, particularly tea and tobacco. This is one of Egypt’s strategic objectives given the country’s interest in promoting ties with Africa, in general, and Nile Basin countries, in particular. El-Nasr for Import and Export imports food products, dried vegetables, juices and jams from Egypt into Kenya.

 

Investment     

There are mutual investments between Egypt and Kenya, particularly by Egyptian businesspeople. Egypt ranks 24 on the list of top investors in Kenya with total investments amounting to USD 36.6 million. On the other hand, Kenya ranks 80 on the list of top investors in Egypt with a net value of USD 7.7 million by 22 Kenyan firms.

One of the major Egyptian investors in Kenya is Citadel Capital which, as of April 2014, held 85% of the shares in Rift Valley Railways, the railways company operating between Mombasa and Kampala, Uganda’s capital.

Still, joint efforts are strenuously exerted to further cooperation between Egypt and Kenya in the industrial area, with a focus on animal and agricultural-related sectors. The sectors include meat processing, leather and juices manufacturing. Work is also in motion to make use of Egypt’s industrial expertise in the fields of technical support and training for Kenya’s industrial sector staff. The two countries also examine means of cooperation in medicine registration provided that Kenya takes certain measures to facilitate the process in order to cut costs.

 

The Joint Committee    

The Egyptian-Kenyan Business Council is one of the most important outcomes of furthering economic cooperation between the two countries. It was launched in December 2016 in order to further trade exchange and investment between Egypt and Kenya.

  • The Council held the first meeting with the attendance of the Kenyan Cabinet Secretary for Industry, Trade and Cooperatives, and the Chairman of Federation of Egyptian Industries and board members from both countries. The parties agreed on formation of workgroups entrusted with furthering trade exchange in industrial sector, petrochemicals, agriculture, energy, health and food. Chairman of the Council Hossam Farid said, during his meeting with the Kenyan Cabinet Secretary for Industry, Trade and Cooperatives, that the Council would examine given sectors to promote its presence in the Kenyan markets in the upcoming period.
  • The Egyptian-Kenyan Business Council is composed of 55 firms that represent more than 60 businesspeople in the sectors of engineering, building and construction materials, chemical industries, food industries, health, renewable energy and environment and readymade garments.
  • During the proceedings of the first meeting of the Egyptian-Kenyan Business Council, the Egyptian mission held a meeting with the Kenyan Cabinet Secretary for Health in which the two parties agreed on donation of:
  • Mobile Blood Test Unit, 1000 units for treatment of Hepatitis C, and Mobile Clinic Unit to be administered by Egyptian doctors (all were donated by Egypt’s Pharco Pharmaceuticals Company).
  • The two sides also agreed on submitting a request for the registration of 30 Egyptian medicines for sale in the Kenyan markets, as well as hosting educational missions from Kenya for training at Egyptian hospitals.
  • Board members of the Council also met with the Kenyan Cabinet Secretary for Energy. The two parties agreed on submitting letters of intent by a number of firms to establish solar-powered stations. Egyptian Lighting Company submitted a letter of intent on establishing a solar-powered station at a capacity of 100 megawatts fully funded by the Egyptian side. The company would sell power to the Kenyan government in accordance with tariff system adopted in Kenya. El-Sewedy Electric also submitted a letter of intent on establishing a solar-powered station at a capacity of 30 megawatts fully funded by the Egyptian side. Moreover, the Egyptian Infinity Company submitted a letter of intent on establishing a solar-powered station at a capacity of 250 megawatts fully funded by the Egyptian side and it would sell power to the Kenyan government in accordance with tariff system adopted in Kenya.
  • In agriculture, the two parties agreed on joint cooperation in agricultural investments, particularly in the planting of corn, soya, rice and other crops. The deal would lead to an increase of Egyptian exports of machinery and equipment such as water pumps, engines, solar cells, tractors, irrigation systems and fertilizers at an expected value of USD 25 million.
  • Moreover, Egypt’s private sector would present training grant at factories and farms in Egypt for more than 500 Kenyan workers.
  • The meeting also touched on a number of vital issues, including business-to-business meetings between Egyptian and Kenyan companies, where the two parties agreed on utilizing the abattoir, affiliated to the Kenyan government in Nairobi, and upgrading it in order to export meat products into Egypt.
  • The Egyptian-Kenyan Business Council also witnessed the signing of an agreement on issuing purchase requisition for Egyptian firms, members of the mission, at a value of USD 10 million, which accounted for 5% of the total of Egypt’s exports into Kenya in 2016, in such areas as engineering industries, chemical industries, building materials, food and health.
  • Joint meetings are held on a regular basis for a follow up of implementation of the above projects. A storehouse was established in Mombasa Port on 50000 square meters for Egyptian products. There are 21 containers for Egyptian products that include building materials, food, chemicals, and engineering equipment. In addition, an Egyptian firm has been established in Kenya to be an entry point for Egyptian products into East Africa. Moreover, tea packaging factory has been established in Ain Sokhna, Egypt for export to the European countries, the Gulf region and South and Central Asia.
  • In November 2016, Minister of Investment and International Cooperation Sahr Nasr presided over the Egyptian delegation that took part in the Senior-Level Meeting of Global Partnership for Effective Development Cooperation (GPEDC) in Nairobi, Kenya. The meeting serves as a unique platform for heads of states and governments, ministers, CEOs of leading organizations in the world. The aim is to discuss means of effective development cooperation at the international level to match the priorities of countries and contribute to achieving Sustainable Development Goals (SDGs). Participants at this event held in Nairobi included more than 100 speakers and development leaders from around the globe. The Egyptian Minister of Investment and International Cooperation chaired a session on “Development Success Story in Egypt”. The session aimed to review successful models of comprehensive partnership and sustainable development in Upper Egypt region.
  • On November 16, 2016, then Prime Minister of Egypt Dr. Sherif Ismail received Vice-President of Kenya William Ruto. The two parties agreed on cooperation in the field of training in security and agriculture. They also discussed volume of trade exchange between the two countries which hit USD 500 million. They also tackled cancelling visa for Egyptians wishing to visit Kenya.
  • During the visit of President El-Sisi to Kenya in February 2017, Egypt and Kenya agreed on avoidance of double taxation on imports in order to enhance trade exchange between them.
  • Egypt took part in the High-Level Conference on the Global Sustainable Blue Economy held in Nairobi, Kenya from November 26-28, 2018. Engineer Sherif Ismail, Advisor to the President on National and Strategic Projects, led the delegation and delivered Egypt’s speech at the opening session of the Conference. In his speech, he highlighted the environmental challenges afflicting seas, oceans, rivers and lakes, namely industrial pollution, climate change, and water high levels. He also reiterated Egypt’s commitment to working on facing those challenges at the national level within Egypt’s Vision 2030 for Sustainable Development, and at the African level within African Union Agenda 2063 (The Africa We Want), in light of Egypt’s presidency of the continental organization in 2019.
  • Engineer Ismail also met, on the sidelines of the Conference, with a number of Kenyan officials, including the Cabinet Secretary for Transport, Infrastructure, Housing Urban Development and Public Works. The two sides discussed means of bolstering cooperation in the medium-scale housing projects and Kenya’s infrastructure via creating partnerships between Egyptian and Kenyan public and private sectors. They also touched on means of utilizing potential investment opportunities in Kenya by Egyptian firms.
  • In March 2019, Egypt took part in Kenya PPP Expo for Plastic, Packing and Petrochemicals Industries. The Egyptian pavilion included 31 specialized firms. Kenyan officials hailed the good quality of Egyptian products and their competitiveness that would allow them to access Kenyan markets, particularly in light of the COMESA Free Trade Area. Egypt’s participation in the Kenya PPP Expo 2019 is another step towards promoting trade exchange with Kenya and opening the doors before the access of Egyptian products into the Kenyan markets, being the regional access point into East African countries. The step has been part of Egypt’s relentless efforts to further inter-African trade and regional integration in line with the goals set by Egypt during her presidency of the African Union.

