Kenya and Ghana are committed to strengthening bilateral trade ties as the volume of goods exchanged between the two countries continues to grow. This development comes as both nations seek to deepen economic cooperation and foster stronger intra-African trade relations. Kenya’s primary exports to Ghana include vegetable fibers, tea, and aluminum, while Ghana exports coconut oil, cocoa powder, and mushroom spawn to Kenya. The exchange of these goods marks a significant step in building a more integrated trade network between East and West Africa, driven by mutual interests and shared goals.

During the celebration of the first anniversary of the Ghana Trade House in Nairobi on Monday, Ghana’s Ambassador to Kenya, Damptey Asare, expressed his gratitude to the Kenyan government for its warm acceptance of the trade house. The Trade House serves as a central hub for promoting Ghanaian goods and services in Kenya, while also providing a platform for Kenyan companies to explore opportunities in Ghana.

Promoting Intra-African Trade through AfCFTA

Ambassador Asare emphasized the importance of the Africa Continental Free Trade Area (AfCFTA) in enhancing trade relations not only between Kenya and Ghana but across the entire African continent. “This celebration is not just about marking one year; it represents a significant step forward in fostering economic ties between Ghana and Kenya, and by extension, all of East Africa,” he stated. The AfCFTA, launched in January 2021, aims to create a single market for goods and services in Africa, boosting trade within the continent and reducing dependency on external markets.

The AfCFTA holds significant potential for African countries, allowing them to capitalize on their diverse resources and boost economic growth. By promoting free trade, AfCFTA encourages member states to remove tariffs and non-tariff barriers, simplifying the process for goods to move across borders. Kenya and Ghana, both signatories of the agreement, are taking steps to ensure they maximize the benefits of this initiative. With enhanced market access, the two countries aim to diversify their trade portfolios, tapping into new opportunities for local businesses and industries.

Enhancing Trade Logistics and Connectivity

One of the key challenges in increasing trade between Kenya and Ghana is the logistics involved in moving goods across long distances. Currently, there are no direct flights between Nairobi and Accra, which complicates trade by increasing transportation costs and extending delivery times. Floice Mukabana, CEO of the Kenya Export Promotion and Branding Agency, stressed the need for direct flights to facilitate trade. “Creating direct routes will not only reduce transportation costs but also improve the speed at which goods can be exchanged,” Mukabana stated during the anniversary celebration.

Improving air connectivity is essential to boosting trade between the two countries. Direct flights would significantly shorten the time it takes for goods to travel between Nairobi and Accra, allowing businesses to respond to market demands more efficiently. Additionally, by reducing transportation costs, businesses can increase their profit margins, making it more affordable for consumers to access goods from both countries. Mukabana called for concerted efforts from governments and the private sector to address logistical challenges, highlighting the need for seamless logistics to enhance market access for goods.

Ghana’s Trade House: A Strategic Hub for East-West Africa Trade

The Ghana Trade House in Nairobi, established in 2023, has become an important player in boosting trade between Kenya and Ghana. It serves as a gateway for Ghanaian businesses to access the East African market while providing Kenyan companies with the opportunity to explore the West African market. The trade house has facilitated product activations in various malls in Nairobi and Mombasa, introducing Kenyan consumers to Ghanaian products and promoting the exchange of ideas between businesses from both countries.

Samuel Dentu, Deputy CEO of the Ghana Export Promotion Authority, highlighted the importance of partnerships and collaboration in the trade house’s strategy. “Our journey has been one of collaboration, and we aim to position both Ghanaian and Kenyan products in other African countries as well,” he said. By leveraging the trade house, businesses from both nations have been able to expand their reach and explore new markets across the continent. The partnership between the Kenya Export Promotion and Branding Agency and the Ghana Export Promotion Authority has been crucial in promoting this trade relationship.

The trade house is not just about the exchange of goods but also about fostering relationships between businesses and consumers. By hosting product activations in major Kenyan cities, the trade house has created a platform for businesses to engage directly with consumers, raising awareness about Ghanaian products and services. This engagement has been vital in building trust and ensuring the sustained growth of trade between the two nations.

Private Sector’s Role in Expanding Trade

In addition to government efforts, the private sector plays a crucial role in the growth of African trade. The increased trade between Kenya and Ghana has attracted the attention of key stakeholders in the region. Kris Senanu, Executive Director of Starmark Marketing Company, emphasized the importance of collaboration between government institutions and private businesses. “Collaboration between governments and the private sector is essential to ensure the sustained growth of African trade,” he noted. Senanu called on African governments to continue creating a conducive environment for businesses to thrive, highlighting the importance of policy support and infrastructure development in fostering trade.

The private sector has been instrumental in driving innovation and investment in Africa’s trade sector. Companies from Kenya and Ghana have been at the forefront of developing new products, services, and technologies that enhance trade efficiency. For example, businesses are increasingly turning to digital platforms to facilitate trade, using e-commerce tools to reach new customers and streamline their operations. This trend is expected to grow as more African countries embrace digital transformation.

Economic Implications of Enhanced Trade Relations

The growing trade ties between Kenya and Ghana are not only beneficial to the two countries but also have broader implications for the African continent. By fostering stronger economic relations, both nations contribute to regional integration efforts, a key pillar of the African Union’s Agenda 2063. The agenda envisions a prosperous Africa that is based on inclusive growth and sustainable development, with intra-African trade being a central driver of this vision.

Increased trade between Kenya and Ghana also has the potential to create jobs and stimulate economic growth in both countries. As businesses expand their operations to meet the demands of new markets, they will require more workers, leading to job creation in sectors such as manufacturing, agriculture, and services. Additionally, the exchange of goods and services between the two countries will contribute to economic diversification, reducing reliance on traditional export markets and enhancing resilience to global economic shocks.

Challenges to Overcome

Despite the positive outlook, there are still challenges that need to be addressed to fully realize the potential of trade between Kenya and Ghana. Infrastructure limitations, such as inadequate transport networks and poor logistics, continue to hamper the movement of goods between the two nations. While efforts are being made to improve connectivity, more investment in infrastructure is required to support the growing trade volume.

Furthermore, trade barriers such as tariffs, non-tariff measures, and complex customs procedures can slow down the flow of goods and increase costs for businesses. Both Kenya and Ghana need to work together to simplify these processes and remove obstacles to trade. Continued collaboration within the framework of the AfCFTA will be essential in addressing these challenges and creating a more conducive environment for trade.

Conclusion

Kenya and Ghana’s commitment to improving trade relations marks a significant milestone in their economic partnership. The establishment of the Ghana Trade House in Nairobi and the ongoing discussions on enhancing logistics and connectivity demonstrate the two nations’ determination to strengthen their economic ties. As both countries work to implement the AfCFTA and overcome logistical challenges, the future of trade between Kenya and Ghana looks promising, with opportunities for businesses and consumers alike. By fostering collaboration between the public and private sectors, and with the support of regional initiatives, Kenya and Ghana are well-positioned to lead the way in promoting intra-African trade.

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Photo source: Google

By: Montel Kamau

Serrari Financial Analyst

16th October, 2024