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Economy

China lowers trade tariffs to woo Kenya exporters

A Chinese trader sells goods at a past Nairobi International Trade fair. China has lowered tariffs on Kenya’s exports to address the unfavourable balance of trade and strengthen trade relations between the two countries. Photo/FILE
A Chinese trader sells goods at a past Nairobi International Trade fair. China has lowered tariffs on Kenya’s exports to address the unfavourable balance of trade and strengthen trade relations between the two countries. Photo/FILE  Nation Media Group

China is dangling lower tariffs and regulatory reforms to woo Kenyan traders in a bid to cement commercial relations that are heavily slanted in its favour.

Africa’s industrial products now attract only 8.9 per cent tariff while agricultural ones face 15.2 per cent, said Yao Chenxi, economic and commercial counsellor at Chinese Embassy in Nairobi.

Three years ago China removed non-tariff barriers such as import quotas, licensing and designated bidding as well as more than 400 tariff lines.

“China has only retained administrative (licensing) control on matters of public safety and the environmental concerns in line with international conventions and World Trade Organisation rules,” Mr Chenxi told a regional exporters forum in Nairobi on Monday.

While its goods have increased to dominate African market in the last 10 years, only South Africa has made inroads into China’s market.

Data prepared by Trade ministry shows that Kenya exported goods worth Sh3.8 billion to China in 2011 against an import bill of Sh144 billion.

Primary commodities — iron, manganese, chromium and copper ores — dominated list of exports to China, fetching Sh800 million. Other top exports from Kenya are leather, sisal fibre, plastics, tea, coffee and fish products.

At the China-Africa forum held in Beijing late last year, Chinese government floated an idea of duty-free and quota-free treatment of African goods.

A similar treatment of African goods by European Union (EU) and US have significantly raised their intake of products from Kenya.

Tuesday, experts blamed fixation with the low value goods and administrative barriers in foreign markets for the wide gap between imports and exports.

About 90 per cent of goods that Kenya exports are primary products, says Africa Trade and Investment Exchange chief executive Kevin Smith.

“Many of Kenya’s manufacturers have world-class products but they are not known abroad because traders do not know the trade, customs, cultural and legal requirements to export them,” said Mr Smith.

The EU as a bloc remains Kenya’s single largest trading partner, accounting for 26 per cent of 2011 exports and 15 per cent of imports. As Kenya’s export market, China is ranked at distance number 23, far behind United Arab Emirate which is number 11.

Apart from low-value goods, Mr Smith said tedious procedures and high cost of importing goods as a major hindrance.

The World Bank’s ranking of countries in ease of doing business indicates that to import, a trader in Kenya has to complete eight documents (region’s best is four), takes 26 days (against region’s best of 10) and incurs $2,225 per container (against region’s best of $500).

“Reducing bureaucracy and corruption as well as encouraging foreign direct investment geared towards new export industry will reduce the gap between imports and exports,” said Mr Smith.

The Kenya Export Council (EPC), a government agency charged promoting exports, has, however, set its sight on the Africa’s market where Kenya’s industrial products have performed well in the past five years.

The EPC’s market development manager Peterson Nyachwaya said more resources would be put in emerging markets such as South Sudan and Somalia in the next financial year.

“The market survey of these countries show huge untapped potential for Kenya firms, especially in South Sudan where only service industry like KCB, Equity Bank and UAP Insurance have made inroads,” said Mr Nyachwaya.

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