Kenya, Ghana attempt smooth trade in cagey Africa

Kenya’s President William Ruto (L) and his Ghanaian counterpart President Nana Akufo-Addo pose for a picture at Jubilee House, the Office of the President, in Accra, Ghana on April 3, 2024

By The East African

Kenya and Ghana, on opposite sides of the continent, say they want to revive trade between them. And they see their vast deposits of gemstones and prized agricultural products as key to boosting their commercial partnership.

On a state visit to Accra last week, Kenya’s President William Ruto and his host Ghana’s leader Nana Akufo-Addo, witnessed the signing of several bilateral agreements and memorandums of understanding.

One of the agreements was between the Ghana Investment Promotion Centre (GIPC) and the Kenya Investment Authority (KIA). Others were between the Association of Ghana Industries and the Kenya Association of Manufacturers, a kind of peer-to-peer relationship.

There are not many similarities. But the ones that do exist could help boost trade. They are among Africa’s most stable economies (although Ghana, like Kenya, has struggled with foreign debt).

They are also among the eight countries on the continent initially selected to test a trade deal under the Africa Continental Free Trade Area (AfCTA).

The results of this experiment, which began in September 2022, should inform AfCTA on whether trade between African countries in different parts of the continent is viable at all.

In Africa, trade has often been hampered by a lack of manufacturing, meaning that countries produce similar products that cannot be sold across borders. This is in addition to the many tariff and non-tariff barriers such as language differences, currency conversion problems, infrastructure problems and insecurity.

But since AfCTA was signed five years ago, enthusiasts like Ghana and Kenya have been looking for opportunities.

Kenya, famous the world over for its tea, fresh flowers and tourism as major foreign exchange earners, has dangled these to Africans who do not produce them.

It has also offered steel products, titanium ore and gemstones. Ghana, formerly known as the Gold Coast, is Africa’s second-largest gold producer.

The West African nation of 30 million people has recently discovered oil and has other vast mineral deposits including diamonds, manganese, limestone, bauxite, iron ore, clays and granite.

Ghana is also the world’s second-largest producer of cocoa and the fourth-largest producer of cassava, as well as maize, tomatoes, yams, rice and many other food crops.

In Accra, the leaders admitted that they consume each other’s products, but they often arrive through third parties in Europe.

The move towards bilateral trade cooperation comes at a time when Ghana’s economy is shrinking, and the country is facing debt problems.

But President Akufo-Addo, whose country hosts the AfCTA secretariat, sees it as a useful move to take advantage of the continental platform.

In October 2022, as part of the pilot phase of AfCTA, Kenya flagged off the first shipment of its tea from Nairobi to Ghana.

On September 23, 2023, Kenyan-made Chloride Exide batteries worth about Ksh9.3 million ($71,814) were shipped to the Ghanaian port of Tema. Little Cab, a taxi-hailing service that started in Kenya, is now operating in Ghana.

Ghanaian government data shows that Kenya in 2022 exported $9.53 million worth of goods to Ghana – the main products being vegetables, tea and aluminium plating.

Ghana exported $5.4 million

Ghana exported $5.46 million to Kenya, with the main products being coconut oil, cocoa powder, mushroom spawn and other live plants, the figures show.

Over the past 26 years, Ghana’s exports to Kenya have grown at an annual rate of 18.2 percent, while Kenya’s exports to Ghana have grown at an annual rate of 14.2 percent.

Last week, the two sides said they were expanding cooperation beyond trade.

The seven agreements covered business and the private sector and included cooperation in science and technology, tourism, education, governance and defence.

“What is being done in this room today is critical for our continent and the future prosperity of our people,” President Nana Akufo-Addo said, at a joint press briefing in Accra on April 4.

President Akufo-Addo said the business community had a responsibility to increase intra-African trade by taking advantage of opportunities under the AfCFTA, the continent’s financial resources and technological advancement.

“Your ability to seize the opportunities will determine whether or not we go forward, and that will determine whether or not the eradication of poverty in our generation is made possible in Africa,” he added.

In the spirit of renewed friendship and as a constant reminder of the need to move forward with the implementation of the agreements, President Ruto was awarded Ghana’s highest honour, the Companion of the Order of the Star of the Volta Honour, on March 4, 2024.

“During my discussions with President Nana Akufo-Addo, we have noted that these agreements are significant in the evolution of our diplomatic ties, which stand on warm and cordial, dynamic and impactful historic collaboration,” President Ruto said.

“This commitment aligns with one of the goals of AfCFTA to create a single market in the continent and to drive economic growth, job creation and poverty eradication,” he added.

President Ruto pointed out that the free movement of people has contributed to the growth of trade, investment and tourism between Kenya and Ghana.

An open borders enthusiast, he recently introduced the controversial visa-free travel that requires visitors to pay $30 some 72 hours before entering Kenya.

Traditionally, Kenya and Ghana did not require visas from each other, but the new system could become a new barrier to trade.

In Ghana, the two leaders discussed their vibrant youthful populations, land and other natural resources.

But they also agreed that some challenges lie beyond their borders and that bilateral arrangements could affect their trade.

So, they agreed to seek solutions to conflicts in places like the Great Lakes region, Sudan and Ethiopia and to promote political stability, especially among Ghana’s neighbours, where coups have been common. They also discussed counter-terrorism.

“It has become clear in our discussions that we have to redouble our efforts to silence the guns in Africa as a vital condition for economic growth,” Ruto said.

They also saw reforms at the AU as critical, as the continental body is supposed to promote Agenda 2063, on which trade and prosperity depend.

“These leaders are labouring hard at a time that the global economy has been trying to cope with multiple shocks and economic uncertainties,” observed Sam Smah, a professor of Sociology at the National Open University of Nigeria (NOUN), said.

The countries, he said, had been driven by the impact of the Covid-19 pandemic, political instability, climate change shocks and international conflicts, including the war in Ukraine.

“Cross-continental trade and exchanges of services and ideas can make a difference in the lives of African citizens currently going through hardship,” he said.