Joe Biden Pledges to Make Nairobi an Investment Magnet in Africa

The Biden administration has made a commitment to enhance Kenya’s investment environment, aiming to set an example for other African nations during ongoing bilateral trade discussions.

In July 2022, the United States and Kenya began formulating the US-Kenya Strategic Trade and Investment Partnership (STIP) to establish a comprehensive free trade agreement to replace Agoa, which has been effective, though outdated. Constance Hamilton, the Assistant US Trade Representative for Africa and the lead negotiator emphasizes how successful discussions could transform Nairobi into a hub for multinational corporations and help generate quality employment opportunities for Kenya’s skilled and unemployed youth. Both nations’ progress towards the deal has been hindered given changes in leadership in the past.

In 2000, the Agoa pact was established and then renewed in June 2015 for 10 more years. This pact grants sub-Saharan African nations duty- and quota-free provisions for a wide-ranging array of goods, such as food, beverages, wood, plastics, rubber, and primarily clothing. Expansion of this pact requires Congress’ approval. Earlier this year, Hamilton referred to the US International Trade Commission’s findings, emphasizing that improvements are necessary based on the lessons learned from 25 years of Agoa.

This development coincides with the decision of US manufacturers in China to accelerate their plans to relocate production lines. Recent disruptions in the supply chain caused by Covid-19 restrictions, combined with the heightened trade tensions between the two largest economies, have caused concern among these manufacturers. Over the past decade, rising wages and intermittent trade disputes between Washington and Beijing have prompted US manufacturers in labor-intensive industries like textiles and furniture to move their production to other countries, including Indonesia and Bangladesh.

At the beginning stages of negotiations in Nairobi from April 17 to 20 for the trade agreement proposal, US negotiators called for improved procedural openness and accuracy for certifying American service providers specifically accountants, architects, engineers, and lawyers in Kenya. The US’s proposal to Kenya aligns with the World Trade Organization’s Joint Statement Initiative on Services Domestic Regulation which was signed by 70 countries in December 2021.