Kenya targets to increase her exports to 20 percent of the Gross Domestic Product (GDP) in three years’ up from the current 14.5 percent by reviewing its trade contracts to understand the market requirements of various global segments.
“We target to expand the export market from its current size today by more than 20 per cent annually to more segments with a view to reducing the import bills the country is grappling with. We are spending more than what we are earning as a country,” he said.
According to the Trade Ministry, this will be realized by among others, product diversification and value addition initiatives.
The formulation of the National Export Strategy (NES) commenced in September last year and is set for finalisation by the end of next month, a process which has so far seen prioritization of target sectors to help increase exports.
The strategy target seven sectors: Livestock and livestock products, agriculture, fisheries, manufacturing products, handicrafts, service sector, emerging sectors such oil and gas.
According to the Economic Survey 2017, Kenya exports to various destinations globally declined to KSh578.1 billion last year from KSh581 billion in 2015, accounting for a 12.1 per cent drop due to the value of re-exports. While imports, on the other hand, declined to KSh1.4 trillion from KSh1.5 trillion in 2015.
“This led to a narrowing of the trade deficit from KSh 996.5 billion in 2015 to KSh 853.7 billion, in 2016 and an improvement of export-import ratio from 36.8 per cent to 40.4 per cent over the same period. Tea; horticulture; articles of apparel and clothing accessories; and coffee were the leading export earners jointly accounting for 56.7 per cent of the total domestic exports during the review period,” reads the survey.
The Central Bank of Kenya projects the country’s current account deficit to rise to 5.8 percent of the gross domestic product in 2017 from an estimated 5.3 percent in 2016 according to Dr. Patrick Njoroge, Governor Central Bank of Kenya.
According to the CBK, “The 12-month current account deficit widened slightly to 6.4 percent of the GDP in July 2017 from 6.2 percent in May, largely due to short-term import demand for cereals and sugar and SGR related transport equipment in the first half of 2017.”
The current account is usually important to the stability of the currency since it dictates a number of dollars Kenya will need to import goods from available reserves.
Kenya Diaspora Remittances in September hit Ksh 18.25Bn
However, resilient inflows from tea and horticulture exports, diaspora remittances and strong recovery in tourism continue to support stability in the foreign exchange market.