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Members of the business community demonstrate in Eastleigh Nairobi | Coastweek

NAIROBI (Xinhua) -- Members of the Eastleigh business community demonstrate in Eastleigh, Nairobi. The popular Eastleigh market remained closed on Wednesday following serious protests by traders over hefty taxes imposed on cargo by Kenya Revenue Authority (KRA). XINHUA PHOTO - JOHN OKOYO

Kenya encouraged: Diversify exports and help cut Trade deficit

NAIROBI (Xinhua) -- Kenyan experts on Thursday urged the government to diversify the country’s export base to help curb rising trade deficits which they said grew 1.2 percent in 2019.

The experts, from the Institute of Economic Affairs (IEA) and the Kenya Association of Manufacturers (KAM), said the government could enhance its ability to widen sources of revenue by increasing investment in a broad range of sectors.

"We remain constrained by the current export structure that relies on a few export products and markets," said KAM research and fiscal policy manager Simon Githuku.

"It is time we diversified if we are to address the ballooning trade deficits."

Githuku told a forum in Nairobi that having a new export structure will mitigate adverse effects of trade fluctuations.

According to latest World Bank statistics, the gap between imports and exports climbed to 1.15 trillion shillings (10.15 billion U.S. dollars) in 2018, up from the previous year’s 10.13 billion dollars.

"We... require a clear regulatory framework and workable incentive packages to condense the trade deficits," Githuku said.

The trade deficit is denying the country an opportunity to create more jobs with local firms losing out to foreign manufacturers in the long run, he said.

Joram Gicheru, an IEA associate, called on the government to give subsidies to local producers of agricultural products to reduce the cost of production and improve volumes and quality of the products.

"One of the ways out from this mess is by striving to double volumes of our three top exports—tea, coffee and horticulture—and to do that it means we need to improve our productivity," he said.

The answers to the deficits also depend on how the government positions its manufacturing sector with a sharp focus on alternative products such as textile, chemicals, machines, agro-processing, blue economy and leather, Gicheru said.

He called on policymakers to take advantage of the Africa Continental Free Trade Area (AfCFTA) initiative, which offers African countries a great long-term opportunity to address technical barriers to trade.

The agreement will increase intra-Africa trade as well as enabling Kenya and other African countries to attract investment, he said, noting that the AfCFTA provides new export opportunities for African products.

Once in place, the AfCFTA will cover a market of 1.2 billion people and a combined gross domestic product (GDP) of some 3 trillion dollars.

"We must position ourselves strategically to reap from the regional pact, which aims to establish a single market that will spur industrialization, infrastructural development, economic diversification and trade," Gicheru said.

Fred Simiyu, who is in charge of international trade at the Ministry of Trade, said the government will implement initiatives to add value to the free trade agreement.

Richard Kariuki, regional head of Governance Beta Healthcare International, urged the government to offer favorable policies that make it easier for pharmaceutical and health industries to operate smoothly.

"The government needs to give subsidies and come up with favorable tax policies on medical equipment, capital expenditure and raw materials as well as honoring obligations for health sector such as tax refunds, improved management as well as partnership with private entities to foster a coherent framework for UHC," he said, referring to universal health care.


East African region to register 5.9  percent growth in 2019: report

NAIROBI (Xinhua) -- The shrinking revenue from export of commodities including minerals led to a minor drop in economic growth rates across East Africa in 2018, according to the African Development Bank (AfDB).

Growth, however, is expected to gain pace in 2019 at 5.9 percent rising to 6.1 percent in 2020, said a report issued by the bank on Wednesday.

The bank’s report, measuring economic performance in 13 countries in eastern Africa, shows the real Gross Domestic Product grew by an estimated 5.7 percent in 2018, slightly less than the 5.9 percent in 2017, due to the growing current account deficits caused by low earnings from exports.

The bank projects economic growth to remain strong in 2019 at 5.9 percent, supported mainly by domestic consumption of goods and the growth in the services sector.

According to Marcellin Ndong-Ntah, AfDB Lead Economist at the regional office in East Africa, the region’s fiscal deficit, due to the low earnings from exports caused by the trade imbalance, stood at 30 percent of the national economy, which is considered under control at the moment.

However, the bank expressed concern at the growing level of foreign debt accumulation by countries which previously benefited from international debt relief, saying the effect of foreign debts accumulation by the private sector and the public sector would be felt in the near future.

The report shows Ethiopia with the highest margin of economic growth at 8.2 percent, followed by Rwanda at 7.8 percent and Kenya at 6 percent economic growth rate.

Djibouti is projected to grow at 5.9 percent while economic growth in South Sudan is expected to remain at negative 3.8 percent.

Seychelles, whose economy depends on tourism and fisheries, is also expected to record a decline of 0.3 percentage points.

In Eritrea, investment in the mining sector and the government’s agriculture development programs is expected to contribute to economic growth in 2019, according to the report.

Uganda, whose economy has been growing rapidly, is expected to record 5.3 percent growth in 2019.

Sudan is also expected to record a decline in economic growth rates by 0.5 percent.

The growth in Sudan has been driven by the mining sector, whose contribution to the GDP is estimated at 7 percent.

According to the AfDB, real economic growth is supply-side driven by the growth in the services sector, followed by industry and the construction sector, whose contribution to the economy remains huge.

In Ethiopia, the construction industry grew by 18.7 percent while the services sector grew by 10.3 percent, according to the report.

COMESA calls for expediting ratification of tripartite free trade area agreement

LUSAKA Zambia (Xinhua) -- An African trading bloc on Thursday urged member states of three regional economic blocs to sign and ratify the free trade area agreement as the deadline nears.

Three regional blocs namely the Common Market for Eastern and Southern Africa (COMESA), East Africa Community and the Southern African Development Community signed the tripartite agreement in June, 2015 in Egypt, comprising 26 countries.

In a statement released after a meeting of the COMESA Intergovernmental Committee in Lusaka, the Zambian capital, the regional bloc urged member states to sign and ratify the agreement which lapses this month.

The statement said so far only four countries in the three regional blocs ratified the agreement.

The deadline of April 2019 was set in June last year during a ministerial meeting in South Africa, the statement added.

Christopher Yaluma, Zambia’s Minister of Commerce, Trade and Industry said it was time for the remaining countries to sign the tripartite given that it was supposed to be the building block to the Africa Free Trade Area Agreement.

"I can not overemphasize the absolute importance of all of us ratifying the tripartite agreement so that it enters into force immediately. After years of negotiation, the tripartite free trade area is ready for implementation," he said.

The Zambian minister said 93 percent of the work of rules of origin has been completed, providing the basis for trade to begin while legal texts have been concluded and adopted.



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