How energy costs will impact Africa’s exports
During a recent visit to Nairobi, I accompanied a colleague to a dinner gathering some of Kenya’s biggest exporters. They sold everything from tea and avocados to flowers and leather in East Africa, Europe, North America, the Middle East and Asia.
What impressed me was how the meeting was organised. Exporters were there not as competitors but as ambassadors of Brand Kenya. As an African, I found this extremely encouraging. This reflected a recognition that in global markets these firms compete less with each other than with rivals in South Africa, Sri Lanka, Australia and dozens of other countries.
Many exporters said this was the first time such a large cross-section of Kenya’s export sector had met with the Ministry of Trade and Industry to discuss the challenges they faced. They were not asking for subsidies or protection from foreign competition. They wanted the government to remove the obstacles that limited their competitiveness.
As someone who studies energy policy, I expected electricity to dominate the discussion. It did, but only as part of a broader discussion about competitiveness. Exporters also mentioned freight costs, taxes, bonded warehouses in overseas markets, and coordination between government agencies and the private sector. They described a global market where every additional dollar of cost reduces razor-thin margins.
When I spoke to one of Kenya’s largest avocado sellers, who sells fresh and frozen produce, he told me that energy accounts for roughly a fifth of his operating costs. He noted that horticulture exporters in Ethiopia and Egypt benefit from significantly lower electricity costs, giving them an advantage before a single container reaches the port.
Kenya’s industrial electricity tariffs are well above those of many regional competitors and high by international standards. Electricity is no longer just an infrastructure problem for energy-intensive operations, from tea factories running continuous crush-tear-twist production lines to cold chain facilities. This is a matter of competition.
Tiku Shah, Managing Director of Sunripe Vertical Agro, captured this challenge well: “If energy costs rise, we cannot simply increase prices because most exporters are locked into supply contracts.”
The Kenya Association of Manufacturers, which represents sectors such as steel, cement and plastic, similarly argued that reducing industrial energy tariffs is essential for competitiveness.
The debate in Nairobi reminded me that we often frame Africa’s struggle for industrialization too narrowly. We discuss energy production, ports, customs reform, and taxation as separate policy questions. Exporters do not experience these separately. A delay at the port could eliminate savings from cheap electricity. Expensive power can negate the advantage of low charges. Competitiveness is the cumulative result of the entire system working together.
