There is an urgent need to address the large gap in the reports of the value of trade between Kenya and China, which has major implications on transparency, taxes and economic relations.
Nairobi reported that it imported Sh377.5 billion from the Asian nation in the 10 months ended October 2022.
Beijing on the other hand reported its exports to Kenya over the same period at Sh809.4 billion, leaving a Sh377.5 billion difference that has not been explained by the Kenya Revenue Authority.
This is arguably the largest discrepancy in Kenya’s international trade to come to light.
There is definitely something amiss here and the sooner we get to the bottom of it the better. At a minimum, it shows that either Kenya or China has been capturing and sharing the wrong data.
Trade flows between countries are closely watched for diplomatic and economic reasons and to find that the numbers are unreliable is disappointing to say the least.
The gap in official trade statistics may also signal potential illegal activities that hurt revenue collection, among other bad outcomes.
Under-invoicing has been identified as a major problem for developing countries which are net importers, buying most of their goods from more industrialised countries.
Through under-invoicing, unscrupulous businesspeople declare their imports to be of lower value than is actually the case in a bid to pay lower taxes.
With this practice, they cheat the government of tax revenue while also harming local manufacturers.
Besides under-invoicing, another issue to investigate more thoroughly is the potential of smuggling where goods find their way into the country without going through official channels and processes.
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Note: The results are not exact but very close to the actual.
