In recent times the country’s exports to Uganda, Tanzania, Rwanda, Burundi and South Sudan has been on a freefall as it comes under fierce competition from Chinese and Indian cheap imports.
Renewed vigor by Kenya’s neighbours to get their respective manufacturing sector up and running again coupled with increase in counterfeits, non-tariff barriers (NTBs), lack of product diversification and high cost of production has further complicated the country’s fight to remain on top of the export trade.
As a result, Kenya’s total exports to East Africa Community Partner States has been on a downward trend for the past five years falling 11% to $1.27 billion in 2018 from a high of $1.43 billion in 2014.
According to a study conducted by EAC Secretariat, in partnership with TradeMark East Africa dubbed ‘EAC Trade and Investment Report (2018)’ it shows that Kenya’s exports to other EAC member states grew at a slower pace of 0.1 % in 2018 compared to a high of 6.1% in 2017, largely due to the cheap imports and increased efforts by regional peers in strengthening their manufacturing capacity to produce corresponding industrial products.
Among Kenya’s manufactured exports to EAC countries are processed foods, mineral products, chemical and chemical products, metals, pharmaceutical and botanical products, textiles and apparels.
The country’s exports to the region increased marginally to $1.273 billion last year from $1.272 billion in 2017.
On the other hand, Nairobi’s imports from the rest of the EAC member states grew by 14.7% to $676.5 million, largely driven by higher food purchases from Uganda and Tanzania.
Imports from Uganda were mainly milk, dry beans and raw materials for the preparation of animal feeds while imports from Tanzania mainly consisted of paper and paperboard, and ceramic products.
Economists now worry if drastic actions are not taken Kenya’s slide off the export trade may be unstoppable.
“In addition, there are challenges of increased incidences of illicit trade, including counterfeits and dumping. Kenya needs to diversify to medium and high technology products to secure and expand its market share,” Kenya Institute for Public Policy Research and Analysis (KIPPRA) economic report for Kenya (2017) reads.
Kenya’s export products are still largely primary in nature and low in technology component hence it cannot effectively compete with Chinese and Indian processed goods.
Tea alone constitutes about 25% of the total value of exports, making the case for more diversification and value addition of export products.
Kenya Association of Manufacturers (KAM), says Kenya has been experiencing declines and market losses in key traditional export markets, with its share in the global market remaining dismal at 0.03% of total global trade.
“Hence the need to promote the competitiveness of local industries should be prioritised in our rejuvenated endeavour to focus on the manufacturing sector as a country,” said Phyllis Wakiaga, the KAM Chief Executive.
“Trade in illicit, substandard and counterfeit products is a major challenge facing manufactures in Kenya today,” she added.