Runaway imports make Kenya poorer

Friday September 22 2017

Labourers carry bananas imported from Uganda at the Nakuru Wholesale Market on April 17, 2017. PHOTO | SULEIMAN MBATIAH | NATION MEDIA GROUP

Labourers carry bananas imported from Uganda at the Nakuru Wholesale Market on April 17, 2017. PHOTO | SULEIMAN MBATIAH | NATION MEDIA GROUP  

By BONI WANJAU

Countries that have invested in improving the supply side of their economy, such as productivity of labour and capital, and stimulated aggregate demand components like consumption, investment, public expenditure and trade balance, have made great strides in improving the welfare of their citizens, stimulating better lifestyles.

The productivity growth of Malaysia — which was at par with Kenya at Independence in 1963 — over the past 25 years has been due to accelerated implementation of productivity-enhancing reforms to increase the quality of human capital and create competition.

Singapore has also grown by implementing policies to improve productivity of labour and capital and hence ensure the most basic of human needs — such as food, shelter, health, education and employment — were met before embracing globalisation, free market capitalism, education and strict pragmatic policies.

The Singaporean government embarked on comprehensive industrialisation with a focus on labour-intensive industries.

Kenya can achieve more economic growth by accelerating production and, similarly, growth on the demand side of the economy.

NET IMPORTER

The country is a net importer of most goods and services, majority of which can be produced locally, reducing unemployment and improving Kenyans’ standards of living.

Most of our exports are agricultural-based products such as coffee, tea, flowers, and some legumes. Although there has been improvement on coffee and tea bonuses paid to farmers, more needs to be done.

Kenya has some natural resources and additional products that it can export in large quantities if the right policies are made. These include goat meat, beef, maize, vegetables, dairy products, sugar and the recently discovered oil and coal. This will increase productivity, meaning better returns to first-hand participants, and ensure rapid industrialisation.

Policies to curb unnecessary importation could help local industries and stimulate industrial expansion. This will be a major turning point by limiting our imports to only goods and services that are not locally produced.

GENERATE INCOMES

Sugar, which makes 2 per cent of our total imports, has almost crippled the local industry. Local factories generate incomes to workers and farmers and stimulate economic growth and their death would deal a huge blow to the economy.

With our oil, we can reopen the petroleum refinery export refined products, creating jobs and bringing in foreign exchange to ease our trade deficit.

Importation of papers and board, also 2 per cent of total imports, has crippled PanAfrican Paper Mills with huge job losses. Importation of items like toothpicks, earbuds and sufurias is unacceptable if we are to grow. These are things which can be produced locally.

Cereals and fertilisers comprise 6 per cent of total imports. Importing cereals such as rice and maize is a major undoing to our farmers.

FARMING

If desert countries like Israel can do more farming than Kenya, then it’s a shame to us since we have fertile land and a big population to work in farms. Let’s modernise and carry out farmer training by reintroducing agricultural extension officers.

Wanton importation is killing our farmers’ morale and youth shun farming. Let’s also welcome more foreign direct investment in fertiliser factories and also encourage local investors to produce it.

The ban on polythene bags will reduce imports, which comprise 4 per cent of total imports, and is good for environmental rehabilitation. Plastic manufacturers should be helped to switch to the approved bags to avoid factory closures and job losses.

LOW TAXES

Local cars made by Kenya vehicle manufacturers should be charged low taxes to attract local buyers to reduce vehicle imports. Our engineers will gain skills and entrepreneurs an income.

But first things first. The First President Mzee Jomo Kenyatta focused on eradication of poverty, ignorance and disease.  His successor, President Daniel arap Moi, stressed peace, love and unity while President Mwai Kibaki dwelt on infrastructural projects, which President Uhuru Kenyatta carried on with.

The incoming regime ought to adopt a more serious approach on productivity of labour and capital. If citizens don’t struggle to fulfil basic needs, then be sure Kenya will take gigantic steps towards a true middle-income economy.

Dr Wanjau is an economist. [email protected]