• Home
  • Indian, Chinese goods elbow out Kenyan products in region

Indian, Chinese goods elbow out Kenyan products in region

Kenya is quickly losing its position as The East African Community (EAC) exports powerhouse, a regional trade report has shown.

Nairobi-manufactured products are increasingly finding it difficult to compete with cheaper imports from China and India and those produced by regional rivals, shrinking Kenya’s share of exports to its EAC neighbours.

Increase in counterfeits, non-tariff barriers (NTBs), lack of product diversification and high cost of production have also rendered Kenyan products less competitive in the market.

The study by the EAC Secretariat, in partnership with TradeMark East Africa, shows that Kenya’s exports to Uganda, Tanzania, Rwanda, Burundi and South Sudan are facing new threats posed by regional manufacturers who have upped their game in the production of similar products.

The EAC Trade and Investment Report (2018) shows that Kenya’s exports to other EAC member states grew at a slower pace of 0.1 per cent in 2018 compared to a high of 6.1 per cent in 2017, largely due to increased efforts by regional peers in strengthening their manufacturing capacity to produce corresponding industrial products.

According to the report, Kenya’s total exports to EAC Partner States have been on a downward trend for the past five years falling 11 per cent to $1.27 billion in 2018 from a high of $1.43 billion in 2014.

The country’s exports to the region increased marginally to $1.273 billion last year from $1.272 billion in 2017.

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.

Nairobi’s imports from the rest of the EAC member states grew by 14.7 per cent 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.

On the other hand, other EAC member states made significant improvement on trade with the EAC bloc, according to the report.

Exports from Tanzania, Burundi and Rwanda grew by 9.5 per cent, 44.3 per cent and six (6) per cent in 2018 compared to declines of 15.9 per cent, 6.5 per cent and 46 per cent in 2017 respectively.

The growth in Uganda’s exports declined to 11.4 per cent from 58.4 per cent while that from South Sudan fell by 88.8 per cent.

Economists at the Kenya Institute for Public Policy Research and Analysis (KIPPRA) say increased competition from cheap imports into the local and EAC markets, especially from China and India, and the strengthening of the manufacturing sector in other EAC countries, poses a major threat to growth of Kenya’s manufacturing sector.

“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,” according to KIPPRA’s economic report for Kenya (2017).

Market losses

According to the Kenya Association of Manufacturers (KAM), 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 per cent 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.

According to KAM, Kenya’s export products are largely primary in nature and low in technology component.

Tea alone constitutes about 25 per cent of the total value of exports, making the case for more diversification of export products.

The manufacturing sector’s share of GDP has remained stagnant, with only limited increases in the past three decades.

The sector contributed an average of 10 per cent to the GDP from 1964-1973, rising marginally to 13.6 per cent from 1990-2007, then falling to 10.7 per cent in 2013 and 7.7 per cent in 2018, according to the country’s Economic Survey 2019.

“So far, the manufacturing sector is largely inward looking with 82 per cent of products sold locally, six (6) per cent destined for the EAC and 12 per cent to the rest of the world,” according to KIPPRA.

“Increased importation of intermediate products that can be locally sourced directly hinders the development of local industries, SME development and job creation along the value chains.”

According to KIPPRA the declining contribution of the manufacturing sector to GDP is slowing down the impetus in transforming and diversifying the economy.

Kenya’s capacity to produce and export manufactured products while at the same time keeping the pace with technological changes lags far behind the global average, although Nairobi is still ranked higher than other East Africa countries.

According to the EAC Trade and Investment Report (2018) Tanzania’s key imports from the EAC partners included pharmaceuticals products, soaps, plastic items and other consumer goods, mainly from Kenya and Uganda.

Burundi and South Sudan’s imports from the EAC fell by 11.1 per cent and 18.5 per cent respectively in 2018.

Burundi’s main EAC trading partners was Tanzania and imports mainly consisted of chemical fertilisers, cement and textile articles.

South Sudan’s main trading partners were Kenya and Uganda, with imports mainly consisting of maize, sugar and manufactured commodities.

By The Eastafrica 

Related posts

Rwanda: French Judges Close Habyarimana Probe


39 NYS suspects, including Ngiritas, fail to buy freedom


Eritrea among 4 countries sanctioned because of refusal to accept deported immigrants


This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More