President William Ruto signed a Comprehensive Economic Partnership Agreement (CEPA) with the United Arabs Emirates (UAE).

In a statement on January 16, Acting Trade Cabinet Secretary Salim Mvurya said CEPA is a long-term agreement to increase trade volumes, strengthen economic cooperation, and stimulate investment.

“It focuses on creating mutually beneficial rules and procedures to govern key aspects of trade and investment, establishes an oversight framework to monitor progress and resolve disputes, and details a framework for economic and development cooperation,” Mvurya said.

He explained that CEPA’s main objective is to create a liberalized market for enhanced trade through the following ways.

1.Eliminating unnecessary technical barriers to trade

2.Promoting efficient and transparent customs procedures that reduce costs and ensure predictability for importers and exporters.

3.Enhancing transparency in and understanding of the application of each Party’s sanitary and phytosanitary measures

4.Accelerating product diversification and industrialization cooperation to grow regional value chains.

Kenya’s export of goods to the UAE has steadily grown over the years, rising from $291 million (Ksh37 billion) in 2013 to $401 million (Ksh52 billion) in 2023.

Key Sectors to Benefit

Additionally, UAE serves as a key logistics and transshipment hub for the six-member Gulf Cooperation Council (GCC).

Mvurya said the CEPA is expected to enhance the penetration of Kenyan exports into the wider Middle East and Asia.

Key export sectors set to benefit from the CEPA include meat and meat products, where UAE accounted for $74m (Ksh9.6 billion) in 2023, more than half of Kenya’s total meat exports that year (Ksh17.6 billion).

Other products with export potential into UAE include fruits, mostly comprising pineapples, avocadoes, mangoes and other fruit ($39m in 2023), vegetables ($10m in 2023), cut flowers ($32m in 2023) and other products.

“This agreement advances implementation of the Bottom-Up Economic Transformation Plan by creating markets for priority value chains, stimulating investments and transferring technology and supporting livelihoods for farmers and other small businesses,” said the CS.

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How Does the Deal Expand Trade in Services

Besides, CEPA includes a chapter on trade in services, which recognizes the importance of services for growth and development.

The agreement progressively liberalizes trade in services to provide market access for services and service suppliers.

It fosters the export of services, while fully preserving the right of the Parties to regulate and introduce new regulations.

Key sectors expected to realize additional opportunities include professional services, business services, communications and the digital economy, education, transport, construction and related engineering services, and distribution.

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Does the Kenya-UAE Stimulate Investment?

According to the CS, the Agreement is key stimulant for foreign direct investment is market access.

He explained that Kenya has secured quota-free and duty-free access to key global markets through the agreements, representing approximately half of global GDP.

“This access encourages the establishment of industries, particularly within special economic zones, and other forms of investment,” he said.

Kenya has also secured duty-free and quota-free access to several key markets, incentivizing long-term planning and capital mobilization.

These include the following trade agreements:

1.The Kenya European Economic Partnership Agreement, signed in December 2023.

This secures duty-free, quota-free access to the 27-country, $16 trillion European Union economy.

2.The Kenya-United Kingdom Economic Partnership Agreement, signed in 2018.

This secures duty-free, quota-free access to the $3.34 trillion United Kingdom market.

3.African Continental Free Trade Area which secures free trade in the $3.4 trillion African market.

4.African Growth and Opportunity Act, which secures tariff-free access to the $26 trillion United States of America market.

The Kenya-UAE CEPA is the first comprehensive economic partnership agreement for the UAE in mainland Africa.

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