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Move to increase export markets, products step in right direction

By Myles Leo | August 18th 2020 at 00:55:00 GMT +0300

The government seems keen on diversifying its exports in both the variety of products and the countries to which it sends.

According to Trade and Enterprise Development Cabinet Secretary Betty Maina, Kenya has been focusing mainly on agricultural exports, following up with the Integrated National Export Development and Promotion Strategy created by President Uhuru Kenyatta in July 2018.

As economies around the world shrink in size, Kenya continues to work on reducing its trade deficit with China. By securing a larger market for our exports to the East Asian Country, we will be able to reduce the gap thereby strengthening our economy.

By improving regulations on phytosanitary (concerning the health of plants) regulations, Kenya should be able to increase the volume of produce we send not only to China, but also to our trade partners all over the world.

President Uhuru and his Chinese counterpart Xi Jinping already signed an agreement in April 2019 to allow Kenya to export Hass avocados to China. This allowed many of Kenya’s avocado farmers to thrive and produce more than it could be consumed by the local market. 

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Following this policy, Kenya under Uhuru has been able to increase the amount of exported goods by Sh2 billion during the 2017-18 period, and this number keeps on increasing. 

Now, our country is turning towards the exportation of flowers, french beans, peanuts, meats, herbs, macadamia nuts and various vegetables to China. This comes on the tails of the 2018 food, plant and animal agreement that provides the framework for exportation of fruit, vegetables, flowers and meat. 

The main imports that we receive from China include electrical machinery and equipment, mechanical appliances, nuclear reactors, railway locomotives, iron and steel, furniture, and textiles. If Kenya’s renewed focus on exporting more produce to China is successful, it will be very instrumental in bridging the trade deficit.

What the administration is essentially trying to do is guarantee a predictable export market through trade expansion. This can occur through targeted sectoral export growth, and by linking domestic value chains to target destination markets. 

But China is not the only country we rely on for imports. We also import from India, the UAE, Saudi Arabia, and South Africa. Other major markets with which we frequently trade include Japan, the UK, the US, Germany, the Netherlands and France. 

For the past several years, Uhuru has cultivated personal relationships with leaders of many of these countries in order to facilitate smoother trade and Free Trade Agreements (FTA). His meetings with President Donald Trump of the US over the past year have resulted in Kenya becoming the first African country to sign a FTA with the United States.

This will not only help us reduce our trade deficit, but it will also empower other African countries to strive for the same accomplishments. Increasing trade and developing smooth functioning trade relationships with diverse countries is key to economic growth.

On the one hand, it increases local employment because it enables Kenyan farmers and manufacturers to reach larger global markets. By scaling up, they are able to increase efficiency, hire more people, and ultimately, turn a higher profit.

Moreover, being able to import many goods that are not produced in Kenya at a low cost gives Kenyans the benefit of cheaper products and a more competitive market. The government’s policy of focusing on certain sectors in which to channel all of our energy enables high speed growth in these sectors so that we can become experts in certain fields. Knowing that the goods that we do not make at home are still accessible to us and available at low prices gives us the best of what the market has to offer.

Focusing on trade really is key to domestic economic development. Trade deficits are typical to most developing countries, but the question of what administrations do to reduce them is key to whether or not that country will succeed in the long run.

The positive trade relations that the current administration has been working on offer us a glimmer of hope despite all of the current economic hardships surrounding Covid-19.

A global health pandemic does not stop consumers from needing to buy food and other goods, and Kenya is moving in the right direction with regards to this. 

Mr Leo is a public policy analyst. [email protected]

Trade Deficit Export Import Economy
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