Kenya’s trade deficit widened by Sh55.64 billion in six months to June on increased food and machinery imports as exports remained sluggish. The deficit — the gap between imports and exports — increased to Sh601.94 billion, up from Sh546.30 billion, according to the Kenya National Bureau of Statistics data. Analysts say the widening deficit is piling pressure on the shilling against global currencies such as the dollar and denies Kenya an opportunity to create more jobs because locals lose out to foreign manufacturers. The high demand for the dollar to fund imports forces the Central Bank of Kenya to intervene, depleting foreign exchange reserves. Imports increased by Sh75.69 billion, or 8.94 per cent, to Sh921.88 billion, while exports rose at a slightly slower pace of 6.68 per cent to Sh319.94 billion. A persistently higher demand for imports than exports may mean Kenyan jobs are being lost to factories in major source markets such as China, which earned Sh202.72 billion from goods she shipped to Kenya in the six-month period. Beijing’s shipments, however, dropped marginally from Sh213.05 billion a year earlier on reduced machinery and equipment orders for the standard gauge railway construction works. Imports from China include textile products, which are cheaper due to a relatively uncompetitive local industry. “Time and again, the government has been trying to revamp that (textiles) sector, but with the cheaper imports, it has not been successful and something has to be done to arrest that trend,” said Genghis Capital senior research analyst Churchill Ogutu...

The resolve by the East African Community member states to market the region as a single investment destination was laudable, as it was widely expected that the gains of regional integration would thus trickle down to all citizens. Still, while regional integration has been the mantra of the EAC heads of state and regional policy makers, the key question is whether this dream will ever be realised, going by the persisting trade wars between the member states. Although significant milestones have been achieved with the signing and ratification of key protocols, the region still has a long way to go to attain its goal of unity. The trade wars and the seemingly lack of commitment by some partner states on the implementation of joint regional projects such as the pipeline and the crude oil refinery have sent mixed signals about the commitment to regional integration. The trade disputes are eroding the gains of the Common Market Protocol, which provides for free movement of goods, services, labour and capital within the regional bloc. The success of the Common Market is critical to the ongoing regional integration process because it will pave the way for the achievement of the monetary union and the EAC political federation. Last week, Tanzania cracked down on sugar imports from Uganda, claiming the commodity had been sneaked into Uganda from Kenya, which is entangled in a domestic sugar crisis caused by importation of large amounts of contaminated duty-free sugar. Dar imposed a 25 per cent import duty...

Mitumba business will thrive even after National Treasury Cabinet Secretary Henry Rotich told MPs he intended to slap the items with higher duties in a bid to revive the textile industry. Kenya has broken ranks with its East African Community (EAC) peers to reduce tariffs on imported second-hand clothes in a strategic decision by President Uhuru Kenyatta's administration to maintain cordial relations with the United States. Under President Donald Trump, the US has not hesitated to pick up trade wars, indiscriminately tussling with both economic giants China and minions Rwanda. An EAC Gazette of June 30 shows that Kenya's importers would bring into the country second-hand clothes, popularly known as mitumba, at a reduced tariff of $0.20 (Sh20) per kilogramme for the next 12 months. This is after a reduction of 50 per cent from an applied tariff of $0.40 (Sh40) per kilogramme. The decision brings into question Uhuru's plan to protect local textile manufacturers and revamp the sub-sector to unleash tens of thousands of jobs. But this will certainly assuage Mr Trump. The real estate mogul, who has vowed to ‘make America great again,’ has already sanctioned Rwanda for increasing import duty on second-hand clothes. "The President has been invited to the US, and so you do not want to create an awkward moment diplomatically,” says University of Nairobi Economics lecturer Gerishon Ikiara. Trump has invited Uhuru to Washington for an official visit set for August 26, with discussions including regional peace and stability set to feature prominently during...

