EDITORIAL: Growing imports from US should offer food for thought

Opinion and Analysis

BP CEO Tony Hayward (R) looks over clean-up efforts at the site of beached oil from the Deepwater Horizon Oil Spill in Port Fourchon, Louisiana May 24, 2010. REUTERS 

By Business Daily

Recent reports showing rapid growth of Kenya’s imports from Asia and Western countries should offer plenty of food for thought for policy makers on multiple fronts.

Trade data released earlier this week by the US Department of Commerce shows that Kenya imported goods worth Sh54.4 billion from the US last year, a 165.3 per cent jump from the previous year.

The growth marked out Kenya as the country whose trade with the US increased at the highest pace in Africa.

For foreign policy wonks, the immediate lesson here is that the world is multi-polar, and the debate about leaning East or West should only be informed by Kenya’s economic, political, social interests rather than short-term expediency.

The debate preceding the Jubilee government’s take-over of power about two years ago was mostly punctuated by near-hostile remarks on both sides of the divide, which in hindsight probably needed not have been the case.

Political temperatures are however known to rise and fall all the time, and it would be foolhardy to expect that even the current seemingly warm relations will not hit rough patches in future.

It is the trade relations, however, that Kenya should pay most attention to Kenya’s ambassador to the US, Njeru Githae, should particularly view the trade data as a big wake-up call in as far as his job in the seat of the world’s super power is concerned.

Mr Githae should particularly be worried that while Kenya imported that big amount of goods from the US, the Sh47.3 billion exports to America still translated into a deficit position to Nairobi’s disadvantage.

How Kenya can exploit the African Growth and Opportunity Act (Agoa) window to ramp up trade should be Mr Githae’s main pre-occupation.

If the US, being the huge economy that it is, could host dozens of African heads of State last year on a diplomatic charm offensive, the Kenya should feel many more times obliged to reach out to American businessmen to showcase local trade opportunities.

Mr Githae’s counterpart in China should be even more worried.

While Kenya imported goods worth Sh178 billion from China in the year to September, the Asian giant bought negligible amount of goods from Nairobi, leaving a gaping trade imbalance between the two countries.

India is also emerging as a big source of imports for Kenyans, but the growth is not matched by exports to the country.

The most visible impact of the trade imbalance is a weak currency, which makes the cost of living high by transmitting imported inflation across the economy.

This situation can be changed if there is concerted goodwill and deliberate policy intervention to build Kenya’s capacity for value addition and exports.