Background

December 12th 1963 is the Independence Day of the Republic of Kenya, officially known as Jamhuri Day. This is the day when Kenya attained full independence from British rule. The late Mzee Jomo Kenyatta was the country's founding father and the first President, until his death in 1978.

Kenya is a democratic nation with a market based economy where people of different ethnic groups (tribes) and religions live and interact together.

The Republic of Kenya covers an area of 582,646 sq km. Kenya is located in the eastern part of Africa and shares boundaries with Ethiopia, Somalia, Sudan, Tanzania and Uganda. Its population was about 36 million people in 2006. The official language is English while Swahili is the national language, both are taught and spoken.

This new emerging nation quickly pulled its act together and took on the task of nation building. At the time of independence, Kenyatta and other leaders recognized obstacles to the development of the young nation such as poverty and diseases. The slogan 'Harambee' was coined by Kenyan workers for purposes of the national development. The word means together and was a call towards self-sufficiency of the nation. Soon after independence, Kenyan leaders adapted a five-year development plan. Its economy started improving at an impressive pace since 2003 as a result of the adaption and implementation of the economic reforms initiated by the government. Kenya is also strategically located within easy reach of export markets of the Middle East, Europe and Asia. The pragmatic economic approach encouraged foreign and local investments that led to a remarkable progress in various sectors.

However, in spite of the regional hub for trade and finance in East Africa, the export of Kenya is limited. Growth rate was at 1.1 percent in 2002 because of the erratic rains, low investor confidence, meagre donor support and political instability caused by the elections. In 2003, progress started taking place that encouraged donors support. The economic indicators show that the real GDP expanded by 6.1 percent in 2006, compared with 5.8 percent in 2005.

The economic growth is also strongly supported by significant expansion in the export sector, especially horticulture and tea. In the private sector expansion is taking place due to low interest rates. The real GDP growth was expected to grow to 7 percent in 2007 and to the projected level of 10 percent by 2009-10. A total of 469.000 new jobs were created in the year 2006 as compared to 458.900 in 2005. The inflation increased to 7.4 percent in the year 2005 from 6.8 percent in 2004 mainly due to high international oil prices and rising electricity costs. The manufacturing sector constitutes 10 percent of the GDP which grew to 6.9 percent in 2006 compared to 5 percent in 2005.

The agricultural sector recorded 6.7 percent growth. The sectoral performance in 2006 declined to 5.6 percent as compared to 7.0 in 2005.

The government has launched its 2030 vision which aims a rapid and sustained economic growth which would transform Kenya into a prosperous middle income state.

Vision 2030 will address the challenges of rapid urbanization, income inequalities, low savings and unemployment especially among the youth. By 2030, Kenya's GDP is expected to rise to Kshs 1.1 trillion. Income per capita would rise by 660 percent over the next 25 years.

Pak-Kenya economic relations

Kenya is one of the major producers of tea in the world and Pakistan is the largest consumer of its tea and a big exporter of rice to Kenya.

Pakistan and Kenya have historical and cultural ties which have augmented bilateral relations. The warm and cordial relations established between Pakistan and Kenya date back to 24 years ago when Kenya opened its mission in Islamabad.

The relations boosted in all spheres including cultural, technical, training and trade. Technical co-operation between the two countries has also grown. Under the existing technical assistance program, Kenyan students have benefited from scholarships in the fields of medicine, pharmacy, dentistry and engineering. The program also offered training in diplomacy, banking, railways management and postal communications.

There is a great scope and potential for growth in trade between Pakistan and Kenya.

Kenya's exports to Pakistan consist of tea, hides and skins, fashion clothes, chemical element compounds, special transitions, leather and its products, iron, steel, machinery and its parts, vegetable and synthetic textile fibres, road vehicles and their parts.

Pakistan's exports to Kenya include wheat, rice, textiles including towels, woven cotton fabrics, special synthetic fabrics, knitted and crocheted fabrics, medical and pharmaceutical products. Recently, Pakistan exported IT to Kenya through NADRA.

In May 2001, two MoUs were signed between Pakistan and Kenya for the expansion of cooperation in the fields of information, media development, food, agriculture and livestock to further enhance the friendship and mutual understanding.

Kenya has agreed to reduce its import duty on Pakistani goods from 40 percent to 25 percent and in return Pakistan has offered a $5 million credit line to Kenya for importing engineering and manufacturing goods.

The Export Promotion Bureau (now TDAP) has setup a warehouses at Nairobi and at the Port of Mombassa to market Pakistani products in the Kenyan market, Pakistan formally launched its first ever export warehouse in Nairobi in March 2006.

There is a great potential for Pakistani goods in the Kenyan market and Pakistani exporters should make maximum use of the warehouse set up by the TDAP. The W\warehouse facilitates the Pakistani exporters and offers them a unique chance to access the diverse and lucrative market in Kenya and the East African region.

A delegation of the Kenyan Tea Board visited Pakistan and met government officials who wished to have a free trade agreement (FTA) between the two countries. The government officials were dissatisfied with the existing imbalance of trade and stressed the need that Kenya should import more Pakistani products like rice, wheat, textiles, engineering goods and food stuffs so that the trade balance could be improved. see table-1.

Like Pakistan, Kenya specializes in agriculture. Kenya is keen to get assistance from Pakistan in research and technology and it would like to benefit from Pakistan's vast experience in agriculture, particularly irrigation systems, to enhance its farms production and would allow duty-free import of all categories of plants and machinery related to agriculture and irrigation development.

Kenya shows a desire to increase imports from Pakistan but under the conditions of the WTO. It is necessary to certify the quality and standard of a product entering the country, therefore, lab test and certifications should be done by the PSQCA.