Ethiopia, Kenya Spearheading Regional Integration Through Trade in East Africa

March 20, 2025

Kenya and Ethiopia are neighboring countries in which share hundreds of kilo meters stretched border line. They also have long historical and cultural attachment. They have past memory and shared vision. The two countries border trade had been conducted before the advent of colonial administration in Kenya.

Organized by the Addis Ababa Chamber of commerce and Sectorial association and the Kenyan Manufacturing Association, the second Ethio-Kenya business forum is conducted recently here in the capital.

According to the study entitled “the Ethiopian Investment opportunities “presented on the forum, Ethiopia in 2018 obtained 276 892888 Dollar from goods and commodities exported to Kenya. But in 2019 the obtained hard currency was reduced to 20329838 Dollar.

The study paper presented by the Addis Ababa Chamber of Commerce and Sectorial Association, Research and Project Administration Manager, Daniel Dendir, tells that, Ethiopia mainly exports Agricultural products to Kenya including wheat, coffee, spices, and inputs of electrical installation, leather products and others. The study further indicates that, in 2020 Ethiopia earned more than 11.5 Million USD, in 2021 more than 17 million USD, in 2022 more than 28.8million USD, in 2023 more than 73.8 million USD, and in 2024 more than 65.8 million USD.

As to Daniel, in 2018 Ethiopia imported items worth more than 23.5 USD products and in the consecutive year the volume of the imported item is increased. Kenya mainly exported its manufactured products to Ethiopia and in 2019 earned more than 63.8 million USD, in 2020 more than 76.2 million USD, in 2021 more than 115 million USD, in 2022 more than 95.6 million USD and in 2023 more than 7.78 million Dollar.

On the occasion, the Political Economy Diplomacy Consul General in the Ministry of Foreign Affairs Ambassador Yohannes Fanta on his part said that, the annual trade volume of Ethiopia and Kenya is small. As compared to the two countries historical attachment, Ethiopia’s export volume is insignificant and this implies that, Ethiopia must exert high energy to boost the trade volume.

Instead of making business with the neighboring countries, Ethiopia gave emphasis looking to beyond Africa and this intern reduced the trade volume made with countries such as Kenya.

The implementation of African Continental Free Trade Area plays crucial role to change the current trend in this regard. The AfCFTA enables countries to benefit in a fair manner from the continental trade and brings better opportunities.

He further said that, COMESA can play pivotal role to facilitate trade among the eastern African countries. In the coming years increasing the volume of agricultural exporting products, manufactured goods and balancing the trade deficit can be possible.

As to Yohannes, when talking about the two countries border stretched hundreds of kilometer, mentioning about illegal trade is vital. He said that illegal trade hampers healthy economic growth and increase criminality, which gave way for political instability. To tackle the illegal border trade one-window service is launched in the border town of Moyale and being implemented.

Yohannes also said that Ethiopia and Kenya have enjoyed a long standing and exceptional partnership founded on the principles of mutual respect, consistency, and understanding.

The Ambassador of Kenya in Ethiopia George Orina on his part said that, even though Kenya and Ethiopia had relation that lasted for long, their annual trade exchange is insignificant hence, changing the trade landscape to the better is essential. He further said that the recent macro-economic reform implemented by the Ethiopian government expected to reinvigorate business and trade between the two countries and beyond and called the Kenyan investors to come here and invest their capital.

He also said the Ethiopian market has undergone significant changes recently. The opportunities here are abundant, he noted, adding that the National Bank of Ethiopia has for instance introduced reforms in the foreign exchange regime in July 2024 to allow banks and investors to buy and sell foreign currency.

Given the enormous potential offered by our two countries, there is a huge trade and investment opportunity for our people to cooperate and work closely.

The Kenyan Association of Manufacturing Chief Executive Office Tobias Alando on his part said that, Ethiopia’s ability to plug into African Continental Free Trade Area (AfCFTA) let it to be advantageous because it is gateway for Kenya to the northern broader.

Alando said that Kenya and Ethiopia “can work jointly to even access other countries around us. So, this collaboration will benefit both countries.”

The CEO added that Kenya is proud to associate with businessmen and women of Ethiopia, stating his belief that Ethiopians are also proud to associate with Kenyan businessmen and women.

Addis Ababa Chamber of Commerce and Sectoral Associations Acting Secretary General, Zekarias Assefa, said Ethiopia and Kenya have sustained long years of diplomatic relations dating back to the early 20th century.

The diplomatic ties of the two nations have resulted in fostering bilateral trade and investment ties in areas of agriculture, tourism and other sectors of the economy. He pointed out that various institutions of the two countries are at present exerting efforts to promote economic and social development.

It is remembered that in 20 18 the African countries leaders and representatives signed agreement that helps the countries by free trade relations. The agreement enables to benefit 1.2 billion Africans.

To make the Ethio-Kenya trade forum as permanent platform meetings are conducted once in Ethiopian and once in Kenya annually and discussions were conducted on various issues. To extend the forum to countries such as Tanzania, Uganda and other countries efforts are exerted. The forum also expected to take various measures to enhance trade volume between the two sisterly countries. After five days meeting the participants of the meeting visited industrial parks located in various parts of the country.

In 2012, the countries signed a Special Status Agreement. The deal stipulates that both parties are permitted to open representative offices in each other’s territory for trade facilitation, information sharing and liaison purposes. The Ethiopian Parliament later approved the treaty in April 2014.

Additionally, the Ethiopian and Kenyan governments have invested in cross-border infrastructure. The Addis Ababa-Nairobi road project was launched in 2012. It was meant to tarmac the 505 km section between Isiolo and Moyale on the frontier. The highway project is slated for completion in 2015.

In 2016, the two countries agreed to build an oil pipeline that would run from the Kenyan port of Lamu to the Ethiopian capital, Addis Ababa. This would be one of various infrastructural projects on which the two countries would work together.

According to the Observatory of Economic Complexity (OEC) a platform focused on the geography and dynamics of economic the building of mutual trust between the two countries, in addition to the removal of non-tariff barriers to ease trade endorsing new laws facilitate the trade relation is essential. One of the primary obstacles in Kenya-Ethiopia trade has been the existence of tariffs and non-tariff barriers (NTBs) that affect trade transactions. Both nations impose tariffs on certain imported goods, increasing the cost of trade and impacting competitiveness.

Additionally, NTBs such as import quotas, licensing requirements, and differing technical standards create complexities for traders, leading to delays and added expenses. Customs procedures represent another major challenge. Cumbersome and time-consuming clearance processes at border points contribute to inefficiencies in trade operations. Issues such as manual documentation, lack of automation, and corruption in customs processes further exacerbate the situation, hindering the timely movement of goods. Ethiopia and Kenya maintain trading ties. Both countries are members of the trade bloc of various infrastructural projects on which the two countries would work together.

Infrastructure limitations also play a role in impeding Kenya-Ethiopia trade. Inadequate transportation networks, including road, rail, and port infrastructure, pose logistical challenges and increase transportation costs. Poor connectivity hampers the efficient movement of goods, impacting supply chains and trade volumes.

BY ABEBE WOLDEGIORGIS

THE ETHIOPIAN HERALD THURSDAY 20 MARCH 2025