Mkikuyu- Akili timamu
JF-Expert Member
- Feb 16, 2018
- 4,310
- 7,464
Kenya’s trade surplus with Africa drops to record low
MONDAY, FEBRUARY 18, 2019 22:00
BY CONSTANT MUNDA
A Rwandan-registered fuel tanker at Kenya-Uganda Busia border town destined for Kigali. FILE PHOTO | NMG
ADVERTISEMENT
Kenya’s goods trade surplus with Africa in the first 11 months of 2018 fell below the Sh10 billion mark for the first time in more than two decades, underlining the growing uncompetitiveness of its products in the continent.
The surplus — the gap between exports and imports — narrowed to Sh8.89 billion in the January-November 2018, the lowest ever recorded since 1998 when such data was publicly made available.
Latest data collated by the Central Bank of Kenya (CBK) show exports earnings from Africa in the 11-month period through last November slipped 2.16 per cent compared to a year earlier to Sh200.12 billion — the lowest value since Sh171.35 billion in 2010.
Imports from African countries, on the other hand, hit a record of Sh191.23 billion, a growth of 5.84 per cent, or Sh10.20 billion, over the corresponding period in 2017, which posted a Sh181.03 billion bill.
Kenya has struggled to sustainably expand her exports to African countries since the turn of the decade, an analysis of official statistics indicate. This is a sign factories in Nairobi have been losing their market share partly due to import substitution.
Higher growth in imports than exports, economists say, denies Kenya an opportunity to create more jobs because locals lose out to foreign manufacturers.
The Kenya Association of Manufacturers (KAM), a sector lobby, on January 29 said regional demand for cement, iron and steel, salt and medicaments from domestic factories had been hardest hit in recent years.
Also Read
Data HubNEWS INDEPTH: Kenya wins praise for fight against illicit tobacco
Data HubNEWS INDEPTH: Kenya lags behind Uganda, Ethiopia in coffee production
The lobby has blamed the challenges the Kenyan factories are facing on “continued erosion in our competitiveness”, citing the two per cent Import Declaration Fee and 1.5 per cent Railway Development Levy on the importation of raw materials and other supplies.
“Our neighbours in the region do not have these additional costs. When other costs such as delayed payments and cost of financing the business are factored, we automatically become more expensive by nearly 12 per cent, making us unable to compete,” the KAM said via e-mail.
“The biggest contributors to the decline are as a result of systemic inefficiencies and unfavourable tax policies.”
Africa accounted for 17.79 per cent, or Sh391.35 billion, of Kenya’s Sh2.20 trillion total trade volume in the January-November period, data collated by the CBK shows.
That’s a slight drop from 18.11 per cent in the corresponding period in 2017.
Kenya is championing a plan to remove trade barriers among African countries to spur movement of goods, services and labour through African Continental Free Trade Area (AfCFTA), which will create a market of at least 1.2 billion people upon ratification.
Kenya and Ghana on May 10, 2018, became the first countries to ratify the AfCFTA deal which requires a minimum of 22 countries to be operationalised.
The country on June 8, 2018, also led from the front by presenting documents ratifying the proposed Common Market for Eastern and Southern Africa (Comesa)-East African Community (EAC)- Southern African Development Community (SADC) tripartite free trade area, according to Comesa secretary-general Sindiso Ngwenya.
The Comesa-EAC-SADC trade agreement, reached in June 2015 bringing together 27 countries, requires a minimum of 14 states to ratify it in order to come into force.
“For Kenya to achieve an increase of the manufacturing sector’s contribution to the gross domestic product from 8.4 per cent in 2017 — which has since been revised downwards to 7.9 per cent — to 15 per cent (in 2022), Africa remains the single most lucrative market for her exports,” Export Promotion Council chief executive Peter Biwott said in an earlier engagement.
Exports strategy
“There is thus the need to aggressively pursue promotional activities in the EAC as well as the continent with a view to taking advantage of market access opportunities.”
Kenya launched the Integrated National Exports Development and Promotion Strategy on July 31, 2018, aiming to grow exports from 2.8 per cent in 2017 to an average of 25 per cent between 2018-22.
The Trade and Industry ministry seeks to increase exports of manufactured goods — a major contributor to total exports dominated by raw and semi-processed agricultural produce — under the strategy at an average of 31 per cent in five years through 2022, a target likely missed by far last year.
Food, beverages and tobacco; textile and apparels, leather and footwear, pharmaceuticals and medical equipment, plastics, light engineering, furniture, motor vehicles and parts are listed as priority industries under the government-led export promotion strategy.
“Kenya’s export products lost market share in both the EAC, Comesa as well as in other traditional markets for the country’s export products,” EPC says in the strategy, citing findings of Report on Trade Flow Analysis — April 2016, by Trade ministry.
“Hitherto, there has been no documented evidence of strategic actions taken to regain any of the lost markets, especially for the agro-processed and manufactured products.”
The plan borrows heavily from East Asian tiger economies’ industrial revolution, which partly catapulted them to sustainably high economic growth between 1965 and 1990.
Countries such as Japan, South Korea, Taiwan, Hong Kong, Singapore, Thailand, Malaysia, and Indonesia dramatically grew their real per capita gross domestic product — economic output divided by the number of people and adjusted for inflation — in that period.
