Use new export plans to bridge trade gaps

Three events held in Kenya in the past week went on largely unnoticed despite their importance to the economy. The first was the Afro-Asia Fintech Festival, which was followed by the launch of the country’s export development strategy. The last was Kenya hosting the Common Market for Eastern and Southern Africa (Comesa) high-level technical meeting on infrastructure.

The overarching theme for the three was facilitating trade regionally and globally through both digital and physical infrastructure. This would in turn help countries narrow the trade deficits confronting them, moving jobs abroad, weakening currencies and making imports more expensive. This is where the Integrated National Export Development and Promotion strategy comes in.

A look at trade data reveals that Kenya imports Sh1 trillion more than it exports. A host of factors have contributed to this, including lack of an integrated policy to drive Kenya’s ability to produce goods for export. In many areas, the strategy strikes the right chord — focusing on manufacturing, agriculture, livestock, fisheries, oil and gas, and handicrafts.

It is therefore almost a throwback to the import substitution policies of the sixties and seventies which came unstuck courtesy of government policies that made import goods cheaper than producing them locally.

Putting digital infrastructure at the centre of delivery of the plan presents an opportunity to boost Kenyan exports. The  focus on value addition rather than wholesale reinvention also presents an opportunity for enhancing exploitation of local resources.

More needs to be done, however, to grow the contribution of exports to the economy threefold – from eight per cent to 22 per cent of the gross national product.

First, the policy is quite heavy on legacy sectors and appears light on export of services like ICT, technical skills and niche tourism, which would earn forex from the comfort of people’s immediate surroundings. Second, it calls for urgent improvement and expansion of national and transnational communication facilities so that produce, especially of the perishable type, reaches markets in record time. Related to this is reducing the cost of doing business further – especially energy and cost of e-commerce – to make local production competitive against the likes of Egypt where power is highly subsidised.

The third and most critical is speed to exploit opportunities brought about by the recently launched Africa Continent Free Trade Area which will be operational from July next year. These are openings that Kenya should move swiftly to exploit.