How Kenya can achieve sustained export expansion
By Soko Directory Team / Published October 4, 2017 | 5:47 am
As a nation, we need to deliberately create an export push for local goods to increase chances of achieving economic goals in Vision 2030 development blueprint.
A growth in export value will not only increase revenue through foreign exchange earnings but will also have a socio-developmental impact by catalysing the creation of productive jobs, thereby absorbing the large numbers of unemployed youth.
In other words, exports ensure a healthy circular flow of income, stimulating an increase in the production of local goods and expansion of industries, consequently opening up opportunities for employment.
Raising the national income also translates to increased public funds that would enable the government to adequately provide and maintain the equal distribution of public goods and basic amenities for citizens, ultimately increasing their quality of life.
Export growth is not just beneficial for economic growth, it supports social and political development.
The unveiling of the National Trade Policy this year re-sparked enthusiasm in industry, as it sought to enhance export competitiveness through investment in value-add industries thereby expanding regional and global markets.
In fact, the new policy places emphasis on turning Kenya into an export-led economy, in an effort to support inclusive development. While, this vision is indeed laudable the tangibility of it is still out of reach owing to various challenges faced, locally and regionally.
Despite the immense opportunities that lie in the region, Kenya’s total export earnings from the EAC registered a four percent decline to KSh121.7 billion last year.
More and more, the incentives to export for local industrialists are dwindling as new hurdles crop up and long-standing ones persist, bearing huge costs on businesses.
A prime example is the complexities experienced in taxation policies and development of new regulations.
The Import Declaration Fee and Railway Development Levy are some of the taxes imposed on raw materials and inputs, leading to increased commodity pricing and thereby reduced competitiveness of products regionally.
This compromises current share of export markets especially in the face of increasing exports from China and India.
Additionally, continued delays in VAT reimbursement slow down operations and destabilise planning for many exporters. Late VAT refunds shift the tax burden from consumption into production.
Outstanding VAT refunds remains a big pain for manufacturers who look forward to the expeditious payment of refunds. As a last resort, manufacturers are forced to get into debt to keep operations afloat, thereby incurring huge losses.
Taxation should be formulated with the aim of enabling local industry to operate at full capacity, incentivising investors and bringing on board more businesses into the tax bracket.
However, tax policies such as the above deter progress towards sustained export competitiveness and in doing so making economic goals as in Vision 2030 that much harder to realise.
We have been talking about ways in which we can leverage counties for our nation’s economic prosperity and intercounty trade plays a huge role in this.
If we abolish current multiple levies and charges that bar us from trading with each other within our borders, we shall diversify and expand goods for exports and grow export market share within the region and globally.
Taxation that is designed to optimise the growth of the local industry will open up intercounty trade, spurring the proliferation of small and medium industries. Development in counties will ensure equitable distribution of resources and inclusivity.
Kenya needs to develop a National Export Development Strategy, which aligns to existing frameworks such as the KITP and also links to the newly-launched Trade policy.
This strategy will seek to promote value addition, especially in agro-processing, powering more exports and eventually reducing trade balance.
Export strategy should be based on the ‘promotion of self-sustaining industrial development’ meaning we ought to find sustainable ways to grow export value through leveraging various competitive advantages, especially with devolution.
Policies should be first and foremost inward-looking to promote local products and create jobs.
Essentially, we need to reset policy ideas to deliver positive achievable results to increase export value both regionally and globally.
The writer is the Kenya Association of Manufacturers Chief Executive
More Articles From This Author
Trending Stories
Other Related Articles
SOKO DIRECTORY & FINANCIAL GUIDE
-
Accountants and Auditors
Banks
Business Consultants
Clearing and Forwarding
Co-operative Movement
Financial and Tax Consultants
Forex Bureaus
Insurance
Investment Banks
Real Estate
Retail Industry
Small and Medium Enterprises
Stock Brokers
ARCHIVES
- 2022
- January 2022 (294)
- February 2022 (329)
- March 2022 (361)
- April 2022 (294)
- May 2022 (137)
- 2021
- January 2021 (182)
- February 2021 (227)
- March 2021 (325)
- April 2021 (259)
- May 2021 (285)
- June 2021 (273)
- July 2021 (277)
- August 2021 (232)
- September 2021 (271)
- October 2021 (305)
- November 2021 (364)
- December 2021 (250)
- 2020
- January 2020 (272)
- February 2020 (310)
- March 2020 (390)
- April 2020 (321)
- May 2020 (335)
- June 2020 (327)
- July 2020 (333)
- August 2020 (276)
- September 2020 (214)
- October 2020 (233)
- November 2020 (242)
- December 2020 (187)
- 2019
- January 2019 (251)
- February 2019 (215)
- March 2019 (283)
- April 2019 (254)
- May 2019 (269)
- June 2019 (250)
- July 2019 (337)
- August 2019 (293)
- September 2019 (306)
- October 2019 (313)
- November 2019 (362)
- December 2019 (318)
- 2018
- January 2018 (291)
- February 2018 (213)
- March 2018 (275)
- April 2018 (223)
- May 2018 (235)
- June 2018 (176)
- July 2018 (256)
- August 2018 (247)
- September 2018 (255)
- October 2018 (282)
- November 2018 (282)
- December 2018 (184)
- 2017
- January 2017 (183)
- February 2017 (194)
- March 2017 (207)
- April 2017 (104)
- May 2017 (169)
- June 2017 (205)
- July 2017 (190)
- August 2017 (195)
- September 2017 (186)
- October 2017 (235)
- November 2017 (253)
- December 2017 (266)
- 2016
- January 2016 (164)
- February 2016 (165)
- March 2016 (190)
- April 2016 (143)
- May 2016 (245)
- June 2016 (182)
- July 2016 (271)
- August 2016 (247)
- September 2016 (233)
- October 2016 (191)
- November 2016 (243)
- December 2016 (153)
- 2015
- January 2015 (1)
- February 2015 (4)
- March 2015 (164)
- April 2015 (107)
- May 2015 (116)
- June 2015 (119)
- July 2015 (147)
- August 2015 (157)
- September 2015 (186)
- October 2015 (169)
- November 2015 (173)
- December 2015 (205)
- 2014
- March 2014 (2)
- 2013
- March 2013 (10)
- June 2013 (1)
- 2012
- March 2012 (7)
- April 2012 (15)
- May 2012 (1)
- July 2012 (1)
- August 2012 (4)
- October 2012 (2)
- November 2012 (2)
- December 2012 (1)
- 2011
- 2010
- 2009
- 2008
- 2007
- 2006
- 2005
- 2004
- 2003
- 2002
- 2001
- 2000
- 1999
- 1998
- 1997
- 1996
- 1995
- 1994
- 1993
- 1992
- 1991
- 1990
- 1989
- 1988
- 1987
- 1986
- 1985
- 1984
- 1983
- 1982
- 1981
- 1980
- 1979
- 1978
- 1977
- 1976
- 1975
- 1974
- 1973
- 1972
- 1971
- 1970
- 1969
- 1968
- 1967
- 1966
- 1965
- 1964
- 1963
- 1962
- 1961
- 1960
- 1959
- 1958
- 1957
- 1956
- 1955
- 1954
- 1953
- 1952
- 1951
- 1950