Kenya’s exports to the United Kingdom could increase by nearly Sh1.59 billion from next year after the latter’s exit from the 27-member European Union trading bloc in December, a UN trade agency study has projected.
The report by the United Nations Conference on Trade and Development (Unctad), released on Tuesday, says most developing countries will also gain in post-Brexit trade “if the UK does not increase tariffs or change trade policies.”
Nairobi could potentially grow exports to the UK by 3.851 percent, or Sh1.589 billion, over 2015 pre-Brexit value when earnings stood at Sh41.27 billion — Kenya’s highest earnings ever since.
Unctad had early last year predicted that Kenya would lose Sh2 billion in case of a no-deal Brexit. But in December last year, British Parliament endorsed a Brexit deal secured by Premier Boris Johnson.
The UN trade agency now postulates that trade barriers between the UK and the 27-member EU after December will result in some suppliers ordering goods directly from developing countries such as Kenya.
That could lead to a “substantial” market opportunity for exporters in developing countries and to a “lesser extent” the EU bloc, says the report titled Brexit beyond tariffs: The role of non-tariff measures and the impact on developing countries.
“These market opportunities are largest when Brexit takes its hardest form, and are attenuated somewhat by an FTA (free trade area) between the parties, which limits the incentive to switch demand,” the study says.
“But the likely persistence of NTMs effects even in an FTA scenario means that there are some opportunities nonetheless, even substantial ones, provided that competitive developing country suppliers can overcome the costs associated with exporting to these two markets.”
After nearly four years of politicking, haggling and delays that cost the political careers of two prime ministers — Theresa Mary (2019) and David Cameron (2016) — the UK formally left the EU on January 31.
There’s, however, a transitional period that ends in December 2020.