Kenya’s trade with Eritrea

Background of Eritrea
The UN awarded Eritrea to Ethiopia in 1952 as part of a federation. Ethiopia's annexation of Eritrea as a province 10 years later sparked a 30-year struggle for independence that ended in 1991 with Eritrean rebels defeating governmental forces; independence was overwhelmingly approved in a 1993 referendum. A two-and-a-half-year border war with Ethiopia that erupted in 1998 ended under UN auspices in December 2000. Eritrea hosted a UN peacekeeping operation that monitored a 25 km-wide Temporary Security Zone (TSZ) on the border with Ethiopia.

Eritrea’s Global Trade
Eritrea’s major trading partners are India for exports and Saudi Arabia for imports:

Eritrea’s exports of merchandised products in 2010 were estimated at US$25 million. The main export commodities are livestock, sorghum, textiles, food, small manufactures
The major export partners are India 25.3%, Italy 20.7%, Sudan 14.1%, China 12.9%, France 5.5%, Saudi Arabia 5.4% (2008)
Eritrea Imports – The estimated value of imports of merchandised products in 2010 was US$738 million. The main import commodities are machinery, petroleum products, food, manufactured goods. . The major import partners are Saudi Arabia 20.7%, India 13.6%, Italy 12.6%, China 9.9%, US 5.1%, Germany 4.6% (2008)

Kenya’s trade with Eritrea
The volume of trade between Kenya and Eritrea has been erratic over the period 2005 - 2010; the total trade rose from  a high of US $ 25.31 million in 2005  declining to US $ 4.41 million in 2007 to a value of US$ 4.90 million in 2010.  On average, the annual decline in total trade was 30% between 2005 and 2010.
The trade balance between the two countries has been in favour of Kenya rising from US $ 1.29 million in 2005 to US $ 4.85 million in 2010  This represents an annual average rise of 30.33% between 2005 and 2009.
Exports: Exports from Kenya to Eritrea were valued at US $ 4.88 million in 2010 which was down from US $13.3 million in 2005. On average, the exports declined annually by 13.2% between 2005 and 2010.
The main export products comprised of edible products, tobacco and tea Other exports include; Paper and paperboard,, Tubes, pipes and hoses of plastics, Soap, cleansing and polishing preparations, Aluminium and articles of apparel and clothing.
Imports: Imports from Eritrea into Kenya amounted to US $ 0.02 million in 2010 down from US $ 12.01 million in 2005, representing an average annual decline of 72.2% in value over the period 2005 - 2010.
The main import category of products into Kenya comprised medicaments in 2010
Eritrea commands an insignificant market share in Kenya’s market.
Commodities with export potential to Eritrea – The following products from Kenya have export potential to Eritrea; locally assembled motor vehicles, steel structures and equipment, motor vehicle tires and seeds
These are products Kenya currently exports to the regional market but have minimal or no presence in Eritrea.

The overall value of imports by Eritrea in the world in 2010 was worth US$ 286.9 million, representing an insignificant share of global imports.
The major global imports which comprise mainly sugar cane, petroleum gases, wheat, motor vehicles and pneumatic tyres  .
The volume of trade between Kenya and Eritrea is not very significant and has been declining over the years, therefore there is need for trade expansion given there are potential products for trade between the two countries
The analysis has identified the following  products that can be developed for the Eritrea market; locally assembled motor vehicles, steel structures and equipment, motor vehicle tires and seeds

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