Kenya and South Africa are working on a preferential trade agreement that could eliminate administrative barriers and boost exchange of goods and services between the two nations.
A joint trade committee formed two years ago to resolve tariff and non-tariff barriers between the two countries have recommended a binding trade and investment pact as a way of tightening the on-and-off bilateral relations.
“We have resolved to formalise our trade relations and are currently working on an agreement that complies with World Trade Organisation’s (WTO) rules,” said Mr Tom Amolo, Kenya’s High Commissioner to South Africa.
South Africa has increased its chunk of Kenya’s market in the last 10 years to become the fifth largest source of imports after shipping in Sh73.8 billion worth of goods in 2011.
In comparison, official statistics showing that Nairobi only managed to export just Sh2.8 billion over the period.
Both being WTO members, a bilateral pact between the two countries must be reciprocal in nature and also leave room for nearly similar treatment to other members of the global body.
Mr Amolo said the pact has been on cards for some time but electoral politics always gets in its way. Last year, South Africa’s President Jacob Zuma postponed a planned visit to Nairobi to create time for party campaigns.
Kenya has since plunged into campaigns ahead of the March 4 elections, meaning it will be up to the incoming government to push for the pact.
“We are going to make the planned visit by President Zuma a priority for this year, but in the meantime encourage businesses from both sides to form partnerships and make money,” Mr Amolo said at the first Kenya-South African Business Forum which started in Nairobi Tuesday.
A total of 50 South African firms with interests in banking, insurance, accountancy, pharmaceuticals, retail, tourism and engineering sent representatives to Nairobi to study the market and seek joint business deals with Kenyan counterparts.
A joint Kenya-South Africa Business Council, representing South African firms and Kenya Private Sector Alliance (Kepsa) was also mooted at the start of the meeting with ends on Thursday.
“South African businesses never miss any opportunity to boost growth of intra-Africa trade,” said Elizabeth Thabethe, the South Africa’s Deputy Minister for Trade and Industry who led the team of businesspeople to Nairobi.
“Our exports have already been affected by the economic situation of the developed countries. We are turning our attention to Africa which is growing fast and has right fundamentals,” she said.
For South Africa, a pact with Kenya is likely to open a new gateway into the eastern Africa market, having used common membership of South African Development Community with Tanzania to boost its presence in the region.
Kenya has a direct link to most of the landlocked countries in the region like Ethiopia, Sudan, Uganda, Rwanda, Burundi and DRC.
Kenya also sits on the gateway to South Sudan and Somalia, emerging as important markets for exports and investment capital in the next five years.
In Nairobi, Trade ministry officials said Kenya would equally benefit from a trade pact and joint venture with South Africans as employment will grow for highly educated youth whose numbers have been swelling lately.
“The two countries have a lot to learn and from each other,” said Trade permanent secretary Abdulrazak Ali.
Just like Kenya which is to set up semi-autonomous counties after elections, South Africa runs a similar structure of governance, sharing power with semi-autonomous provinces.
“The Constitution being implemented makes Kenya the safest business destination from the point of investor protection,” said Mr Ali.