Kenya Mulls How to Bridge Trade Gap With South Africa

Kenya is seeking to offset trade imbalance with South Africa by focusing on services where the East African country has a comparative advantage.

Industrialisation secretary Adan Mohamed on Tuesday met South Africa’s minister of Trade and Industry Rob Davies to discuss a framework for engagement before the end of the year.

According to the Export Promotion Council, Kenya’s imports from South Africa have increased from $287.7 million in 2003 to $ 477.4 million in 2007, a rise of about 66 per cent while exports have been decreasing from $51 million in 2004.

This means that the share of Kenya’s total exports in the South Africa’s global imports has remained below one per cent.

During bilateral talks with Mr Davies, Mr Mohamed agreed to hold match making meetings between business delegations from Kenya and South Africa during a state visit later in the year.

Mr Davies said South Africa was keen on building trade in services with its African counterparts which it has not explored.

“We want to have measurable and tangible progress because countries meet sign frameworks but have very little follow-up activity,” he said.

The South African minister said the country had come up with Trade Investment African arm to encourage the countries companies to expand trade into the continent.

Kenya is also seeking access into the South African market for mainly tea and avocado exports.

Mr Davies said this could happen if the countries speed up implementation of the tripartite free trade agreement that would bring together the East African Community, the Common Market for Eastern and Southern Africa (Comesa) and Southern African Development Community.

“I know Kenya wants a bilateral with us on tea and avocado but how do we do it, it will be addressed under the tripartite,” he said.

Mr Mohamed has also been holding sideline bilateral talks with governments to build networks for future engagements.

Yesterday, he was scheduled to meet Sri Lanka minister of Industry and Commerce Risad Badhiutheen and International Trade Centre chief executive Arancha Gonzalez and hosted a high level CEO matchmaking breakfast and textile sector.

Kenya is also backing African Union intra-African trade where President Uhuru Kenyatta called for the establishment of a Continental Free Trade Area.

The President said boosting intra-African trade would accelerate integration, develop larger markets and foster competition which will help in poverty reduction, growth and sustainable development.

“Equally, pooling economies and markets through regional integration will provide a sufficiently wide economic and market space to make new economies of scale,” said President Kenyatta.

He expressed concern that while 40 per cent of North American trade is with other North American countries and 63 per cent of trade by countries in Western Europe is with other Western European nations, only about 12 per cent of African trade is with other African nations.

State Department of Trade PS Chris Kiptoo also called on the wealthy commonwealth nations to increase investment in vital infrastructure that would make a substantial impact on exports and strengthen the resilience of Africa’s member countries’ economies to shocks.

He said increased trade partnerships with African member countries would boost their integration to the global economy as capital intensive infrastructure are a trade barrier between to increased trade between the partner nations.

“While the continent is spending over $131 billion on infrastructure-related construction which is expected to grow to $200 billion by 2015, there’s an existing funding gap that needs to be addressed,” said Dr Kiptoo said during the Commonwealth ministerial meeting.

Source: The Nation.