Kenya, South Africa sign agreements to boost trade

Reuters, Saturday 27 Nov 2010

The African continent's two economic powerhouses strive for further economic boosts

Kenya and South Africa signed agreements Friday aimed at improving commercial relations between the two regional economic powerhouses before a planned visit by President Jacob Zuma next year.

The deals were sealed during a visit by South African Deputy President Kgalema Motlanthe to East Africa's biggest economy. He said his trip was to create a better environment for businessmen to trade freely between the two countries.

Kenyan businessmen say South African tariffs and other trade barriers can make it difficult to invest or sell some exports in the continent's biggest economy.

Trade ministers from the two countries signed a Memorandum of Understanding (MOU) on agricultural cooperation and a double taxation treaty.

"The agreement will facilitate investment, in particular by removing the obligations that may exist at present of being taxed in both jurisdictions," Motlanthe told Reuters.

He said in an interview that the agriculture MOU would address the opening of South African markets to Kenyan produce.

Currently, tea exported from Kenya attracts an import tax of four rand per kilogramme and while soda ash attracts a 12 per cent levy. Kenya, which is the world's biggest exporter of black tea, wants both to be zero rated.

Kenya also cannot export livestock and livestock products due to strict health rules in South Africa, while there is a ban on avocados from Kenya due to fruit flies there, Kenyan Trade Minister Chirau Mwakwere told business delegates.

He said Kenya had completed all the requirements for both livestock and avocado exports and was waiting for South African inspectors to come and make checks.

Mwakwere said the balance of trade between the two African nations was heavily in favour of South Africa and the steps taken on Friday would make the playing field more even.

"In 2009, the value of South African imports to Kenya was 70 billion shillings ($869 million) while imports from Kenya to South Africa were valued at 3.5 billion shillings," he said.

Motlanthe also held talks with Kenyan President Mwai Kibaki and Prime Minister Raila Odinga. He left Kenya Friday.

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