Asian products dominate Kenyan shops as Europe brands struggle to survive
Posted Thursday, May 31 2012 at 21:56
This mismatch worsened Kenya’s trade balance by 49.7 per cent in 2011 compared to 21.3 per cent in 2010, piling pressure on shilling which weakened to record 107 against the dollar in October last year.
“Kenya is running on one engine, with high imports but weak exports. It will succeed economically and be less vulnerable to shocks only if it balances its economy through stronger exports,” Wolfgang Fengler, Lead Economist for the World Bank’s Kenya programme said when the institution released Kenya’s economic outlook 2012.
The report titled: “Navigating the Storm, Delivering the Promise”, says the current account deficit (gap between imports and exports) widened above 10 per cent of GDP in 2011, higher than in Greece’s.
It continues, “Kenya is well positioned to make new products such as textiles, chemicals and automotive parts and enter new markets such as Asia if it continues to improve its infrastructure and investment climate.”
Generally, Kenya has entered into economic integration deals with most countries in Africa – including a common market arrangement with its East African neighbours and a free trade Area with 19 countries from eastern and southern Africa (Comesa).
These deals lifted the country’s exports to Africa to Sh247.6 billion or 48.5 per cent of last year’s total exports becoming the single largest destination for its goods.
Out of this, the four East African countries absorbed Sh137.2 billion worth of goods or 35.6 per cent of Kenya’s exports to Africa growth.
On the import side, however, imports from African countries trail Asia at distant Sh302.9 billion followed by Europe at Sh255.4 billion.
The irony of the situation is that Kenya and other EAC partners have for the last 10 years rejected a legal text of Economic Partnership Agreements (EPAs) for fear that it could open floodgates for EU products at the expense of domestic industrialisation.
As expected, however, these skewed figures have sparked off fresh debate as to whether Asia – mainly India and China – are better economic partners to Africa.
“We are entering a new phase in our ties with Africa– from a shared history of struggle against colonial oppression and economic exploitation to achieve freedom— to a relationship based on economic partnership in a globalised, deeply interconnected world,” Pinak Chakravarty, a secretary in charge of public diplomacy at India’s external affairs ministry said a statement sent to Business Daily two weeks ago from Dar es Salaam.
This is the same belief that has led to the launch of INDIAFRICA an initiative which seeks to tap these shared sensibilities, histories and intertwined cultures between India and the African Continent.
In Kenya, the presence of Asian corporation transcends the boundary of trade.
Chinese firms have built superior highways including Thika Road, the Museum Hill interchange, and Lanet Highway (Nakuru) which have significantly reduced traffic jams, Kenya’s other economic headache through which billions of shillings is lost every year.
Back to Lang’ata road, it is the Sh3 billion road expansion project by Chinese contractor—China Wu Yi – which is causing the heavy traffic at the moment.
Upon completion by end of this year, the same contractor is expected to start building the controversial Southern bypass through Nairobi National Park to ease traffic on Lang’ata Road.