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Africa: Diversify Into New Markets, Traders Urged
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The Nation (Nairobi)
23 July 2008
Posted to the web 23 July 2008
Kaburu Mugambi
Nairobi
Although Kenya has increased its share of trade within east Africa and Comesa, its trade levels with the world have reduced by half in the last two decades.
Vice-President Kalonzo Musyoka has said this poses a threat to Kenya's fight against poverty if the country fails to increase trade with non-traditional partners.
It is estimated that Kenya's share of trade with the world is about half of what it used to be in the mid-1980s whereas the ratio of trade to the gross domestic product has dropped sharply from 71 per cent to the current level of about 56 per cent.
"This declining share of trade can be attributed to the inability to diversify exports from primary products to manufactured and value added goods, coupled with the inability to access new markets," Mr Musyoka said at the opening of African Trade Insurance Agency annual general meeting in Nairobi Tuesday.
He said that the agency has a critical role of helping member states to diversify and increase exports, move up the value chain and find new markets. "I therefore urge the business community to take advantage of the political and credit insurance products offered by ATI as a cushion against possible risks," the Vice-President said.
ATI chief executive Peter Jones said that over the past two and a half years the agency has increased its focus on providing support for companies exporting both regionally and internationally.
The agency has grown its export credit business by 40 per cent in terms of gross exposure and 25 per cent in terms of exporters benefiting from this cover.
By the end of 2010, Mr Jones said ATI expects to be supporting annual exports of $1 billion (Sh66.3 billion) for exporters located in African member states.
Sell directly
"Export credit insurance is a high value-added product, allowing the exporter to move up the value chain by selling directly to end users, rather than via wholesalers and auction houses," he said, "while reducing their cost of financing by using ATI policy as security for their borrowings."
Comesa member countries formed ATI in 2000 to cover the perception of high risk associated with poor public governance and negative political events.
Since it was created in 2001, the agency has supported almost $500 million (Sh33.1 billion) of inward investment and in the past two and a half years has supported exports by private corporations worth over $180 million (Sh11.9 billion).
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In addition, the agency has supported over $120 million (Sh7.9 billion) in stand-alone terrorism and sabotage coverage, in partnership with various underwriters at Lloyd's of London.
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