This archive report was first published on 23 December 2019.
Published on December 23, 2019, Kenya's reputation as a major economic hub in Africa is under scrutiny due to a worrying trade trend.
For the first time since the country started compiling trade data, imports from Africa have surpassed exports, with a trade deficit of nearly Sh4.22 billion recorded over nine months through September.
The Central Bank of Kenya (CBK) data shows that Kenya ordered goods worth Sh168.741 billion from African countries, while earning Sh164.525 billion in exports during the same period.
While Kenya's open-trade policy has encouraged intra-African trade over the past 17 years, the trade mismatch requires immediate attention to diagnose the cause and resolve it.
There are two possible explanations for the trade gap: either Kenya's goods have lost competitiveness in the continent, or Nairobi's open-trade policy has failed to elicit reciprocal gestures from other African states.
However, the World Bank's Doing Business 2020 ranking, which assesses the private sector's review of states' facilitative role, puts Kenya at position 56 globally, a marked improvement from number 61 the previous year.
Kenya is ranked as the third most competitive economy in Africa after Mauritius and Rwanda, implying that the private sector must also bear responsibility for the remaining competitiveness questions.
These include failure to invest in product research and development, poor pricing policy, and factory inefficiencies.
Alternatively, if the trade mismatch is due to the abuse of Kenya's open-door policy, Nairobi needs to reevaluate its options to ensure preferential access to its market is granted on a reciprocal basis.
