In April 2022, the Centre for International Private Enterprise (CIPE) conducted a study on the potential impact of the African Continental Free Trade Area (AfCFTA) on Medium, Small, and Micro-Scale Enterprises (MSMEs) in Kenya. The study aimed to assess the awareness, benefits, threats, and readiness of Kenyan MSMEs regarding AfCFTA. It also evaluated the impact of the COVID-19 pandemic on MSMEs and their digital trade activities. The study sought to provide recommendations for maximizing the benefits of AfCFTA for MSMEs in Kenya.
The study employed an explanatory survey approach, collecting both qualitative and quantitative data. It targeted MSMEs, key informants in the private sector, and policymakers. Questionnaires and interviews were used as survey instruments, and probabilistic and non-probabilistic sampling methods were applied. Various analytical models and indices were used to analyze the data.
The study revealed a low level of awareness among MSMEs regarding AfCFTA and its ongoing negotiations. MSMEs had limited involvement in the negotiations and lacked knowledge about the potential threats posed by AfCFTA. The majority of respondents perceived the impact of COVID-19 measures on their business operations as moderate to high. While many acknowledged the potential benefits of digital trade, a significant number of MSMEs reported non-participation in online trade.
Based on the research findings, the study put forward several recommendations for private sector organizations, the government of Kenya, development partners, and the AfCFTA Secretariat to maximize the benefits of AfCFTA for MSMEs. These recommendations include simplifying administrative procedures, developing simplified regimes for rules of origin, supporting women entrepreneurs and women-owned SMEs, creating awareness and building capacity among the private sector, improving infrastructure, providing technical assistance on accessing finance, ensuring standardized quality goods, linking MSMEs to relevant markets, and facilitating partnerships and support channels for MSMEs.
Additional recommendations from the public-private dialogue highlighted the need for MSMEs to aggregate their goods for easier access to international markets, promoting awareness and understanding of the Trade in Services protocol, virtual incubation and partnerships for MSMEs, addressing customs and transport challenges, identifying suitable sectors for MSMEs’ alignment along value chains, and prioritizing the implementation of protocols benefiting women and youth.
By implementing these recommendations, stakeholders can enhance MSMEs’ understanding of AfCFTA, improve their competitiveness and capacity to benefit from the agreement, and foster inclusive economic growth and transformative change in Kenya.
The study emphasized the importance of supporting and empowering Kenyan MSMEs to seize the opportunities presented by AfCFTA, ultimately contributing to the overall growth of Kenya’s economy within the African market.
