Kenya is struggling to capitalise on rising global demand for environmentally friendly products, with its green export potential stalled by policy gaps and finance shortfalls. A report by the Kenya Institute for Public Policy Research and Analysis (KIPPRA) found that limited access to low-carbon machinery, weak policy implementation, and scarce green finance are major obstacles. The report noted that horticulture, coffee, tea, textiles, and apparel account for 52.4% of Kenya's total export value, making their shift to cleaner production essential for the economy.
The scarcity of low-carbon machinery and intermediate goods is a significant challenge, representing less than 1% of Kenya's GDP. This forces exporters to rely on higher-emission inputs, undermining the country's eco-friendly export ambitions. High upfront costs for clean technologies and limited access to green finance further deter businesses from investing in renewable energy, energy-efficient equipment, and cleaner production systems. As a result, Kenya is failing to convert its green export potential into higher export earnings.
Policy gaps are also compounding these challenges, with no explicit provision for tariff exemptions on imports of environmentally friendly machinery and raw materials under the East African Community Common External Tariff. This raises adoption costs for greener technologies, making it more difficult for businesses to invest in sustainable production. Despite having several green-transition policies, including the National Climate Change Action Plan and the Green Economy Strategy, weak coordination, implementation gaps, and limited enforcement prevent these frameworks from translating into greener exports.
Weak linkages between local industries and exporters are another significant challenge, restricting the use of domestically produced sustainable raw materials. Limited access to green certification and carbon accounting also hampers firms' ability to meet stringent market requirements, such as the EU Deforestation Regulation and Carbon Border Adjustment Mechanism. This makes it difficult for Kenyan exporters to compete in the global market, where environmental sustainability is increasingly becoming a key consideration.
To address these challenges, KIPPRA recommends that the National Treasury and Ministry of Trade remove import tariffs on green technologies, especially machinery and intermediate goods used in sustainable production. The report also proposes creating specialised green export zones within Special Economic Zones, offering tax incentives and reduced duties. These measures aim to encourage investment in green technologies and promote sustainable production, ultimately enhancing Kenya's green export potential.
Additional proposals include establishing a national carbon accounting and reporting framework, providing training for exporters, setting up green technology hubs, and strengthening research partnerships with universities. Embedding climate commitments in bilateral and regional trade agreements is also recommended, to ensure that Kenya's trade policies align with its green economy goals. By implementing these recommendations, Kenya can unlock its green export potential and benefit from the growing global demand for environmentally friendly products.
The KIPPRA report highlights the need for a coordinated approach to address the challenges facing Kenya's green export sector. By addressing policy gaps, improving access to green finance, and promoting sustainable production, Kenya can increase its export earnings while contributing to a more environmentally sustainable economy. The report's recommendations provide a roadmap for the government and private sector to work together to unlock Kenya's green export potential and achieve a more sustainable future.
Key points
- Limited access to low-carbon machinery and green finance is stalling Kenya's green export potential.
- Policy gaps, including the lack of tariff exemptions on environmentally friendly imports, are compounding the challenges facing Kenya's green export sector.
- KIPPRA recommends removing import tariffs on green technologies and creating specialised green export zones to promote sustainable production and enhance Kenya's green export potential.
