A PAPER ON
TRADE POLICY MAKING PROCESS IN
KENYA
by
E. B. MANYARA
SENIOR ASSISTANT DIRECTOR OF EXTERNAL
TRADE
OFFICE OF DEPUTY PRIME MINISTER AND
MINISTRY OF TRADE
TELPOSTA TOWERS
NAIROBI
1
Introduction
The need for formulation of a National Trade Policy is founded on
a notion that promoting trade is key to Kenya’s development in an
environment characterized by rapid technology and progress and
globalization. The intensification of competitive pressures in
liberalized regimes, also make it more important to mount a trade
policy. The policy recognizes the need for a coherent trade policy.
Current interventions affecting trade development and
competitiveness in Kenya can be found in numerous policy
documents and the implementation and coordination is scattered
to a number of institutions and ministries. This hinders the
successful implementation of the trade policies.
2
Evolution of Trade Policy in Kenya

3
Trade policies in Kenya have evolved
through the following distinct policy
orientations.
Import Substitution Policies (1960-80’s)
After independence, Kenya’s trade efforts were mainly
guided by import substitution strategy. The Sessional
Paper No. 10 of 1965 mainly centered on trade
development and pursued enhanced protection of the
domestic market to help develop industries. The Policy
was a key influence on the development of trade
regime in Kenya over the first decade from
independence. The objectives of the Strategy were;
rapid growth of trade, easing balance of payment
pressure, increased domestic control of the economy
and generation of employment.
4
Trade Liberalization: Structural
Adjustment Policies (SAPs-1980s)

5
The SAPs were introduce in the early 1980s to address the
Structural rigidities price instability and macro-economic
imbalances that had become embedded in the economy and
led to poor delivery of services by the public sector. The main
thrust of the adjustment programme was to effect a shift from a
highly protected domestic market to a more competitive
environment that would facilitate increased use of local
resources, outward oriented policies that would promote
employment creation and export expansion.
The
implementation of the SAPs involved, among others, promotion
of non-traditional exports, liberalization of market systems and
reform of international trade regulations.
Export Oriented Policies – 1990s
These policies were embodied in the Sixth Development Plan
(1989-1993) which provided a policy framework for adoption of
export promotion strategy centered on creation of an enabling
environment for export growth. This was to be achieved
through institutional reform, reduction and restructuring of
tariffs, abolition of export duties, introduction of export retention
schemes, improvement of foreign exchange and insurance
regulations and the establishment of the National Export Credit
Guarantee Coorporation. This strategy proposed incentives that
aimed at encouraging industries to provide for exports. The
main objectives of export led industrial reform programmes
were to improve efficiency, stimulate private investment and
increase the sector’s foreign exchange earnings.
6
Vision 2030 and National Trade Policy
(from 2004 to-date)
Vision 2030 is geared towards making Kenya a globally
competitive and prosperous nation with high quality of
life. A National Trade Policy is a key compliment of the
Vision and is intended “to transform the economy from
a supply constrained outfit responsive to enhanced
domestic integration and wider participation in the
global economy for national and international trade
expansion”. The trade policy is intended to fast-track
the realization of Vision 2030 objectives through:-
7
Vision 2030 and National Trade Policy
(from 2004 to-date)
–
–
–
–
–
8
Promotion of decent, protected and recognized informal
trade;
Establishment of vibrant business supported by well
established and functioning infrastructure and social
amenities.
Expansion of Kenyan exports and thereby generate jobs
and prosperity for the people of Kenya.
Transformation of Kenya into a regional service hub; and
Enhancement of opportunities and increase the digital
opportunity index from access (0.17) to medium access
(0.5).
Trade Policy Making in Kenya and Main
responsibility

9
The Office of the Deputy Prime Minister and Ministry
of Trade takes the lead role in trade policy making
process in the country. For instance, the National
Export Strategy (NES) and the Private Sector
Development Strategy (PSDS0, the two trade policy
documents demanded by “Economic Recovery
Strategy for Wealth and Employment Creation (ERS)
were accordingly formulated in the Office of the
Deputy Prime Minister and Ministry of Trade. The
two documents identifies strategic sectors and set
out a road map that would help the country build a
strong and thriving private sector in Kenya.
Various Stages of Trade Policy making
Process
Kenya is in the process of finalizing its trade policy document. It adopted
a model that European and Asian countries follow in formulating their
trade policies which has 11 stages as outlined hereunder:Current
status
Problems/challenges identification
Benchmarking with aspirational countries (newly industrialized countries)
Area of focus and required interventions
Overall country vision
Goal to solve the problem within a time frame
Specific objectives to achieve the goal within a timeframe
10
Trade Policy Making in Kenya and Main
responsibility




11
Strategies and targets for each objective
Flagship projects for quick wins
Institutional implementation framework; and
Expected impact
Main Elements of Trade Policy Making
Process





12
The trade policy making process focuses on six key elements
and the same are presented as follows:Informal trade – to mainstream the sector within the overall
economy
Retail trade – to ensure that it is well supported by well
established and functioning infrastructure and special amenities
Distribution and wholesale trade – to address the challenges
arising from existence of inefficient supply chains across most
sub-sectors and product categories
International trade – to negotiate for policy space and better
trade terms to enable the country reap the benefits of emerging
market access opportunities
Main Elements of Trade Policy Making
Process
– to ensure that it is adequately
developed and mainstreamed in the whole economy;
and
 Trade in services – to support and develop the sector
and ensure that it maximumly contribute to the growth
of the economy
All the six elements are intended to contribute towards
the realization of the objective of the Economic pillar
of vision 2030 ..” to maintain a sustained economic
growth of 10% per annum over the next 25 years”.
 E-Commerce
13
Government Ministries involved in
Trade Policy Making
Office of the Deputy Prime Minister and
Ministry of Trade works very closely with
Ministries of Industrialization, Economic
Planning and National Development as well as
KIPPRA in trade policy making process.
14
Means for Eliciting inputs from
Stakeholders
The team that is currently formulating the trade
policy engage stakeholders both in formal and
informal consultations. The consultations have
been extended to the provinces targeting
provincial administration, agriculture, trade
and industrial development officers, local
authorities and informal and formal trade
organizations.
15
Trade Policy Announcement
The Private Sector Development Strategy (PSDS) after
obtaining Cabinet approval and launched by former
Vice President, Hon. Moody Awori, is the latest trade
policy announcement from the Government. This is
the first Private Sector Development Policy to be
developed by the Government of Kenya. It outlines
specific policies and strategies that need to be pursued
in order to enhance private sector growth and
competitiveness in the country. This is being pursued
under five goals as indicated hereunder:-
16
Trade Policy Announcement
Goal 1: Improving Kenya’s business environment;
Goal 2: Accelerating institutional transformation within the public
sector;
Goal 3: Facilitating growth through greater expansion of trade;
Goal 4: Improving the productivity of enterprises; and
Goal 5: Supporting entrepreneurship and indigenous enterprise
development.
The formulation of the draft trade policy document which is about
to be finalized is being supported and funded Goal 3.
17
Conclusion

18
Since independence Kenya has never had a clear
and well structured trade policy document. The
trade policies as contained in various government
documents makes it cumbersome to interpret them
and also difficult to be understood by the outside
world. This in turn has had an adverse effect on
investment. Every effort has now been made and
the first trade policy document is expected to be
rolled out by early next year.