Market Opportunity for Services in East African Common Market

Kenya has adopted a proactive policy towards widening the export basket for goods and services and has within the same policy, Identified services export among key sectors to drive the export growth and deepening of markets in the current decade.

Globally, trade in services has emerged as a driving force of the world economy and based on the World Bank estimates, accounts for over 20% of World global trade.

Kenya has harnessed a market led economy since independence in 1963, and this has seen the emergence of a vibrant service sector that today accounts for over sixty (60%) percent of Gross Domestic Product (GDP).Services trade has driven other sectors of the economy and enhanced efficiency that Kenya commands in the region and that has significantly improved competitiveness in the merchandise export sector.

Based on a study that was conducted by the World Bank in collaboration with the Export Promotion Council, that is” World Bank/Export Promotion Council Study: Assessment of Kenya’s Export Potential and Supply Capacities in selected Professional Service Sectors”, that also mapped the frontiers and depth of Kenya’s Services Export; Kenya has adequate capacity to export her services to the Eastern, Central and Southern African region. This is corroborated by the findings of an earlier study that was conducted by the Commonwealth Secretariat”Kenya: Strategy for Export Promotion of Professional Services in Kenya”

Based on the aforementioned studies; Kenya has comparative advantage in the following niches of services export:
 Professional Services: Accountancy, Architecture, Engineering, Information Communications Technology/Information Technology enabled Services (ICT/ITES) and Legal Services;
 Business Service: Business Process Outsourcing Services;
 Financial Service: Insurance and Non-Banking Financial Services;
 Transport Services: Freight Forwarding Services.

Exploiting the Opportunity in the East African Common Market

The Common Market of East Africa formally came into force from 1st January 2010.This liberalized the movement of factors of production; investments, capital, labour mobility and also operationalised the rights of establishment between citizens of the common market (East African Community).The Common Market has therefore technically laid the foundation for trade in services to thrive.

The attendant constraints such as difficulty in staffing; lack of adequate and competent staff within EAC market ,will gradually be overcome as immigration and unilateral state laws are relaxed and free movement relaxed.

Prohibitions such as in advertising services for accounting, engineering, architectural and legal sectors will be gradually relaxed and companies enabled to market and promote their services.

Whereas at the government level, Kenya continues to engage other East African Community partners to further liberalise by removing obstacles and would in the end facilitate market Access and Business linkages; Kenyan service providers now need to go out to conclude the business to business linkages with the other partners within the Common Market and network in Tanzania, Uganda, Rwanda and Burundi to make the Services market work.

Companies need to undertake Export Market Readiness Assessment to establish their competencies to enter foreign markets. The Export Promotion Council is administering the export checker and would support Services enterprises that intend to venture into the regional markets.

For more information, contact:
Export Promotion Council

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