By Beth Nyaga
Kenya will have to negotiate afresh trade agreements with Britain following the Brexit decision National Treasury Cabinet Secretary Henry Rotich has said.
Britain’s vote to leave the European Union continues to reverberate through financial markets, with the sterling pound falling to its lowest level in 31 years, despite government attempts to relieve some of the confusion about the political and economic outlook.
The UK is one of the largest foreign investors in Kenya with bilateral trade totaling to over 170 billion shillings last year.
Over 60 UK companies operate from Kenya, including Barclays Bank, British Airways, BAT, Standard Chartered Bank, Diageo, GlaxoSmithKline, Unilever, De La Rue, Finlays, G4S, Tullow Oil and BG Group.
Kenyan authorities continue to keep an eye on the happenings in Europe as the effects of Brexit continues to reverberate across the world.
Exporters to Britain which is Kenya’s third largest trading partner are worried that the weakening sterling pound is likely to condemn them into huge losses denying Kenya the much needed foreign currency inflows.
Kenya exports cut flowers, coffee, tea and Khat to the European Union.
Central Bank Governor Dr. Patrick Njoroge says the Central Bank is ready to take contingency measures to ameliorate the effects of Brexit.
“The bank is ready to intervene in the local currency market if there is a shortage of foreign currency,” says Njoroge.
UK is the largest exporter of tourists to Kenya, benefitting our local economy in terms of foreign exchange earnings, visa revenues, domestic spending, and the direct and indirect jobs created through the upkeep of the hospitality sector.
UK’s vote to leave the EU has caused a significant depreciation in the Sterling Pound, which will make it more expensive for UK tourists to travel to Kenya, having a negative impact on our tourist arrivals and GDP growth, at a time when the tourism sector is struggling to recover.
Though the Nairobi Securities Exchange has not been adversely affected by the Brexit vote, analysts are warning that it is still too early to pop up the champagne bottle since full effects of the decision to leave the EU continues to emerge every minute.