When Kenya became one of the first nations to ratify the African Continental Free Trade Area (AfCFTA) in 2018, the goal was clear: to become the gateway to a market of 1.3 billion people and create a golden opportunity for local manufacturers. However, eight years later, a new industry report reveals that this “gateway” is currently blocked by exorbitant logistics costs and stifling bureaucracy.
The 2026 Logistics Study Report, released yesterday by the Kenya Association of Manufacturers (KAM) in collaboration with TradeMark Africa, presents a grim picture of Kenya’s continental competitiveness. While the agreement has been successful in reducing tariffs on 90 percent of products, the report argues that the sky-high costs of transporting goods across borders are “cannibalizing” these gains.
The data reveals a startling reality: it is often cheaper for a Kenyan company to ship goods to Europe than to neighboring African capitals. Shipping a 20-foot container from Mombasa to Lagos, Nigeria, costs between $3,200 and $4,200 (approx. Sh 414,000 to Sh 543,000). For those choosing faster options, air freight costs have soared to as much as $110,000 (Sh 14.2 million) for equivalent cargo.
The Lusaka corridor, vital for trade heading to Southern Africa, faces similar hurdles. Exporters encounter travel delays of up to 30 days due to border congestion and additional layers of costs reaching up to $7,000.”Logistics, not market access, is now the defining constraint to our competitiveness,” said KAM CEO Tobias Alando. “AfCFTA has created the opportunity, but current infrastructure and regulatory friction are isolating our businesses from the market.”
The report indicates that Small and Medium Enterprises (SMEs) are the most heavily affected. While large companies have the bargaining power to negotiate discounts for high-volume shipping, small institutions are forced to shoulder the maximum costs. Additionally, the complex “Rules of Origin” documentation required to prove a product is truly “Made in Kenya” demands legal expertise and time that small firms simply do not possess.
“The logistics system currently seems designed only for large companies,” the report states. “Unless hubs are established where small businesses can aggregate their shipments, AfCFTA will remain a theoretical benefit for small entrepreneurs.”
The stakes go beyond individual company profit margins. Kenya has set an ambitious goal to increase manufacturing’s share of the GDP from 7.3 percent to 20 percent by 2030. However, experts warn this goal is unreachable if the country continues to be outpaced by efficient exporters like Egypt or South Africa.
To salvage the situation, industry leaders are calling for an immediate shift in focus. Key recommendations include establishing cargo aggregation centers in strategic cities like Lusaka and Addis Ababa, integrating fragmented processes between customs and standards authorities through “single-window” systems, and addressing security gaps and incomplete border integration along the Moyale corridor to Ethiopia. As TradeMark Africa’s Kenya Director Lilian Mwai noted, the time for policy talk has passed. “If we do not resolve this ‘cost-and-friction wedge’ in our operating systems, Kenya will remain a mere spectator in the trade revolution it helped start.”
