The pursuit of export-led economic growth has been clearly articulated in the governing coalition's manifesto; Bottom-up Economic Transformation Agenda (BETA).
The Kenya Association of Manufacturers (KAM) has also prioritised export-led growth as a pivotal pillar within its strategic framework for industrialisation.
The transformative growth of industrialised nations has been propelled by exports. Global economic powerhouses such as China, Canada, Germany, and India have harnessed remarkable export strategies to fuel their economic engines that have become the benchmark for other aspiring nations.
Their strategy has mainly been to generate funds, derived from diverse sources such as budget allocations, domestic and international borrowings, and export-generated revenue, which are channelled through financial institutions to support exporters.
This multifaceted approach aids local exporters in overcoming international trade challenges, spurs economic progress whilst protecting local investments.
Regionally, Egypt and Morocco are emerging as key success stories in creating and executing an effective export-led strategy whose impact over the last few years has been tremendous.
Their governments have made strategic investments in transportation infrastructure and port development, while also offering tax incentives and access to export credit insurance to support their exporters.
For Kenya to effectively implement its export promotion strategy, it must align its national approach to fiscal strategies to the structures under the regional Common External Tariffs such as East African Community – Common External Tariffs (EAC-CET), COMESA, and AFCFTA.
For instance, the EAC - CET structure outlines four band levels of value addition which are raw materials, intermediate products, finished and sensitive goods.
Based on this structure any fiscal measures are reviewed against the four band structures to create a level operating environment for industries across the EAC region.
Any imposition of additional domestic taxes midstream along the value chain outside this four-band tariff structure distorts the EA protocol and disadvantages the Kenyan companies with increased cost of production compared to regional competitors.
This negatively impacts their competitiveness in both domestic and export markets. Furthermore, the resulting rise in costs could inadvertently amplify the appeal of imported goods.
On the positive side, we need to acknowledge the efforts Kenya is undertaking towards export promotion through certain value chains.
For example, in the tea sector, there is an enhanced effort to increase the share of value addition done locally before it is exported.
There are also commendable efforts in the leather and pharmaceutical industry to enhance our capacity to export finished manufactured products.
We must be careful not to introduce policies that could inadvertently undermine the competitiveness of vital industries and compromise the success of export initiatives.
The writer is the chairperson of the Kenya Association of Manufacturers.
PAYE Tax Calculator
Note: The results are not exact but very close to the actual.
