KENYAN businesses are pushing for
urgent reforms to unlock the East African Community (EAC) market.
This, as they warn that non-tariff
barriers, border delays, high logistics costs and fragmented regulations are
undermining the region’s potential to become a major investment and production
hub.
The call emerged from the CEOs–Trade
and Investment Roundtable held in Nairobi, where business leaders and
policymakers said East Africa’s estimated $400 billion (Sh51.7 trillion) economy
presents a significant growth opportunity for Kenyan companies seeking to
expand beyond the domestic market.
East African Business Council (EABC)
executive director, Ahmed Farah, said the regional bloc should be viewed as
Kenya’s next major growth frontier.
With intra-EAC trade at about $19.7
billion (Sh2.5 trillion) , representing roughly 12.5 per cent of total EAC
trade, Farah said there was considerable room to expand commerce, investment and
production across the region.
“Our priority must be to make the
EAC a more competitive and predictable market for business,” Farah said,
calling for the removal of non-tariff barriers, harmonisation of standards,
lower logistics costs and consistent implementation of regional commitments.
The private sector argues that
improving regional integration could allow Kenyan manufacturers and service
providers to access a much larger consumer base while encouraging investment in
regional value chains.
Kenya Investment Authority
(KenInvest) CEO John Mwendwa said East Africa is already attracting a
significant share of investment flowing into the continent.
According to figures cited at the
meeting from a recent UNCTAD report, Africa attracted about $70 billion in
foreign direct investment, with East Africa receiving approximately $14.6
billion, equivalent to about 21 per cent of the continental inflows.
Mwendwa said investors are looking
for scale, predictability, talent, market access and opportunities to participate
in regional value chains.
He urged EAC countries to move away
from competing against each other for investment and instead build
complementary production networks in which countries source inputs across
borders and specialise in areas where they have competitive advantages.
He also called for greater digital
integration and interoperability of government systems to reduce the cost and
time involved in cross-border trade.
The concerns were echoed by Duncan
Onyango, chief executive of Trade Catalyst Africa, who said competitiveness
goes beyond the ability of a company to manufacture quality products.
For businesses, he said, the
critical questions are whether they can finance production, fulfil orders,
receive payment and make a profit after navigating the costs of moving goods
across borders.
Onyango identified trade corridors,
SME financing and systems of trust, liquidity and investment as three areas
requiring urgent attention.
He warned that poor transport
infrastructure, clearance requirements and weak systems can erode the
competitiveness of businesses even after they have invested in modern machinery
and production capacity.
The challenge, he added, extends
beyond physical infrastructure.
Different currencies, inflation
conditions, financial systems, reserve constraints and risk profiles continue
to complicate cross-border trade and investment, making financial integration
an important component of the regional integration agenda.
The meeting also highlighted the
size of the opportunity available to East African businesses.
Ashif Kassam, executive chairman of
RSM Eastern Africa LLP, said the EAC had eight Partner States and a population
of more than 360 million, but warned that the region had yet to convert this
scale into a genuinely integrated market.
Intra-regional trade accounts for
only about 15 per cent of total EAC trade, according to figures presented by
Kassam, although it grew by 28 per cent in 2025.
He estimated that between 30 and 50
per cent of the region’s trade potential remains unrealised.
Kenya’s economy was put at
approximately $136 billion, with exports valued at $8.3 billion against imports
of $20.2 billion.
Kenya recorded GDP growth of 5.3 per
cent in the first quarter of 2026, up from 4.9 per cent during the same period
in 2025, while foreign exchange reserves stood at $15.4 billion, equivalent to
6.5 months of import cover.
Kassam identified non-tariff
barriers, regulatory fragmentation, border delays, high logistics and
electricity costs, weak digital integration, cross-border payment difficulties
and policy uncertainty among the major constraints holding back regional
investment.
For Kenyan companies, the removal of
these barriers could open opportunities in manufacturing, logistics,
agriculture, tourism, financial services and other sectors where regional
demand is growing.
The private sector has also urged
governments to move beyond signing regional agreements and focus on
implementation.
Among the proposals emerging from
the roundtable were time-bound mechanisms for resolving non-tariff barriers,
including compensation for businesses affected by unjustified trade
disruptions.
Business leaders also want increased
investment in port, road, rail and multimodal transport infrastructure,
alongside simplified border procedures and stronger freedom of transit.
They called for harmonisation of
standards, regulations, licensing requirements and professional qualifications
to enable companies and skilled workers to operate more easily across borders.
Another major priority is the
development of interoperable regional payment systems to lower the cost of
cross-border transactions.
The tourism sector also stands to
benefit from deeper integration. Participants proposed expanding and
digitalising the East Africa Tourist Visa, advancing open skies to reduce
regional air travel costs and promoting mutual recognition of tour guides and
professional services.
The recommendations are particularly
significant for Kenya, which has positioned itself as a regional logistics,
financial and commercial hub.
The business community wants the
country to strengthen that position by developing regional value chains and
using its infrastructure, financial services and entrepreneurial ecosystem as a
platform for companies serving the wider East African market.
Angela Muga, country manager at the
East African Development Bank (EADB), said the bank was supporting
private-sector expansion through long-term financing and sector expertise in
areas including agriculture, agro-processing, manufacturing, infrastructure,
renewable energy and climate-related investments.
She encouraged businesses and small
and medium-sized enterprises to engage with EADB to explore financing
opportunities for expansion across East Africa.
The private sector forum also
brought together representatives from the Kenya Association of Manufacturers,
Shippers Council of Eastern Africa and Kenya Association of Tour Operators.
They identified inadequate infrastructure,
high transport costs, regulatory fragmentation, costly regional air travel,
limited payment interoperability and differences in standards and professional
qualifications as key obstacles to competitiveness.
