EDITORIAL: Address drop in Kenya trade surplus with Africa

The sharp drop in Kenya’s trade surplus with Africa is a big economic concern. A trade surplus — the gap between exports and imports — is a critical pointer to the economic well being of a country because it reflects net inflow of domestic currency from foreign markets.

Statistics by the Central Bank of Kenya (CBK) show that Kenya’s goods trade surplus with Africa in the first 11 months of 2018 fell below the Sh10 billion mark for the first time in more than two decades.

Specifically, the surplus narrowed to Sh8.89 billion in the January-November window, the lowest ever recorded since 1998 when such data was publicly made available.

Exports earnings from Africa in the 11-month period through last November slipped 2.16 per cent compared to a year earlier to Sh200.12 billion — the lowest value since Sh171.35 billion in 2010.On the other hand, imports from African countries hit a record of Sh191.23 billion, a growth of 5.84 per cent, over the corresponding period in 2017.

This scenario doesn’t augur well for Kenya, which aspires to be an economic powerhouse in the region. As such, urgent steps must be taken to reverse this anomaly. Economies do not thrive on consumerism but vibrant export sectors which guarantee employment and economic growth from sale of goods abroad.

Technically, a trade surplus means there is high demand for a country’s goods in the external market; hence Kenya must focus on addressing the pertinent issues that may be affecting the competitiveness of its goods in the targeted markets.

Manufacturers in Kenya through their lobby, the Kenya Association of Manufacturers (KAM), have decried the high cost of doing business in the country and cited the two per cent Import Declaration Fee and the 1.5 percent Railway Development Levy on the importation of raw materials and other supplies as major setbacks to competiveness. Industrialists have also complained about trade barriers due to non-uniform quality standards and cargo clearance procedures.

The government should review its tax regime and champion for the speedy merger of the Common Market for Eastern and Southern Africa, the East African Community and the Southern African Development Community as a way of guaranteeing free flow of goods.