Inside Politics

Kenya’s trade balance with China worries economists

Friday, November 19th, 2021 00:12 |
Kenya Ports Authority.

The massive trade deficit between Kenya and China is raising concern among experts.

Economists say Kenya’s imports from China have grown exponentially over the years compared to the rate at which exports to the Asian nation is increasing, thus balance of trade, is heavily in favour of the latter.

Data by Kenya National Bureau of Statistics (KNBS) shows Kenya’s total imports from China soared to $336.717 million in March this year alone, compared to $275.269 million a month earlier.

Kenya’s exports to China on the other hand stood at $139.01 million in the whole of 2020, according to figures by the United Nations COMTRADE database on international trade.

Analysts now warn that the deficit remains too big and have recommended enhanced measures if the two trading partners are to compete favorably.

One of those measures is to push for the uptake of more Kenyan goods and products in the Chinese market, according to Kenya Investment Authority (KenInvest) General Manager of Investment Promotion and Business Development, Pius Rotich.

Tax breaks

Other considerations include tax breaks and “softer” credit facilities to boost local businesses, especially SMEs keen to export to the Chinese market.

“This is an ongoing engagement between ourselves, other relevant State agencies and all stakeholders involved,” Rotich said during the opening ceremony of the 4th Kenya International Industrial Expo (KIIE) which is expected to end on Friday.

The expo comes at a time when the country is scaling up its manufacturing sector in the post-Covid era and has attracted over 90 Chinese firms and 15 Kenyan brands exhibiting at the event.

Statistics show that over the last decade, China has grown to become the country’s largest trade partner and biggest bilateral lender – but at a cost, with sociocultural and political consequences working against Kenya – with mounting Chinese debt and a growing number of Chinese population taking over local informal businesses such as mitumba being some of the drawbacks.

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