By Maxwell Okello CEO of AmCham Kenya
Like the rest of the world, African economies are today faced with economic headwinds. This has elevated the need to enhance trade and investment with key partners, such as the U.S., as long-term partner for the continent to weather such crises, catalyze economic growth and safeguard livelihoods.
According to the United Nations’ World Economic Situation and Prospects report, economic growth in Africa weakened to 3.3 percent in 2023. This was attributed to the global economic slowdown, subdued investment and falling exports.
However, there is great optimism over the East African region’s prospects. The African Development Bank projects that the region’s growth will stand at 5.1 per cent in 2024 and 5.7 per cent in 2025, ahead of the rest of the continent. A significant proportion of this is expected to be driven by trade and investment activity, hence the need to optimize flows as an antidote to the current slump but also a pathway for long-term sustainable and inclusive growth.
Trade and investment can spur robust economic activity in the region, unlocking opportunities for more people directly in the form of jobs and indirectly by developing value chains. This also has the potential to drive inclusive development and reduce reliance on development assistance.
As the region looks to enhance trade and investment relationships with the rest of the world, significant attention needs to be paid to the U.S. market considering its role as a strategic trading partner. Over the years, trade and investment between the U.S. and the East African region has steadily grown. In 2022, the value of imports from the U.S., including machinery, wheat and aircraft into the region stood at $1.1 billion; while exports, mainly apparel, macadamia nuts, coffee, tea, and titanium, totaled $1.3 billion.
This activity is expected to get a further boost from Kenya’s ongoing negotiations with the U.S., known as the Strategic Trade and Investment Partnership. It is the first-of-its-kind bilateral trade agreement between the United States and a sub-Saharan African country and aims to increase investment, promote sustainable and inclusive economic growth, benefit workers, consumers, and businesses, and support African regional economic integration.
There has been continued interest by U.S. companies in establishing or expanding their business presence and engagement within the East African region. In recent years, this has seen the establishment of strategic investments in Kenya including the recent Amazon Web Services’ development center, the NBA Africa office in Kenya, among others.
There are even more opportunities to deepen the region’s two-way trade relations with the U.S. Currently, Africa lags other regions, such as Europe and Asia, in terms of trade and investment activity. More opportunities can be unlocked through closer commercial collaboration as well as sustained efforts to enhance the business climate, and progressive reforms to address persistent barriers to trade and investment.
This makes the upcoming 4th regional AmCham Business Summit a great opportunity for strengthening bilateral trade and investment between the U.S. and the region. Bringing together business and government delegations from the U.S., Kenya, and across the East African region, the Summit, set to happen on April 24 and 25, 2024, will explore the vast trade and investment opportunities that lie ahead. On the agenda are issues critical for the region’s economic development, including shaping the future of U.S. – East Africa trade and investment, climate action, digital transformation, universal health coverage and sustainable finance. It will build on the huge successes from last year’s summit that saw deals forged, connections struck and investments worth US$700 million announced.
Such platforms for interaction by businesses from across the region and the U.S. as well as senior government officials are key in promoting and enhancing trade and investments. Spurring robust economic activity in the region bears huge benefits for individuals, businesses, and the region, including inclusive growth and resilience to external shocks.