 

Development, Training and Aid  

Egypt and Kenya share amicable relations based on cooperation. Egypt has been keen to provide different forms of support and assistance to the sisterly people of Kenya at the times of crises and natural disasters such as drought and flood. Through the Egyptian Fund for Technical Cooperation with Africa (replaced later by the Egyptian Agency of Partnership for Development (EAPD) and via concerned institutions in Egypt, the country has provided a lot of assistance and training courses for the Kenyan side. Egypt has also been keen to dispatch Egyptian experts to Kenya in the areas of agriculture, water, animal wealth, fish farming, health, communications and security, among others.  

  • Kenyan cadres systematically receive training in Egypt and courses include: agriculture, hydraulics, strategy, security, irrigation, health, nursing, hotel and tourism, space, diplomacy, civil aviation, as well as military training.
  • The Egyptian International Center for Agriculture provides a bundle of training courses for the Kenyan nationals in the areas of poultry production, vegetables, agricultural services, projects’ analysis, cotton production, pesticides’ integrated management, soil and water management and animal health and productivity. The Egyptian Ministry of Electricity and Renewable Energy provides 17 grants per annum for the Kenyan side.
  • In March 2012, Samuel L. Poghisio Cabinet Secretary for Information and Communications of Kenya led a delegation to Egypt. He conferred with Egyptian officials on some joint agreements between the two countries in information technology related areas, including management of smart villages and carrying out of a number of specialized communications’ programs for Kenyan cadres.
  • The Kenyan delegation also presented Kenya’s 2030 Information and Communications Vision and means of upgrading infrastructure, implementing electronic government (e-Government) and national digital content. The Kenyan delegation asked Egypt to provide assistance towards content digitization and transfer of the know-how in the field of outsourcing industry in Kenya. The delegation also discussed working with Egypt to upgrade infrastructure and information accessibility via regional initiatives to be carried out in collaboration with Egypt.