Interview: Frank Matsaert
What are the primary non-tariff barriers in Kenya?
FRANK MATSAERT: The non-tariff barriers that affect Kenya the most are often imposed by Kenya itself. The first problem is weighbridges with the amount of delays, traffic congestion, overloading and transparency. The second problem is roadblocks, particularly on the trade corridor between Tanzania and Kenya. The third problem revolves around border institutions, particularly those with Tanzania and Uganda. Here, the border crossings open at varying times and when trucks arrive, they need to wait until the crossing opens. They also often still need to show physical rather than electronic documents, which hinders efficiency. Lastly, there’s also an issue with standards recognition between countries, and sometimes there are multiple institutions required to export and move goods around. This obviously creates quite a lot of complications for companies doing business on both sides of the border, and these all heavily affect the country’s neighbours.
As far as remedies go, weighbridges can be replaced with modern weigh-in-motion bridges. Not only that, they can be linked across borders as well. To remedy the roadblock issue is a bit trickier, but it should definitely include more monitoring of roadblocks and making the private sector more aware of the cost that they incur for companies. For border institutions, revenue authorities should simply agree on a standard 24-hour opening for busy borders so traffic congestion can be avoided. Document processing should also be automated. For standards recognition, the main driver for efficiency will be harmonisation and mutual recognition.
How would you assess the trade liberalisation dialogue between the public and private sectors?
MATSAERT: The dialogue is good. If you look it most of the major meetings on trade, the Kenya Private Sector Alliance (KEPSA) and the Kenya Association of Manufactures (KAM) are always present, as well as many research think-tanks. Historically, Kenya has been well known for being very private sector driven. For example, during the negotiations of the EAC Common Market both KEPSA and KAM were involved in the entire process. They are also key members of the East African Business Council, which is at every single regional trade discourse. The president sets the tone by regularly meeting with the private sector on key issues, especially relating to the business environment.
As far as improvements go, I’d like to see more analytics on key issues. Some of the key systemic problems we face here in Kenya, like the high cost of power and problems with logistics, distribution and infrastructure, could be discussed more. All in all, Kenya definitely has a strong public-private dialogue space.
What sectors or industries stand to benefit the most from further East African integration?
MATSAERT: First of all, a lot of positive things have happened in terms of regional integration. Due to this, we’ve seen a lot of service sector expansion, particularly in banks and financial services. In many cases, we are seeing Kenyan companies in the service sector act as anchor regional players. A second area that has really done well is retail. Kenya has a strong formalised retail segment. We are also seeing growth in both the manufacturing and agro-processing sectors, and I believe that with further liberalisation these two sectors stand to benefit most. This is due not only to Kenya’s geography, but to the sound industrial base that Kenya has achieved. Tourism is another interesting sector, considering the growing demand for regional tourism packages and Kenya as a leading destination in the area.
If you look at challenges, sugar is one. Another area could be agriculture production, considering Kenya’s relatively high cost base in the region. Low-value manufactured products could face stiff competition. Furthermore, cereals will also be a difficult segment as there are often government policies that nurture food security that can be at odds with business efficiency.
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