“EXPORTERS FORUM 2010” EXPORTERS FORUM 2010 Kenya’s Export Potential Presentation Presentation THE EXPORT PROMOTION COUNCIL P.O. BOX 40247 00100 NAIROBI NAIROBI TEL: +254 20 2228534-8 FAX: +254 20 2218013, 2228539 By Matanda Wabuyele. OGW E-MAIL: chiefexe@epc.or.ke Chief Executive WEBSITE: WEBSITE: www epckenya org www.epckenya.org Export Promotion Council
CONTENTS � Overview of Kenya’s Export Trade Pattern � � Export Competitiveness Export Competitiveness � Market and Product Prioritization � Policy Evolution � Challenges for the Export Sector � Proposed Measures to enhance Kenya’s Export Performance � A Background of EPC 2
Overview of Kenya’s Export Trade Pattern
Overview of Kenya’s Export Scenario � Total exports in 2009 were at Kshs. 344.9 billion and accounted for 0 03% of world’s total exports for 0.03% of world s total exports. � Exports grew by 13% on average between the period 2003 and 2007, attaining 26% growth between 2007 and 2008. In the 2008 – 2009 period there was a marginal increase in the value of 2009 period there was a marginal increase in the value of exports by 0.3%. � The export sector has contributed significantly to the growth of the GDP. The 2009 GDP growth rate of 2.6% would have been worse g had it not been for the impressive performance of the export sector. ….the export sector contributes 16.4% to the GDP hence a significant pillar in economic development a significant pillar in economic development 4
Kenya Balance of Trade 2003 - 2009 KENYA'S BALANCE OF TRADE 2003 - 2009 (Values in Kshs. Billions) 1000.00 800.00 600.00 h s . B illio n s 400.00 200.00 200 00 V a lu e in K s 0.00 -200.00 -400.00 -600.00 2003 2004 2005 2006 2007 2008 2009 281 84 281.84 364.21 364 21 443 09 443.09 521 48 521.48 605 12 605.12 770.65 770 65 788 10 788.10 Imports I t 183.15 214.79 260.42 250.99 274.60 344.95 344.95 Exports -98.69 -149.41 -182.67 -270.49 -330.51 -425.70 -443.15 Trade balance YEARS ..indicate increasing trade deficit calling for efforts to increase exports to reduce the trade deficit 5
Proportion of Major Exports in 2009 demonstrates….. PROPORTION OF KENYA'S EXPORT PRODUCTS-2009 Tea, 19.94% All Other**, 38.27% , % Articles of Plastics, 1.72% Horticulture, 18.91% Cement, 2.25% Coffee, 4.44% Essential Oils, 2.39% Apparels, 4.04% Soda Ash, 2.41% Tobacco manufactures, Iron and Steel, 2.63% 3.02% 3.02% …the export basket is dominated by primary commodities 6
Top 10 Export Products in 2009… Value in Ksh. RANK PRODUCT Billions % of total export 68.77 1 Tea 19.94 65.22 2 Horticulture 18.91 15.31 3 Coffee 4.44 13.95 4 4 Apparels/clothing accessories Apparels/clothing accessories 4.04 4.04 10.41 5 Tobacco/Tobacco manufactures 3.02 9.07 6 Iron and Steel 2.63 8.31 7 7 Soda Ash Soda Ash 2 41 2.41 8.23 8 Essential Oils 2.39 7.77 9 Cement 2.25 5.92 5 92 10 Articles of Plastics 1.72 132.00 All Other** 38.27 Total Exports 344.95 100.00 Source: KNBS Economic Survey 2010 Source: KNBS Economic Survey 2010 …shows that horticulture and tea accounted for about 39% of Kenya’s commodity exports 7
Major Destinations of Kenya's Exports by Region - 2009 KENYA'S EXPORT MARKETS BY REGION (2009) AMERICA REST OF EUROPE REST OF EUROPE 5.05% ALL OTHER COUNTRIES 3.54% 1.25% COMESA 32.73% MIDDLE EAST 5.60% FAR EAST & AUSTRALIA 11.84% REST OF AFRICA 14.45% EUROPEAN UNION 25.54% Traditional markets of COMESA and and EU acco nt for o er 58 % of e port Traditional markets of COMESA and and EU account for over 58 % of export earnings hence there is need for export markets consolidation, expansion and diversification into other growth and emerging export markets 8
Leading 10 Markets in 2009… Country Value in Ksh. Billions % total exports 1 Uganda 46.24 13.40 2 2 United Kingdom United Kingdom 38 50 38.50 11 16 11.16 3 Tanzania 30.09 8.72 4 Netherlands 26.33 7.63 5 U.S.A. 17.42 5.05 6 Pakistan 15.17 4.40 7 Sudan 12.76 3.70 8 8 Egypt gypt 11.89 89 3.45 3 5 9 Dem. Rep. Congo 11.32 3.28 10 Somalia 11.21 3.25 All others 124.02 35.95 Total 344.95 100.00 Source: CBS, Economic Survey, 2010 … … shows that within top 10 Kenya’s export markets, African countries account for 40.2% of Kenya’s merchandise exports hence the need for market consolidation 9
Kenya’s export markets spread indicates--- Group of countries Market share in Incremental Kenya’s exports y p Export Market p spread Top 10 markets 64.5% - Top 20 markets T 20 k t 81 7% 81.7% 17 2% 17.2% Top 30 markets 89.6% 7.9% Top 40 markets T 40 k t 94.5% 94 5% 4 9% 4.9% Top 50 markets 96.6% 2.1% Top 60 markets Top 60 markets 97.9 % 97 9 % 1 3% 1.3% --Declining export spread with block of every 10 countries ---Establishes need for market diversification E t bli h d f k t di ifi ti 10
Summary Observations There is predominance of : � The traditional export markets of the COMESA and European Union which account for over 58% of the export earnings � African countries (COMESA) in the top ten export destinations. NB: � Exports to Africa/COMESA comprises manufactured products including; E t t Af i /COMESA i f t d d t i l di household goods, value added tea and coffee, plastics, etc � Exports to EU are predominantly non-value added agricultural commodities � Exports of horticultural produce to the EU are increasingly becoming value added (pre-packs, flower bouquets, etc) (p p , q , ) � Major imports are capital and industrial goods indicating an expanding economy, through manufacturing ………The export scenario calls for export market and product enlargement and diversification. 11
Export Competitiveness
Why Export Competitiveness � In the wake of the current economic and financial crisis, countries around the globe are looking for ways to reignite economic growth growth. � Traditionally, export-led growth has been perceived as one of the most promising pathways to do so most promising pathways to do so. � Government policy to achieve export-led growth is then essentially about findings ways to increase the ability to sell domestically produced goods and services on global markets. � This ability to export is what has often been understood as “export competitiveness . competitiveness” ……………..The experience of several waves of Asian economies that achieved high and sustained growth while pursuing a strong export orientation provided the empirical backdrop for this approach. i t ti id d th i i l b kd f thi h 13
General Barriers that Hinder export competitiveness General barriers to exports that reduce trade below its socially optimal level include: � Inefficiencies in the domestic business environment, � Others are related to market access abroad, for example through � Oth l t d t k t b d f l th h the tariff and non-tariff barriers � Lagging Lagging capabilities capabilities of of domestic domestic companies companies, either either in in understanding foreign markets or in their own products, services, or value chains. ……………Competitiveness strategies are squarely oriented towards reaching higher productivity. