A vendor displays fruits. China imports fruits, among other produce, from Kenya and the new trade policy is expected to boost business between the two countries. Photo/FILE
China has announced plans to remove tariffs currently charged on Kenyan goods in a move that is set to open another market outlet for the country’s export outside the East African community.
The country’s finance ministry has named Kenya among the 33 developing countries whose goods will largely be exempt from import tariffs from next month.
The ministry statement said the Chinese Government would scrap tariffs on about 60 per cent of imports from countries on the list beginning July 1, opening an easy window into the 1.3 billion people market.
The effective date of this window coincides with the planned launch of the EAC common market in which Kenya expects the borders of Tanzania, Uganda, Rwanda and Burundi to open for the free movement of factors of production.
It is not immediately clear which goods will benefit under the new tariff regime but experts said China is likely to encourage importation of raw materials and other inputs that it needs to power rapid economic growth.
China imports scrap metal, fruits, nuts sisal fibre, row hides and skins, fish, black tea, coffee, and leather wares from Kenya.
Scrapping tariffs on these produce means their cost will fall in China by between three to 30 per cent — the current range of the Asian country’s external tariffs.
Best news
“This is definitely the best news I have heard in recent times as an investor. It means we must increase our production immediately because of a readily accessible market,” Mr Fahd Faisel, the Nakuru Tanners’ managing director told the Business Daily.
The Nakuru-based firm exports a range of wet blue skins and hides to China.
“Our business model is to put a foot in all markets where there is demand for our products but the removal of tariffs would mean we concentrate our energies on Chinese market,” he added.
The balance of trade between Kenya and China has worsened over the last five years in favour of the Asian countries.
Official statistics indicate that while Kenya’s exports to China only grew at a snail pace from Sh1.2 billion in 2005 to Sh2.5 billion in 2009, imports have risen phenomenally to Sh74.5 billion from Sh19.4 billion in 2005.
Trade ministry officials said the free trade policy was unlikely to bridge the huge gap between imports and exports.
“Chinese exports are mainly capital goods and unless Kenya approaches this opening with a keen eye on value addition, its impact on the trade imbalance will be minimal,” said a trade ministry official who cannot be quoted under Government protocols.
Mr Daniel Mbithi, an official of Nairobi Coffee Exchange sees the new tariff regime as the best opportunity to penetrate the Chinese market.
“If at all coffee is in the list then it is great news for Kenya because the coffee industry has for years viewed China as an emerging market with vast untapped potential,” said Mr Mbithi.
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