Kenya gets economic lifeline in East Africa’s common market

The signing of the East Africa Community common market has given Kenya an economic lifeline.

The protocol launched last week, comes at a time when the country is grappling with low exports to international markets.

Food and Agriculture Organisation (FAO) says Kenya’s main export— black tea— to Britain and Russia has reduced, owing to the Europe debt crisis and increased global supply.

Exporters say the crisis that has battered investor confidence across Europe and pushed the euro to its lowest level in 13 months has eroded their earnings.

Coffee exports have also dropped due to poor quality of beans harvested.

The US Department of Agriculture’s Nairobi bureau, in its latest report, says Kenya’s coffee production is likely to fall 8.2 per cent to 670,000 bags in 2010-11, the lowest amount produced in more than 30 years.

Farmers are not replacing coffee bushes, with the over 100-year-old plants yielding low-quality berries, the report says.

The situation has been made worse by the low culture of coffee consumption in the Kenya.

The country requires to export more to improve its balance of payments account and boost the stability of the Kenyan currency.

A recent World Bank report noted that Kenya’s exports as a share of gross domestic product (GDP) have declined from 40 per cent in 1960 to 26 per cent in 2009.

The bank warns that reliance on domestic consumption while net exports remain weak is denting hopes of meeting long-term growth.

Hope now lies on the expanded regional market.

“East Africa Common Market is by all means a huge market that cannot be ignored. As Kenya professionals we are ready to take advantage of this expanded market to deepen our services provision to the region,” said Mr Daniel Ichang’i, the chairman of the Association of Professional Societies in East Africa.

Mr Vimal Shah, the chairman of the Kenya Association of Manufacturers said businesses see expanded opportunities in the common market, but there is need for member states to ease remaining barriers for business to fully benefit from integration.

“Partner states need to urgently simplify and harmonise their trade and documentation procedures. This should be accompanies by reduction of import and export documents,” he said.