That helped cut poverty and income inequalities in what has come to be known as the “East Asian Miracle”.
MONDAY, FEBRUARY 18, 2019 22:00
BY CONSTANT MUNDA
ADVERTISEMENT
Kenya’s goods trade surplus with Africa in the first 11 months of 2018 fell below the Sh10 billion mark for the first time in more than two decades, underlining the growing uncompetitiveness of its products in the continent.
The surplus — the gap between exports and imports — narrowed to Sh8.89 billion in the January-November 2018, the lowest ever recorded since 1998 when such data was publicly made available.
Latest data collated by the Central Bank of Kenya (CBK) show exports earnings from Africa in the 11-month period through last November slipped 2.16 per cent compared to a year earlier to Sh200.12 billion — the lowest value since Sh171.35 billion in 2010.
Imports from African countries, on the other hand, hit a record of Sh191.23 billion, a growth of 5.84 per cent, or Sh10.20 billion, over the corresponding period in 2017, which posted a Sh181.03 billion bill.
Kenya has struggled to sustainably expand her exports to African countries since the turn of the decade, an analysis of official statistics indicate. This is a sign factories in Nairobi have been losing their market share partly due to import substitution.
Higher growth in imports than exports, economists say, denies Kenya an opportunity to create more jobs because locals lose out to foreign manufacturers.
The Kenya Association of Manufacturers (KAM), a sector lobby, on January 29 said regional demand for cement, iron and steel, salt and medicaments from domestic factories had been hardest hit in recent years.
Also Read
Data HubNEWS INDEPTH: Kenya wins praise for fight against illicit tobacco
Data HubNEWS INDEPTH: Kenya lags behind Uganda, Ethiopia in coffee production
The lobby has blamed the challenges the Kenyan factories are facing on “continued erosion in our competitiveness”, citing the two per cent Import Declaration Fee and 1.5 per cent Railway Development Levy on the importation of raw materials and other supplies.
“Our neighbours in the region do not have these additional costs. When other costs such as delayed payments and cost of financing the business are factored, we automatically become more expensive by nearly 12 per cent, making us unable to compete,” the KAM said via e-mail.
“The biggest contributors to the decline are as a result of systemic inefficiencies and unfavourable tax policies.”
Africa accounted for 17.79 per cent, or Sh391.35 billion, of Kenya’s Sh2.20 trillion total trade volume in the January-November period, data collated by the CBK shows.
That’s a slight drop from 18.11 per cent in the corresponding period in 2017.
Kenya is championing a plan to remove trade barriers among African countries to spur movement of goods, services and labour through African Continental Free Trade Area (AfCFTA), which will create a market of at least 1.2 billion people upon ratification.
Kenya and Ghana on May 10, 2018, became the first countries to ratify the AfCFTA deal which requires a minimum of 22 countries to be operationalised.
The country on June 8, 2018, also led from the front by presenting documents ratifying the proposed Common Market for Eastern and Southern Africa (Comesa)-East African Community (EAC)- Southern African Development Community (SADC) tripartite free trade area, according to Comesa secretary-general Sindiso Ngwenya.
The Comesa-EAC-SADC trade agreement, reached in June 2015 bringing together 27 countries, requires a minimum of 14 states to ratify it in order to come into force.
“For Kenya to achieve an increase of the manufacturing sector’s contribution to the gross domestic product from 8.4 per cent in 2017 — which has since been revised downwards to 7.9 per cent — to 15 per cent (in 2022), Africa remains the single most lucrative market for her exports,” Export Promotion Council chief executive Peter Biwott said in an earlier engagement.
Exports strategy
“There is thus the need to aggressively pursue promotional activities in the EAC as well as the continent with a view to taking advantage of market access opportunities.”
Kenya launched the Integrated National Exports Development and Promotion Strategy on July 31, 2018, aiming to grow exports from 2.8 per cent in 2017 to an average of 25 per cent between 2018-22.
The Trade and Industry ministry seeks to increase exports of manufactured goods — a major contributor to total exports dominated by raw and semi-processed agricultural produce — under the strategy at an average of 31 per cent in five years through 2022, a target likely missed by far last year.
Food, beverages and tobacco; textile and apparels, leather and footwear, pharmaceuticals and medical equipment, plastics, light engineering, furniture, motor vehicles and parts are listed as priority industries under the government-led export promotion strategy.
“Kenya’s export products lost market share in both the EAC, Comesa as well as in other traditional markets for the country’s export products,” EPC says in the strategy, citing findings of Report on Trade Flow Analysis — April 2016, by Trade ministry.
“Hitherto, there has been no documented evidence of strategic actions taken to regain any of the lost markets, especially for the agro-processed and manufactured products.”
The plan borrows heavily from East Asian tiger economies’ industrial revolution, which partly catapulted them to sustainably high economic growth between 1965 and 1990.
Countries such as Japan, South Korea, Taiwan, Hong Kong, Singapore, Thailand, Malaysia, and Indonesia dramatically grew their real per capita gross domestic product — economic output divided by the number of people and adjusted for inflation — in that period.
That helped cut poverty and income inequalities in what has come to be known as the “East Asian Miracle”.
