With a trade deficit of Ksh 1.1 tr***ion, Kenya has to up its game in the export industry to help repay the debt. In this year’s Annual Trade Law Centre (TRALAC) conference organised in ***ociation with the African Growth and Opportunity Act (AGOA), there w*** be an emphasis to get Kenya to export more in order to reduce the trade deficit.
In a previous Interview, President Uhuru Kenyatta compared Kenya’s debt to ***an’s, and most were amazed to learn that the later has a bigger debt. The difference between Kenya and ***an, **wever, is that ***an has a large number of exports mainly in technology products which makes them not to worry a lot about their debt. ***an’s export of technology products has been the engine of the country’s economic growth since 1960.
Kenya exports a huge amount of goods, but the imports are more than the exports hence the trade deficit of Ksh 1.1 tr***ion. The borrowing of funds has come to make the deficit even bigger alt**ugh it was st*** growing gradually.
In 2001, Kenya’s trade deficit was at Ksh 2.5 b***ion and at Ksh 10.9 b***ion in 2017. A difference of two years registers a boost of the trade deficit to Ksh 1.1 tr***ion. This is mainly because of the government’s plan to improve infrastructure in the country and hence increase production.
Kenya leading import is oil at 16% of all imports with mechanical and electrical equipment coming in second and third at 11% and 6.7% respectively. Our exports **wever can not be compared to the imports in terms of monetary value but with increased production tha values can be matched. Cofee and Tea are Kenya’s biggest exports at 29% with flowers and minerals coming in second and third at 10% and 6.2% respectively.
It is clear that most of our exports are agricultural products, a sector that can help Kenya repay some debt if production is increased. Minerals also **ld a fair share of the exports and maybe the oil in Turkana can sal***e the country from debt.
Speaking at a Trade works**p in Hilton **tel Nairobi on Wednesday, Export Promotion Council CEO Peter Biwott, said that African countries struggle to pay debts because of low sales to other countries. He said there is a buyers directory that w*** help Kenyan sellers find buyers for their products.
“We’re developing a buyers directory to ensure buyers can be accessed to increase Kenya’s exports,” Biwott said, “the directory w*** help identify exporters as well as importers and registering them in order to identify a market for products and capitalising on export capital.”
He added that mobilizing counties as well can help increase Kenya’s exports as each county w*** be develo*** to the export quan***y in the country and boost the debt to GDP ratio.
Most of the Kenyan exports goes to *****tan, Uganda and the United States respectively but our top import sources are not any of the aforementioned. Most of Kenya’s Imports are from China which is responsible for 23% of all imports in the country followed by India at 10% then UAE at 8%.
The United States has for a number of years signaled that it intends to move away from non-reciprocal preferences to reciprocal trading arrangements. An example of reciprocal preferences is what Kenya has with the US, Kenya exports to the US a great deal but imports more from China which is a threat to the United States. The US feels like it is losing out (in Africa) to Europe and others.
Kenya’s exports to the United States are insignificant in the growth of the US’s economy at less than 1% of the total USA imports. This has an insignificant contribution to the United States’ economy growth and sc****** it away w*** do little harm to the US. Kenya, **wever, w*** lose out a great deal as finding another export destination might be a difficult task.
TRALAC ***ociate and Economist Eckart Naumann said that Kenya might be facing the risk of losing the US as an export destination because of the threat it faces from China and Europe, among others. Naumann said that Kenya s**uld look to import from the United States in order to maintain the balance in trade between the two countries.
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Before AGOA expires in 2025, Kenya s**uld capitalise on using the law to export duty free and reduce the trade deficit.
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