In rejecting the proposed free trade pact between the East African Community and China, Kenya has taken a bold step that is also in tandem with its economic policy. Even with existing tariff walls, trade balance is heavily skewed in favour of China, which already accounts for a quarter of Kenya’s imports and two per cent of exports.
It shouldn’t, therefore, take a rocket scientist to guess what damage lowering the tariffs as proposed in the comprehensive free trade agreement (FTA), would have on the economy. On the account of rejecting the FTA alone, the Trade ministry deserves a pat on the back.
Retention of the current tariff levels cannot be regarded as a restrictive trade practice, but one that protects local firms while keeping Kenya as an open free market economy. If there has been consistency in Kenya’s economic philosophy, the idea that our development must progress from agricultural to industrial production stands out.
Our march to the middle income status by 2030 is partly predicated on the industrialisation journey.
The Big Four Agenda that President Uhuru Kenyatta unveiled shortly after he was sworn in for his second term in office, seeks to among other things, rev up the industrial engine.
Yet a State that seeks to expand its industrial production must equally safeguard its market.
Economists have over the years shown that enhanced industrial production can only be sustainable if supported by mass domestic consumption with only the surplus ending in external markets.
Granted, Nairobi participated in the negotiation of the FTA for nearly two years before it finally stated its stand. But rejecting Beijing overtures was always going to require some valour. The Asian state has offered cash and technical support worth billions of shillings to ensure that Kenya has world-class infrastructural facilities like superhighways, airports, seaports and railways.
It is our considered view that these facilities should be used more to bring in raw materials and inputs to local factories and ship back finished products to markets. They cannot be used to transport imports, which can be produced locally.