NAIROBI, Kenya, June 22 – Kenyan exporters have been urged to diversify their products and destination markets to cushion themselves from imminent risks.
Trade Minister Amos Kimunya says such risks include exposure to adverse effects of commodity prices and fluctuations in demand.
Speaking during a forum to discuss challenges facing Kenyan exporters, Mr Kimunya noted that the export industry is over reliant on Common Markets for East and Southern Africa (COMESA) and the European Union (EU) markets.
“If you just look at COMESA and EU they account for 60 percent of our total export earnings. In COMESA we are talking about 17 countries while EU are about 26 countries,” Mr Kimunya noted and added: “This means out of the 150 countries with a global presence we are not doing even 50 of these.”
He noted that despite COMESA being a main source market for the country, most of the export trade is between Kenya and Uganda making the situation even riskier.
“If you were to break down the 60 percent between COMESA and EU further, you will actually find that Uganda takes over half of that, and then add Somalia, Southern Sudan and Tanzania and you will notice that there still a lot of opportunities out there,” Mr Kimunya said.
He further observed that the situation gets worse considering that 40 percent of the country’s export revenue is generated from three main products; tea, coffee and horticulture.
Mr Kimunya recommended that exporters take advantage of opportunities presented by programmes like African Growth Opportunity Act (AGOA) to diversify.
“We have had the AGOA initiative for the last 10 years which opens doors to participating countries to export 6400 product lines. Out of that, I believe we are not even doing 20,” he noted.
The Trade Minister observed that the American market has huge potential and encouraged Kenyan exporters to take advantage.
Access to trade finance, unpredictable foreign exchange rates, and a high export insurance cover were listed at the forum as the biggest challenges facing exporters in the industry.
A director of the Kenya Private Sector Alliance (KEPSA) Bob Karina said these issues make it almost impossible for Small and Medium Enterprises (SMEs) to thrive in the export trade.
“This is notwithstanding the bureaucratic conditions at the borders that make it almost impossible for a trader to meet deadlines at short notice,” he said.
Participants urged the Trade Ministry to facilitate easier access to trade finance, provide more security to exporters and reduce on bureaucracies in both government and trade systems if it were to spur better growth within the industry.