The implications of Kenya signing an agricultural exports deal with China

The growing relationship between Kenya and China has led to the two countries signing a new deal that will see agricultural products exported from Africa to Asia.

In recent years, China has converted into Kenya’s largest and most important trading partner. This can be seen in how the Standard Gauge Railway linking Mombasa and Nairobi was funded by a $3 billion, 15-year loan from the Exim Bank in China. Could this new agricultural deal see the two countries work together even more closely?

What Does the Deal Cover?

Nzioka Waita is President Uhuru Kenyatta's Chief of Staff. He confirmed that Kenya will export fruit and vegetables to the Asian country. The export to China of meat and cut flowers is also said to be covered under the terms of the agreement.

At the current time, Kenya mainly exports its flowers and vegetables to Europe. Indeed, it has been reported that, every year, over 1 billion flowers are sent from here to the world’s biggest flower auction, which is held in Amsterdam.

No figures have yet been provided for the number or value of exports that are expected to be made to China under the terms of this deal. However, the Asian giant already accounts for 17% of Kenya’s annual trade (over $4 billion) even before the new agreement comes into force.

How It Could Affect Kenya

Kenya has been actively looking for new markets for its products. The flower exportation trade, in particular, has grown impressively. It is reported that earnings from the exportation of cut flowers rose by 16% in 2017, with the increased volume at close to 20%.

Investors may see major fluctuations in the Kenyan Shilling as well, as exchange rates are heavily affected by imports and exports. Volatility is a crucial component to monitor when trading options on platforms such as IG as it is always fluctuating in frequency and severity, so currency investments may become more popular due to this.



There are also links to be found between exportation figures and the overall national economy. Positive net exports can help the country’s economy to grow and raise employment levels, which can have a huge knock-on effect on the lives of millions of people.

How It Could Affect China

Naturally, this deal is also going to have a number of interesting benefits for China as well. The most obvious is that they need to find more food for their people than they can possibly produce at home. With a population of some 1.4 billion, they face enormous challenges in providing the food needed for so many people.

Indeed, it is estimated that around an acre of arable land is needed to feed a single person in the US. In China, the amount of available land for farming purposes is only around 0.2 acres per person, even when taking into account those fields that are of lower quality due to pollution.

They have turned to technology to try to boost production lately, with an increase in the use of fertilizers and pesticides, in particular. However, to meet the challenge of feeding its citizens, this Asian country has had to turn abroad. The General Administration of Quality Supervision, Inspection and Quarantine reported an annual food import growth of over 17% from 2010 to 2014.

Turkey, Argentina and Australia are a few of the countries that already send massive amounts of products to China. With Kenya agreeing to meet suitable food safety measures, China has now increased its sources of fresh, high-quality food significantly.

This agricultural deal should prove to be a positive development for both sides. While full details haven’t been released yet, there is no doubt that the overall idea is something that meets the current needs of both countries.