Parliament is in the process of ratifying an agreement to establish a tripartite free-trade area that will bring 26 African countries into a single market governed by preferential free-trade arrangements. The agreement was ratified by the select committee on trade and international relations of the National Council of Provinces on Wednesday and will be considered by the portfolio committee on trade and industry of the National Assembly in two weeks time. So far 22 countries have signed the agreement which was launched in Egypt in June 2015 with SA signing in July 2017. It will enter into force once it has been ratified by 14 member states. So far only Egypt and Uganda have ratified it. The agreement is built on the three existing trading blocs: the Common Market for Eastern and Southern Africa (Comesa), the Southern African Development Community (Sadc) and the East African Community (EAC). The countries included in the tripartite free-trade area — seen as a critical driver of regional integration on the continent — have a combined population of 626-million and a total GDP of $1.2-trillion. Once the tariff negotiations are finalised, the deal will offer exporters preferential or zero tariffs into the markets of member countries. Some countries that fall within the tripartite free-trade agreement (TFTA) such as Rwanda, Ethiopia and Tanzania, are among the fastest growing economies on the continent. Briefing the select committee department of DTI chief director Wamkele Mene said SA’s trade with TFTA countries represents 16% of its trade with the...

The East African Community (EAC), a natural and critical trading block for East African nations, has painstakingly been built from the scratch since its collapse in the 1970s. Originally founded in 1967, it crashed 10 years later thanks largely to jingoistic politicians, who failed to see the great economic potential in it, but were rather obsessed with pursuit of short-term political goals. Very unfortunately, despite the billions of shillings that trade within the community generates for its citizens, governments are behaving as if that is not important. The challenge is that trade numbers rarely feature in the political debates or even popular discourse. EAC, with a GDP of $159.5 billion (Sh15 trillion) and 149 million people in 2014, has been feeding small traders, farmers, industrialists and the hospitality sector for years. Trade among member states, dominated by Kenya, Uganda and Tanzania stood at $5.63 billion (Sh500 billion) in 2014 after falling from $5.8 billion in 2013. Indeed, for all the six countries, the three are the most important trading partners. But that is not what has been headlining news of late. Instead, things seemed to unravel at the Kenya-Tanzania where locals protested the arrest of informal traders ferrying goods from Dar es Salaam. Incidentally, this came days after Kenyan tour van drivers blocked their Tanzanian colleagues from accessing the Kenyan — on grounds that Tanzanian authorities had treated them in a similar manner.  President John Magufuli has pursued policies that do not promote robust commercial exchange across national borders –...

NAIROBI, Aug. 6 (Xinhua) -- The United Nations Economic Commission for Africa (UNECA) on Monday urged the East African Community (EAC) to liberalize trade in professional services in order to spur growth of the manufacturing sector. Stephen Karingi, the Director of Capacity Development Division at UNECA, told Xinhua in Nairobi that the region's manufacturing sector is not as competitive as it should be due to relatively high cost of services including in the insurance, legal, logistic and finance sectors. "There is empirical evidence that efficiency gains occurs when markets are opened up. The EAC will further its industrialization agenda if it can access cheaper services from a liberalized market," Karingi said on the sidelines of the Fifth Common Market for Eastern and Southern Africa (COMESA) Annual Research Forum. EAC member states includes Kenya, Uganda, Tanzania, Rwanda, Burundi and South Sudan. Karingi called for the partners of the trading bloc to amend their national laws so that they permit free movement of professionals across the region. He said that the region has already signed the EAC Common Market Protocol which calls for free movement of capital and labor but implementation has not been completed. Karingi said that for every manufactured good, there is an element of services input which must be procured at a competitive cost in order for merchandise to compete regionally and globally. He noted that the EAC is one of the most integrated regions in the continent. He observed that intra-EAC trade has been increasing primarily because Uganda...

Mombasa port, which has been in operation since the 18th century, has grown over time and contributes more than 40 per cent of Kenya’s annual revenues. Being one of the largest ports in Africa, the port serves Kenya and landlocked countries including Uganda, Rwanda, Burundi, South Sudan and the DRC. Sea ports are gateways for 80 per cent of trade cargo. Currently, Kenya, Tanzania and Djibouti are competing to be the region’s transportation and trade hubs. Djibouti poses less of a threat because of Mombasa’s larger hinterland and operational efficiencies, not to mention the possible diversion of Ethiopian traffic to Eritrea. These nations continue to pump in huge investments to further develop and modernise the available supporting infrastructure. Mombasa port is the largest in East Africa, with capacity to handle up to 500,000 TEUs. However, the port’s volumes exceed the throughput capacity by a factor of more than two. This implies inevitable delay, especially during busy periods, meaning a significant capacity would have to be added to meet the port’s future demands. The delays at the port can be attributed to customs clearance processes, land-side connections not able to evacuate containers quickly enough, and freight providers charging clients demurrage for the additional time that customers keep containers. In a move aimed at boosting revenues for the government to finance its 2018/19 budget, the Finance Bill 2018 seeks to introduce withholding tax (WHT) on demurrage paid to non-resident shipping lines at a rate of 20 per cent on the gross demurrage...

