Kenya and Ethiopia have officially launched a simplified cross-border trade regime designed to boost economic exchanges along their shared border. The agreement, signed in Addis Ababa, aims to strengthen bilateral trade while ensuring border communities benefit from opportunities under the African Continental Free Trade Area (AfCFTA).
The deal was signed by Ethiopia’s Minister of Trade and Regional Integration, Kassahun Gofe, and Kenya’s Cabinet Secretary for Investments, Trade and Industry, Lee Kinyanjui. It builds on earlier discussions in Mombasa in April 2025, which highlighted the need to remove constraints affecting cross-border trade.
The simplified regime focuses on formalizing and securing small-scale trade, particularly daily transactions by local traders. By clarifying rules, easing procedures, and establishing a common framework, the two governments aim to reduce informality and foster more structured trade.
Officials emphasized that the framework also has social and economic benefits. It seeks to increase incomes, improve access to essential goods, curb illicit trade, and strengthen peace and cooperation along the border. The initiative positions cross-border trade as a driver of local development and regional stability.
The move aligns with the AfCFTA’s broader goal of creating a single African market by easing the movement of goods and services, enhancing intra-African trade, and supporting economic upgrading across the continent.
According to the World Trade Organization, merchandise trade between Kenya and Ethiopia the two largest economies in East Africa totaled US$166.6 million in 2024.
Historical Background of Kenya-Ethiopia relations
Kenya and Ethiopia share a long history of political, economic, and cultural interactions shaped by geography, trade, and regional dynamics. Their 867-kilometre border stretches from Moyale in the north to Lake Turkana in the south, linking pastoralist communities, trade hubs, and agricultural regions.
Pre-Colonial and Colonial Era:
Long before modern borders were established, communities across what is now northern Kenya and southern Ethiopia engaged in trade, exchanging livestock, grains, and other goods. The arrival of European colonial powers in East Africa in the late 19th and early 20th centuries reshaped these interactions. While Kenya fell under British colonial rule, Ethiopia remained independent, creating a unique dynamic. Despite differing political trajectories, cross-border trade and cultural exchanges continued, particularly among the Oromo, Somali, and Turkana communities.
Post-Independence Era:
Kenya gained independence in 1963, while Ethiopia, under Emperor Haile Selassie, was a sovereign monarchy. The two countries established formal diplomatic relations in the 1960s, with embassies in Addis Ababa and Nairobi. Cooperation initially focused on trade, infrastructure, and regional security, although the border remained porous, with informal trade persisting.
1980s–1990s: Regional Challenges and Cooperation
During the 1980s, Ethiopia faced internal conflicts and famine, while Kenya grappled with political and economic reforms. Kenya became a transit hub for humanitarian aid into Ethiopia, strengthening bilateral engagement. The two countries also collaborated on regional security, particularly through the Intergovernmental Authority on Drought and Development (IGADD), the precursor to IGAD.
