Market access answer to manufacturing challenges

What you need to know:

  • A single African market would make the continent a more attractive investment destination for foreign direct investors.

  • Combined market potential of China, the United Kingdom and the United States is 1,799 billion people.

  • The President’s visit to the US and China, and the visit by UK Prime Minister have opened an opportunity for the expansion of the manufacturing sector.

Kenya seeks to spur economic growth and development through the ‘Big Four’ agenda. When a country seeks to spur manufacturing output to Sh2,235 billion in five years, it becomes necessary for all of us to make our contributions felt.

ECONOMIC

It is expected that goods worth Sh1,805 billion should be exported by 2022 to enable the country to attain the surplus trade needed to enhance its foreign exchange reserve. Kenya has access to markets in the EAC, Comesa, US and EU worth Shs2.9 trillion, which Kenyans can explore. One of the historical truths on economic and industrial transformation is that the citizens rally behind their leaders, and contribute to development.

PROCUREMENT

Sometimes in the initial stages of industrialisation they pay a higher cost as competitiveness is created. While the government works to open markets, create local opportunities for economic transformation, including expanding infrastructure, access to government procurement opportunity (Agpo), the people need to increase their contributions by working hard, differently, and being a part of economic transformation in large numbers.

MILESTONES

The recent engagements by President Uhuru Kenyatta and his American counterpart, Mr Donald Trump, UK Prime Minister Theresa May and Chinese President Xi Jinping are a strategic move to elevate the relationship between Kenya and these countries to expand trade and investment.

The commitment by these leaders to enhancing the economic partnership involves their governments’ support to key projects for trade and investment development. With market access milestones achieved in these markets, Kenyans should take up the numerous export opportunities. Combined market potential of China, the United Kingdom and the United States is 1,799 billion people.

ATTRACTIVE

A single African market would make the continent a more attractive investment destination for foreign direct investors, since the Africa Continental Free Trade Area (AfCFTA) would mean that an investor would potentially be able to sell to or invest in the entire African market. The Harmonised Rules of Origin (RoO) and elimination of non-tariff measures such as Sanitary and Phytosanitary measures (SPS) under the AfCFTA will make it easier for foreign direct investment in Kenya and trade both within Africa and into the US, UK and China. To realise the ‘Big 4’ agenda, Kenya needs both local and foreign direct investments. Inclusive growth and development would require more Kenyans to form a pool of domestic direct investors to take advantage of market opportunities presented to us.

ELIGIBLE

Currently, Kenya qualifies for duty free market access until 2025 into the US market under the African Growth and Opportunity Act, but less than 20 Kenyan products qualify for export (includes textiles, apparels, tea, coffee, vegetables and handicrafts). These are few, in relation to over 6,400 Agoa eligible products. The President’s visit to the US and China, and the visit by UK Prime Minister have opened an opportunity for the expansion of the manufacturing sector envisaged in the Big 4 Agenda.

DIVERSIFICATION

Over the last decade, Kenya’s exports to the UK have been declining characterised by a narrow range of products mostly comprising low value raw or semi-processed products, while imports from UK are diverse high value products. Benefits from the UK market can be drawn through increased diversification of exports of sunrise products such as vegetable dyes, dried vegetables, leather accessories, garments and light manufacturing to increase Kenya’s pounds earnings to augment cash cow exports, including coffee, tea, fresh vegetables and fruits.

INFLUENCE

The conclusion of the China-Africa Cooperation summit in Beijing highlighted China’s commitment to Africa’s development aspirations. China is an opportunity for Kenya, especially with Chinese renewed interest in the continent through the “One Belt, One Road” initiative, the China International Import Exposition this November, themed “New Era, Shared Future” as well as the high value International Horticulture Exposition in Beijing, beginning April to October next year in China. Kenya and Ghana are among the first countries in Africa to ratify the AfCFTA. To benefit from duty-free markets, the continent needs to grow intra-Africa trade to between 50 and 60 per cent to compete effectively with the growing Chinese influence.

Mr Biwott is the chief executive officer of Export Promotion Council. [email protected]