On JULY 6 this year Nigeria’s eminent public servant, Africa’s regional integration doyen and scholar-diplomat Professor Adebayo Adedeji was buried at his home in Asuwaju Court, Ijebu Ode, in Nigeria’s south-western Ogun state. The memorial service took place at the Cathedral Church in Ijebu Ode, which I attended. Adedeji was born on 21 December 1930 in Ijebu Ode and died on 25 April this year at the age of 87. On 7 July 2018, the UN Economic Commission for Africa (Uneca) hosted a symposium in Lagos to honour the life and extraordinary work that Adedeji had done during his tenure as executive secretary of Uneca between 1975 and 1991. I was privileged to have known Adedeji during my critical years of completing a doctorate in international relations with the University of Witwatersrand, which focused on Africa’s regional integration efforts. I also co-edited a book which was dedicated to Adedeji in 2016 titled Region-Building in Africa. He was instrumental in key policy documents including the harmonisation of regional policies that guided Africa, such as the 1980 Lagos Plan of Action (LPA), the Abuja Treaty of 1991, and outlining the need for a fully integrated internationally competitive regional economic community prioritising infrastructure, trade and services, as well as an airspace-driven liberalised market strategy for the free movement of people, goods, and services. Adedeji also called for Africa’s five sub-regions to harmonise their policies - through the Yamoussoukro Declaration of 2000 - with a view to fully liberalising Africa’s airspace market by 2002....

The East African Community should channel its resources to the implementation of the African Continental Free Trade Area (CFTA) as an alternative to pacts with Europe, Asia and the US. “Africa has a lot of potential in intra-regional trade that is untapped; that is why we are exploited by the West and Asia, who offer trade deals that benefit them more than they do African states,” said Seth Kwizera, the co-ordinator of think tank Economic Policy and Research Network. “When over 40 states signed the CFTA, it was a strong statement. Once it is in force and the major barriers to regional trade are eliminated, liberal trade will start across the continent. This will give a stronger voice to countries and regions when dealing with global economic powers.” It is thought that intra-Africa trade could double under the CFTA, and benefit blocs like the EAC that are at advanced stages of free trade protocols such as free movement of people and establishment of a Common Market. The United Nations Economic Commission for Africa (Uneca) said that the “Anything But Arms” deal with the European Union, established in 2001, has not brought about the expected industrial growth in EAC economies despite exports from the region enjoying duty-free and quota-free access to the EU. The region’s trade deficit with EU has stagnated at an average of $1 billion every year for the past three years, according to data from the European Commission. In addition, Economic Partnership Agreements (EPAs) with Europe have met...

The East African Rift Valley is generally considered to be the area in which modern humans first appeared. Fast forward 200,000 years and this 'Cradle of Humankind' has been reborn economically. Three of the 10 fastest-growing economies in the world last year were located in East Africa. The African Development Bank (AfDB) has forecast growth of 5.9pc in the region this year and 6.1pc in 2019, with Djibouti, Ethiopia, Kenya, Rwanda, Tanzania and Uganda all reporting GDP growth in excess of 5pc. Trade between Ireland and Africa is also on the rise, forecast to reach €24bn by 2020. This year East Africa will be the continent's fastest-growing region. It is little wonder then that the region's burgeoning middle class, estimated to comprise about 10-15pc of its 430 million-strong population, is on the radar for exporters. Opportunities also abound in other high-value sectors, such as healthcare, fintech, and ICT. Nairobi, Kenya's capital, is at the heart of East Africa's transformation. Indeed, its reputation as an ICT hub has earned Kenya the moniker 'Silicon Savannah'. It was in Kenya that mobile money technology was pioneered. The electronic wallet service - which allows users to store, send, and receive money using their mobile phone - has transformed how many Africans receive their pay and spend funds. The service is actively used by an estimated 66pc of all adults in Kenya, Rwanda, Tanzania, and Uganda. Dublin-based provider Oxygen 8 offers mobile payment solutions through its Tola subsidiaries in Kenya, Mozambique, Tanzania, Uganda, and Rwanda,...