By MESHACK KIPTURGO
In Summary
- An efficient logistics chain is one of the key tools to create competitive advantage in a growing economy
An efficient logistics chain is one of the key
tools to create competitive advantage in a growing economy. Every
thriving economy relies on an efficient supply chain that nurtures
global trade and embraces global competitiveness.
Singapore boasts of being the most efficient
country in logistics. In the 2011 World Bank Ease of Doing Business
Index, Singapore was ranked as the best country in the world to do
business in.
Kenya, seeking diversity among its trade partners,
has set its sights on the East. Asia is the fastest growing economic
region and the largest continental economy by GDP in the world.
China is the largest economy in Asia and the
second largest economy in the world. In addition, Asia has the highest
population, with China alone having more than one billion inhabitants.
The potential trade and impact on the Kenyan economy as a result of this
new trade partnership would be immense.
But does Kenya have the capacity to reap the benefits of doing business with this trade giant?
On the Kenyan logistics front, key concerns
include non-tariff barriers, the state of infrastructure, insecurity and
the rising cost of fuel. Thus, the high cost of goods is largely
attributed to logistics.
These are critical concerns that have directly
impacted the cost of doing business in Kenya and threatened its position
as the regional business hub in East Africa.
Neighbours Tanzania, Uganda and Rwanda have
identified this gap as well, and they are drawing investors into their
markets by embarking on infrastructural developments like the
construction of the $11 billion Bagamoyo Port, $164 million new airport
terminal and the Tanga-Musoma railway in Tanzania; Rwanda is investing
in the air cargo industry and an airport free trade zone. These
initiatives could shift trade away from Kenya.
To remain competitive, the Kenyan government is
expanding its infrastructure as well as regional partnerships that would
ease trade among the East African Community partners.
The recently launched single window system,
standard gauge railway, infrastructure development and expansion —
specifically at the port of Mombasa and Jomo Kenyatta International
Airport — have moved in the right direction.
To effectively tackle the current and emerging
demands from international markets, Kenya needs to provide a safe and
convenient environment for doing business. Some interventions include
building a dual carriageway on the Northern Corridor from Mombasa to the
Malaba border.
Uganda and Rwanda could extend the dual carriage way into their countries.
There is also a need to fast-track the
construction of the free port to enable Kenya to meet the demands of the
growing markets.
An airport free trade zone would also greatly
boost our air cargo logistics. East African countries should jointly
partner and negotiate with global markets.
Tackling current trade hindrances while planning
for long term business growth will attract more investments in Kenya and
East Africa. In the longer term, innovative ideas should be considered
for Kenya’s traditional markets from the West and the Asian markets.
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