Building the East African Trade Axis
?
Building the East African Trade Axis
Growing trade relations between Kenya and Ethiopia presents new opportunities for investors.
The growing trade partnership between Ethiopia and Kenya is one of the major developments to follow on the African continent. Ethiopia is populous with vast farmland while Kenya is both an ideal trading hub on the shores of the Indian Ocean, and a nation increasingly known for technological innovation.
However, the amount of trade between the two countries is still very small, with the agreements in place tilted in favor of Kenya.
There is a huge unexploited potential to expand bilateral trade. Both nations signed an agreement to lift more trading restrictions recently. Some of the obvious areas of opportunity are agri-processing, financial services, distributive trade, science, technology and innovation and higher education.
Kenya, Ethiopia and South Sudan were jointly developing an economic and transport corridor comprising of a standard gauge railway line from Lamu Port in Kenya to Addis Ababa and Juba. The route would enable Ethiopian products to reach the sea and outer markets.
One challenge for Kenya is Ethiopia’s reluctance to open up the finance sector to foreign players. Equity Bank would be very interested in setting up shop in Ethiopia due to its high population.
Ethiopian already extends its electricity grid across the border to the Kenyan towns of Moyale and Sololo. This should be seen as a clear demonstration of the affirmative intention of both governments to promote cross-border trade and investments. Furthermore, the Ethiopian government grants special and preferential treatment to investors from Kenya, a token from Ethiopia’s government of its commitment to working towards increased trade with its neighbor.
Peace and security in the region are important for sustainable development, so the agreement also covers jointly ensuring stability in the region. Over the past decades, Ethiopia has worked as a peacekeeping force in the region so it will continue to play a key role in this effort.
Ethiopia’s Prime Minister Haile Mariam Desalegn made a statement that it was now time for East African governments to invest in building their own equipment instead of importing it. He noted that Ethiopia was already in the process of increasing its manufacturing capabilities.
You may not hear often hear about Ethiopia, but it has the elements to become a production base to be reckoned with going forward. One of the next big themes in Africa is all about bringing Ethiopia’s output online.
[Frontier Market Network]
← ← Back to home page...