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Boosting trade ties with Pakistan is important to our growth

FINANCIAL STANDARD
By Julius Bitok | July 21st 2015

Kenya and Pakistan have long enjoyed strong diplomatic ties, underpinned by robust commercial activities.

Currently, trade between the two countries is worth about Sh81.8 billion ($800 million) annually, with Pakistan being a leading importer of Kenya’s tea, and more than 80 per cent of the rice imported into Kenya coming from Pakistan.

Data from the Kenya Bureau of Statistics shows that in 2014, tea accounted for more than 95 per cent of total exports from Kenya to the South Asian nation.

Pakistan is the fourth-leading destination for Kenya’s goods after Uganda, Tanzania and Britain. In 2013, we exported goods worth Sh37.8 billion to Pakistan. And in 2014, the country was the leading importer of our products in Asia, buying goods worth Sh47.7 billion, an increase of Sh9.9 billion over 2013.

Strategic deals

Aside from tea, other high-potential export commodities from Kenya to Pakistan include coconuts, dry nuts, mangoes, fresh flowers and powdered milk. Pakistan can, through strategic deals, sell to Kenya pharmaceuticals, surgical equipment, textiles, farm machinery and sports goods at favourable terms.

Several factors underpin trade between the two countries, including a strong commitment from the two nations to grow their ties. This is driven mainly by the fact that bilateral relations have become a key cog in transforming the two economies.

These bilateral relations have been sustained by a raft of agreements. For instance, rice from Pakistan attracts 35 per cent duty, while commodities from other markets face higher levies. On its part, Pakistan imposes 5 per cent import duty on Kenyan tea.

A second reason our relations are bound to improve is the ongoing integration of East African economies, which is shaping the region into a huge market for goods and services.

With a population of more than 100 million, the five-nation East African Community is attracting investors from all corners of the globe. Pakistani traders and investors have the opportunity to expand their engagement with Kenya to gain a foothold in the region and cash in on its potential.

Kenya is East Africa’s financial and technology hub, and a gateway to the region, with most imports and exports going through the busy Mombasa port.

The country’s position in East Africa, and its stature in Africa, was further boosted by last year’s rebasing, which saw Kenya leap into middle-income status and become the continent’s ninth largest economy, up from 12th.

Massive projects

The prospects for the country’s economy look even brighter with the planned roll-out of massive projects like the standard gauge railway, and stepping up of electricity generation capacity, which is already driving down the cost of power. Thanks to its already vibrant ties with Kenya, Pakistan is poised to seize all these economic opportunities.

The two countries have traditionally been trading in primary products like rice and tea, but are now actively seeking to diversify their respective economies through manufacturing.

Despite Kenya-Pakistan ties being already admirably solid, there is potential to boost them through multi-dimensional approaches.

One way is by stepping up linkages with chambers of commerce and educational and research institutions. Already, progress has been made in forging partnerships in the field of education, with several Kenyans studying in Pakistan. Such new areas of partnerships need to be pursued with vigour.

There is also room for expansion in tourism and export of Kenyan flowers.

Perhaps the biggest challenge that both countries face is the threat of terrorism. Al-Shabaab is a thorn in the flesh of Nairobi’s development aspirations, while in Islamabad, extremists associated with the Taliban pose huge security challenges. The two nations bear scars, some still very fresh, of terror attacks that have deeply hurt. However, these attacks have also exposed the resilience of the people and economies of the two countries.

In essence, the commitment to diversified trade ties, as well as similar experiences, hold Kenya and Pakistan to a shared destiny. This calls for stronger bonds of trade and friendship.

The writer is Kenya’s ambassador to Pakistan.

[email protected]

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