Free Trade as a Development Tool for Kenya (Essay Sample)

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Free Trade as a Development Tool for Kenya
The Kenyan economy is among the strongest in the East African Region but has shown less growth than its neighbors in recent years. The country is currently part of a regional trade bloc, which would benefit its economy if it utilized the available trade advantages to their fullest extent. In reality, however, there are a number of non-tariff trade restrictions that reduce the country’s ability to trade freely with its neighbors. By removing these restrictions, Kenya can place itself in an advantageous trading position and prepare itself for the reduced importation rates that the free trade zone offers. Free trade policies have the ability to improve a country’s economic status if the country in question implements them properly. These potential benefits raise the issue of the impact that the implementation of free trade policies would have on Kenya’s current economic situation as well as its future development.
Kenya exports a large number of goods such as agricultural produce and textiles to European and US markets (Zapeda). In turn, these markets supply the country with a large portion of its imports, which are in the form of manufactured goods and oil. The country’s imports exceed its imports. The result is an increase in the country’s reliance on the foreign exchange earned by its more lucrative industries, such as its active service sector (World Bank). In such a scenario, the economy can easily be destabilized if it has to deal with an increase in the prices of its imported products. According to external analysts, the country’s economy currently suffers from deficits in sectors such as food and energy due to its strict import regulations (World Bank). These deficiencies lead to citizens paying more than the standard global rate for such products and illuminate the defects in the country’s strictly regulated trading system.
The East African Community free trade zone could benefit Kenya’s economic situation by allowing the state to pay lower tariffs for its imports. Tanzania produces a surplus amount of food products, and free trade would enable Kenya to import these food products at subsidized rates and reduce food prices in the country (World Bank). Kenya could also reduce its dependence on oil imports by reducing trade barriers with Ethiopia and importing power directly from this country. In return, Kenya could export its expertise by allowing its service sector to expand its reach in the region (World Bank). The income generated by this expansion would improve service provision in the EAC while also providing the Kenyan economy with an additional revenue source. Manufacturing industries would also benefit from the implementation of free trade policies due to easier movement of capital and labor across the region, eventually reducing the region’s dependence on imported manufactured goods (Zapeda).
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