12 May 2014

Kenya-China in Mou to Shore Up Exports

Manufacturers will be the biggest beneficiaries of Chinese Premier Li Keqiang's state visit if he fulfils his promise to take "forceful steps" to ease the yawning trade imbalance with Kenya.

The Premier has promised to facilitate trade and provide convenience for Kenyan industries to market their products in the world's second largest economy.

Kenya and China have signed a raft of agreements, one of which was on investment promotion co-operation between the two countries' agencies.

"This MoU is geared towards bridging the balance of trade which is currently in favour of China by giving Kenya's products access to the Chinese market among other things," the State House said in a statement.

Kenya-China trade is grossly tilted in favour of the Asian giant. The value of Kenya's imports from China was the second highest in 2013 at Sh182.36 billion behind India's Sh258.23 billion, according to Economic Survey 2014. Imports mainly include machinery, transport equipment, motor vehicles, metals, plastics, electrical equipments,electronics, textiles and a range of household goods.

Kenya's exports to China however dwarf the imports at a mere Sh4.2 billion in 2013, creating a massive trade deficit of Sh178.16 billion last year. Exports to China mainly include iron, manganese, chromium, copper ores, leather, sisal fibre, tea, coffee and fish products.

Aly-Khan Satchu, a financial analyst and CEO of Rich Management, in his Star column today notes that Premier Li Keqiang is cognisant that balancing trade volumes between the two countries is a "serious challenge".

The Premier said some steps to be taken to shore up Kenya's export to the Asian giant will include showcasing Kenyan products at trade fairs and promotion campaigns in China.

"The Chinese government will continue to take forceful steps to ease the trade imbalance between our two countries. We welcome Kenyan companies to participate in large trade fairs and other commercial activities... to show their strength and that they are in a position to meet Chinese needs," he said on Saturday.

"The Chinese government is ready to provide convenience and facilitation in this regard and want to see more Kenyan goods in the Chinese markets."

He promised to encourage Chinese companies to investments in Kenya's manufacturing sector and help local businesses raise their processing capacity and product competitiveness.

Moses Ikiara, managing director of the Kenya Investment Corporation, yesterday said the MoU will focus mainly on trade facilitation in the business registration process and work permits.

"If, for example, a Chinese investor wants to set up in Kenya, they just contact us, give us all information and we shall arrange all the appointments on their behalf," Ikiara said on phone.

Premier Li Keqiang said increasing Kenya's exports to China would help ease off "significant pressure on the Chinese government's exercise of macroeconomic regulation" as it is forced to maintain huge volumes of foreign currency reserves.

He said China's "substantial foreign exchange reserves" are already a "burden" to his government.

Ikiara said the establishment of a one-stop shop for all "quality" foreign and domestic investors is almost complete.

"With China, we will have exchange of staff and we are planning to send two staff (from KenInvest) to learn Chinese," he said.

The two will also collaborate in organising trade fairs in either country, with the host state mobilising targeted participants and facilitating logistics.

Copyright © 2014 The Star. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 2,000 reports a day from more than 130 news organizations and over 200 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.