Regional Trade
Unlocking Regional Trade: How Kenyan SMEs Can Thrive Amid AGOA Uncertainty
By Lim Hazel
Kenya’ s small and medium-sized enterprises( SMEs) stand at a crossroads. For more than two decades, many exporters have relied on the African Growth and Opportunity Act( AGOA) to access the US market duty-free, particularly in textiles and apparel. Yet with AGOA’ s renewal uncertain and global demand patterns shifting, the risks of overreliance on a single trade preference scheme are becoming clear.
At the same time, Kenya is part of the East African Community( EAC), a market of nearly 300 million people that is geographically close, culturally connected, and increasingly integrated under the African Continental Free Trade Area( AfCFTA). This regional market offers Kenyan SMEs enormous opportunities to grow. However, unlocking its full potential is not straightforward. Non-tariff barriers( NTBs), inconsistent policies, and fragmented standards continue to frustrate businesses and undermine confidence in cross-border trade.
The question for Kenya, then, is how to help SMEs thrive in EAC markets even in the face of these obstacles. The answer lies in a two-pronged approach: empowering SMEs to build resilience and competitiveness while pushing for systemic policy reforms to eliminate the barriers that hold back regional trade.
The Current State of Regional Trade
SMEs are the backbone of Kenya’ s economy, contributing around 40 percent of GDP and accounting for more than 80 percent of employment. For many of these enterprises, expanding into regional markets is the most viable path to scaling their businesses. Transport costs are lower than shipping to Europe or the US, consumer tastes are familiar, and value chains often span across borders.
Yet despite these advantages, intra- EAC trade remains underwhelming. According to recent monitoring reports and a recent article on Business Daily, Kenya and its neighbors are consistently flagged among the top sources of trade obstacles globally. These obstacles range from sudden import bans to discriminatory taxes and burdensome customs procedures. For example,
Delays at borders increase the cost of doing business, duplicative testing of products erodes SME margins, and sudden bans disrupt supply chains. For SMEs operating with tight cash flows and limited capacity, such unpredictability can mean the difference between expansion and collapse. With AGOA’ s future uncertain, the urgency to build reliable regional markets is greater than ever.
Uganda has at times faced Kenyan restrictions on dairy and poultry imports, while Tanzania has imposed levies on plastics and introduced policies limiting foreign traders. Each episode undermines the spirit of the EAC Common Market Protocol, which promises free movement of goods, services, and people.
The cost of these barriers is high. Delays at borders increase the cost of doing business, duplicative testing of products erodes SME margins, and sudden bans disrupt supply chains. For SMEs operating with tight cash flows and limited capacity, such unpredictability can mean the difference between expansion and collapse. With AGOA’ s future uncertain, the urgency to build reliable regional markets is greater than ever.
Key Challenges Facing SMEs in EAC Markets
Non-Tariff Barriers( NTBs)
While tariffs have largely been reduced, NTBs persist. These include sudden import bans, requirements for additional permits, and time-consuming customs clearance. SMEs are particularly vulnerable because they lack the resources to absorb delays or hire specialized compliance staff.
Policy Inconsistency
One of the biggest frustrations for SMEs is unpredictability. A business may invest in building export channels only for a trading partner to introduce new levies or restrictions overnight. Tanzania’ s restrictions on foreign traders and Kenya’ s periodic import bans are examples of how quickly policies can shift.
Standards and Certification Gaps
Products often need to undergo separate testing in each EAC country, even if
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