How counties can help bridge export deficit gap

A multi-sectoral conference early this month signaled the country’s fresh intentions to expand and sustain its range of exports. The fair dubbed “Kenya Trade Week” sought to brainstorm on ways to power President Uhuru Kenyatta’s Big 4 Agenda through trade.

What perhaps wasn’t loud enough during the conference is the fact the meeting was held in the wake of a not-so-rosy report that Kenya’s exports to key markets in Africa had dropped to an eight-year low in the first four months of the year. The Central Bank of Kenya had in June showed that Kenya’s earnings from the continent were about Sh71.44 billion, a 4.5 per cent drop compared to the same period in 2017 and the lowest since 2010.

More in, less out

Over the same period, Kenya’s trade balance hit Sh1.1 trillion in 2017 compared to Sh822 million in 2016 an increase of 33 per cent. The move is attributed to a faster growth of imports and a slower growth of exports. According to the latest data from the Kenya National Bureau of Statistics, imports grew by 20.5 per cent to hit Sh1.7 trillion in 2017 compared to Sh1.4  trillion in 2016 mainly driven by an increase in importation of industrial machinery, petroleum products, motor vehicles, and iron & steel and even foodstuffs.

It is perhaps in light of these depressing statistics and a push to improve the country’s balance of trade that this high level meeting culminated in the launch of the National Export Strategy. The strategy has stirred fresh impetus and enthusiasm as it seeks to address export competitiveness through investment in value-add industries.

A boost in exports will not only increase Kenya’s revenues through foreign exchange earnings, but will also catalyze the creation of productive jobs. This answers one of President Kenyatta’s quest to push for creation of 1.3 million manufacturing jobs and boosting household incomes by 2022.

What cannot be over-emphasized is that counties – singly and\or in collaboration with each other – own the space within which this transformation is envisaged. Whether it’s manufacturing or agro-processing, any activities aimed at producing for exports will not take place in a vacuum. This reality thrusts counties at the centre of the fresh initiative.

At a macro level, it helps that as a Country, we have one national strategy to boost, diversify and grow our exports. At a micro level, carrying through this strategy will take the collaboration of the national and County governments. From the onset, it behoves upon the national Government to profile counties according to their promise and identify the needs of each to produce for the export market.

Unity of purpose

On their own, however, there is a lot that the devolved units can do to prime themselves as investment destinations and hubs of production for the export market. Counties with shared borders and characteristics will benefit a great deal working together to identify areas of synergy as a way of spurring trade and commerce.

More critically, approaching investment from a regional perspective will inadvertently allow the cooperating counties to take advantage of economies of scale that arise when one combines their total populations, the availability of resources therein, and combined financial contributions from both the county governments and the local investors.

It will also be a lot easier for the national Government dealing with counties in economic blocs rather than with each individual county in any activities or processes designed to produce for exports.

It is therefore instructive that the national Government expends reasonable resources and effort towards pushing for formation of economic blocs within and among counties with shared characteristics, borders and potential.

From the officers of the National Government, cooperating counties can also benefit from the insights and guidance on trade practices, export standards, harmonized taxation across counties in an economic bloc and awareness on export opportunities.

Overall, the National Government shoulders the ultimate responsibility of easing the cost of doing business in the country including improving infrastructure, provision of reliable and affordable power, security for investors and private investments and friendly taxation regime.

Still, counties have within their ambit the responsibility to remain open to business and investments from other counties or economic blocs.

Mr Wangamati is Bungoma Governor and Chair of Trade and Industrialisation Committee at CoG