Kenya: Ambitious project rolled out to increase exports by 20 percent
Kenya has crafted a new strategy to revitalise exports that have stagnated for some time.
The National Export Development and Promotion Strategy aims to grow exports by 20 per cent by 2022. The ambitious plan targets six items for accelerated development via a public-private working group.
While unveiling the plan this week, Trade Principal Secretary Chris Kiptoo said safeguarding Kenya’s exports, with a keen eye on opening up new markets for processed products, underpins the new strategy.
The principal secretary said Kenya has identified six sectors that will be prioritized including livestock and livestock products, agriculture, fisheries, manufactured products and handicrafts.
Data shows that about 60 per cent of Kenya’s exports comprise just 10 products, which go to only 12 destinations, half of which are in Africa.
Countries identified as key markets in the new push include USA, UK, Germany, Uganda, Egypt, Democratic Republic of Congo, Rwanda, Pakistan, South Sudan, Belgium and The Netherlands.
The PS said another strategy will aim at improving balance of trade between various countries, particularly Asian powerhouses China and India. Currently, trade between Kenya and the two countries is heavily tilted in their favour.
The Trade PS said while imports from India last year were 12 per cent, and those from China at 13 per cent, Kenya only exported a paltry 1 per cent to these two countries.
In 2015, Chinese imports to Kenya peaked at Sh320.8 billion, compared with Sh8.4 billion worth of exports, while India exported goods worth Sh411.8 billion to Kenya and received imports worth only Sh11.7 billion that year.
Export Promotion Council chief executive Peter Biwott said Kenya should nurture incentives for both local and foreign direct investments as a way of promoting value addition, which will directly increase exports and create jobs.
“More economic zones should be created across counties where investors set up shop targeting regional and foreign markets. This will not only create jobs but will nurture technology transfer, especially for large scale industrial operations in agro-processing sectors,” he said.
According to the new strategy, the six identified sectors will see private players work with the government to streamline the value chain, with trade exhibitions held in target markets to promote business-to-business linkages.
Kenyan delegations have since attended four trade fairs in Pakistani cities of Karachi, Peshawar Lahore and Islamabad, organised by Kenya’s High Commission in Pakistan in association with Pakistani Business Associations.
This year, Pakistan overtook Uganda as the largest buyer of Kenyan goods. Exports to Islamabad jumped 90.8 per cent to Sh24.8 billion in the year to May, from Sh13 billion in a similar period last year.
Kenya’s High Commissioner to Pakistan, Ambassador Julius Bitok, said there are huge business and trade opportunities that need to be explored between the two countries.
“Pakistani businesses have heavily invested in automobiles, media, real estate, health, pharmaceutical and textile industries in Kenya. With Nairobi becoming an East African hub, more Pakistanis have shown heightened interest in investing in Kenya,” he said in an interview.
Kenya’s main exports are raw tea, coffee, pyrethrum, horticultural products and fruits and flowers, meaning that the country exports millions of jobs abroad that could be harnessed locally through value addition and processing.
Africa Coffee Roasters, Sasini, Gibsons, Java and Dormans are among the firms engaged in value addition of coffee before it is shipped to foreign markets for sale. Kenya has also benefited immensely from apparels business, where Europe and US-bound finished products are made at factories located within export promotion zones. These currently employ about 42,000 Kenyans.
The planned strategy will also demystify foreign trade by helping local firms access targeted markets, especially in Africa, where trade in ready-to-brew roasted and branded coffee saw Kenya earn Sh22.57 billion in 2013, before the figure dwindled to Sh762 million in 2016.
Starting 2018, said Dr Kiptoo, sector working groups will have an opportunity to identify challenges and seek government interventions to streamline operations.
As Kenya seeks to expand exports through new markets, the Trade PS said the country would also foster closer ties with traditional markets, especially in East Africa.
Playing down the current Kenya-Tanzania tiff, Dr Kiptoo expressed optimism that cordial relations between the two longtime development allies would be restored soon.
“A lot has been said on the pertinent issues disrupting trade between Kenya and Tanzania. Kenya considers Tanzania an important market for its goods and services, which has seen Tanzania become our second most treasured customer in East Africa and sixth in the world,” he said.
Last year, Tanzania bought goods worth Sh34.8 billion from Kenya, while it exported goods worth Sh12.8 billion to Kenya, among them wheat and cooking gas.
Dr Kiptoo said the emerging mining sector holds great promise, adding that the sector is being closely monitored to ensure Kenyans are trained in various tasks along the value chain, from mining to making end-products such as jewelry.
But traders lament that high energy costs, coupled with many levies from import declaration fees to railway development levies for imported raw materials, as well as statutory and county levies, have made Kenyan goods uncompetitive.
While local firms are exposed to many regulations, firms operating within economic zones are pampered with in-house, one-stop shop regulatory regimes that eliminate the need to hop from one office to another to acquire compliance papers.
Traders say late refunds of VAT adversely affects cash flow, whereby most traders pass on the cost to consumers. Some also seek loans to meet operational obligations, which have recently seen many suffer unforeseen losses when the business environment falters owing to political chaos.
According to the Kenya Association of Manufacturers, a long term taxation regime would help businesses to thrive, instead of the annual changes usually announced on Budget Day.
Inter-county levies have also been a deterrence to regional trade as county governments charge levies for lorries in transit to either side. This has seen many traders reduce their volumes of goods for inter-county markets.