The recently signed Kenya-UAE trade deal is set to revolutionize trade relations between the two countries and could potentially reduce China’s stronghold as Kenya’s primary source of imports. The agreement, signed by President William Ruto in Abu Dhabi, UAE, on January 14, 2025, seeks to eliminate trade barriers and boost bilateral trade.
Key Highlights of the Trade Deal
- Enhanced Export Opportunities The deal will open up new markets for Kenyan products such as:
- Horticultural products
- Meat products
- Increased Imports from UAE Kenya will double its imports from the UAE, which include:
- Petroleum
- Machinery
- Chemicals
Trade Growth and Statistics
The government reported that trade between Kenya and the UAE reached KSh 445 billion in 2023, making the UAE Kenya’s sixth-largest export destination.
- Imports from the UAE dipped slightly between July and September 2024 to KSh 88.9 billion, down from KSh 90.9 billion in the previous quarter.
- Exports to the UAE outpaced those to China, with UAE imports declining marginally to KSh 27 billion in Q3 2024, compared to China’s sharper drop from KSh 8.5 billion to KSh 4.9 billion.
UAE’s Strategic Vision for Africa
This trade agreement marks the UAE’s first with an African nation. It underscores Abu Dhabi’s ambition to strengthen its economic footprint in Africa as it competes with traditional Western and Chinese trade dominance. Emirati companies have pledged investments worth US$110 billion in African projects, with a significant focus on renewable energy.
Shifting Trade Dynamics
The UAE’s engagement in Africa coincides with growing criticism of China’s role on the continent, particularly regarding high debt burdens and market flooding with inexpensive imports. Since 2022, Kenya has actively pursued opportunities arising from Abu Dhabi’s strategic shift.
A Broader Global Strategy
The Comprehensive Economic Partnership Agreement (CEPA) is part of Nairobi’s growing portfolio of global trade partnerships. Other key agreements include:
- Kenya-UK Economic Partnership Agreement
- African Continental Free Trade Area (AfCFTA)
- African Growth and Opportunity Act (AGOA) with the US
This deal is expected to bolster industries while attracting Foreign Direct Investment (FDI) in Kenya’s services sector.
Post-Oil Economic Future
For the UAE, this partnership aligns with a broader strategy to diversify its economy in preparation for a post-oil era. Similar agreements have been signed with New Zealand and Malaysia, signaling the Gulf country’s global ambitions.
Conclusion
The Kenya-UAE trade deal is poised to significantly enhance bilateral trade, challenge China’s dominance, and create new opportunities for economic growth. With Kenya’s strategic position as Africa’s gateway to global markets, this partnership promises a transformative impact on the region’s trade dynamics. Stay updated for more developments on this historic agreement.
