Ideas & Debate

Why Kenya needs close to trade gap with China

KENYA

US President Donald Trump’s recent trade wars should prompt us to ponder how Kenya can genuinely increase its national wealth when our economy is characterised by a huge trade imbalance prompted mainly by runaway imported consumption. Trump’s trade wars target multiplication of US jobs through increased domestic production and exports while reducing competing imports. He has specifically targeted China for a major correction of USA trade deficits.

Trump may have his own unique ways of “forcing” the trade agenda; however the principle behind his crusade will no doubt find concurrence with the likes of Kenya which similarly experience huge trade deficits with China where the bulk of our consumer imports are sourced. It is timely for Kenya to honestly debate the subject of our import-export imbalance, especially with China

And I am here specifically referring to import/export of consumer goods, and not the ongoing infrastructure development and financing partnership that Kenya has with China which is a deliberate and strategic decision by Kenya to pursue with that country.

The key issues to address are how Kenya can increase its exports of produce and goods to China, while simultaneously embarking on a sustainable imports substitution program to reduce dependence on imports. It is for Kenya to figure out how to achieve these two trade goals, for indeed there is no motivation for China to alter the status quo.

Rebalancing of our export/import trade is a collective responsibility by the ministries in charge of foreign trade and the productive sectors (agriculture, livestock, forestry, mining, manufacturing), with the county governments playing their devolved roles. President Uhuru has set the ball rolling with a highly visible Big Four agenda which includes expansion of agriculture and manufacturing which support exports and imports substitution.

Kenya knows exactly what is required to grow and promote exports while reducing imports. It is the implementation that is usually weak for lack of focus, commitment, and follow-through

As a nation, we need a mindset shift to believe in ourselves and our ability to reduce imported consumption through imports substitution while boosting exports to finance whatever other imports the country must undertake. This is key to national wealth creation and the attainment of a sustainable middle income status.

However we need to firstly clean our house by firmly eliminating corrupt and mostly illegal trade activities which include unjustified, illegal and counterfeit imports. These should be eliminated with firmness and finality for indeed they sabotage national self-determination to grow a balanced trade.

Where genuinely justified, we should not hesitate to institute fiscal protection to help incubate and grow our production and export capacity. In a free trade environment, prudent and selective protection will certainly prove useful.

We also need to strengthen support governance and regulatory structures, for not only are our gates now wide open to Chinese imports, we also appear to have additionally allowed Chinese citizens to set up wholesale and retail trade in Kenya to sell the same imports. This points to a serious regulatory lapse by our immigration and trade licensing agencies, which should be corrected to protect Kenya’s jobs and self-honor.

All said and done, the Chinese leadership is to be admired for how, over time, they have systematically perfected protection and promotion of their own economic and industrial interests through medium and long term economic planning. Kenya should similarly commit itself to unapologetically further and protect its economic interests.

We are about to appoint a new ambassador to China. It is important that her brief is sufficiently structured and detailed to include growing our exports into China. She should also seek technical assistance and co-operation to help Kenya increase her local capacity to grow its productive capacity and jobs through skilling and technology transfer. This will indeed be a proof of true and honest friendship and co-operation.

As for President Trump, it is the underlying principles to protect and grow US economy and jobs that get my nod, and I am sure many Kenyans will agree with me in this respect. His process for achieving the intended ends may however be open to debate.