In recent years, Kenya has enhanced its trade potential by incorporating international and regional agreements into its legal and regulatory frameworks. The country is a founding member of the World Trade Organization (WTO) and a charter member of the East African Community (EAC). In 2005, Kenya took the significant step of establishing an EAC Customs Union along with Uganda and Tanzania (Rwanda and Burundi joined in June 2007). Kenya adopted the EAC Common External Tariff (CET), replacing a four-band tariff structure with a simplified three-band tariff structure of 0, 10 and 25 percent. Kenya has also undertaken significant and largely successful reform efforts within its Customs agency; efforts that, if sustained, could lead to tangible rewards in the future.
This chapter is divided into two parts: Trade Policy and Trade Facilitation. Trade policy pertains to Kenya’s commitment to building formal trade relations with both its immediate neighbors across the African continent, and with international markets, through such mechanisms as mutual tariff reductions and streamlining of trade processes. Trade facilitation refers to the simplification and harmonizing of a country’s international trade procedures to bring them in line with current best practices and globally accepted standards. Such an environment is required for a country to seize the opportunities offered by the global trading market and to fully participate in the economic benefits that can reduce poverty.
The BizCLIR scores for International Trade confirm persistent weaknesses in the implementing and supporting institutions, but very promising social dynamics.
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