Diversifying exports and seeking larger markets will spur economic growth

Kenya has been pushing for its avocadoes to be exported to South Africa for more than a year but the efforts have not borne fruit. PHOTO | FILE

What you need to know:

  • Kenya has been focusing mainly on agricultural exports, following up with the Integrated National Export Development and Promotion Strategy created by President Uhuru Kenyatta in July 2018.

As economies around the world shrink, Kenya continues to work on reducing its trade deficits with China. By securing a larger market for our exports to the East Asian Country, we will reduce the gap between how much China exports to Kenya versus the opposite, thereby strengthening our economy.

Kenya has been focusing mainly on agricultural exports, following up with the Integrated National Export Development and Promotion Strategy created by President Uhuru Kenyatta in July 2018.

By improving regulations on phytosanitary (concerning the health of plants) regulations, Kenya should be able to increase the volume of produce we send not only to China, but also to our trade partners all over the world.

President Kenyatta and his Chinese counterpart Xi Jinping already signed an agreement in April 2019 to allow Kenya to export Hass avocados to China. This allowed many Kenyan avocado farmers to produce more than could be consumed by the local market alone. 

Following this policy, Kenya has been able to increase the amount of exported goods by Sh2 billion during the 2017-18 period, and this number keeps on increasing. 

If Kenya’s renewed focus on exporting more produce to China is successful, its trade deficit will be bridged.

What the administration is essentially trying to do is guarantee a predictable export market through trade expansion. This can occur through targeted sectoral export growth and by linking domestic value chains to target destination markets. 

But China is not the only country we rely on for imports.

For the past several years, President Kenyatta has cultivated personal relationships with other world leaders to facilitate smoother trade and Free Trade Agreements (FTA).

His meetings with US President Donald Trump over the past year have resulted in Kenya becoming the first African country to sign a FTA with the United States.

This will not only help us reduce our trade deficit, but it will also empower other African countries to strive for the same accomplishments. Increasing trade and developing smooth functioning trade relationships with diverse countries is key to economic growth.

It increases employment because it enables Kenyan farmers and manufacturers to reach larger global markets. By scaling up, they are able to increase efficiency, hire more people, and ultimately, turn a higher profit.

Conversely, being able to import many goods that are not produced in Kenya at a low cost gives Kenyans the benefit of cheaper products and a more competitive market.

Focusing on trade is key to economic development. Trade deficits are typical to most developing countries, but the question of what administrations do to reduce them is key to whether or not that country will succeed in the long run.

The positive trade relations offer us a glimmer of hope despite the current economic hardships occasioned by the Covid-19 pandemic.

A global health pandemic does not reduce demand for Kenyan goods and services. 

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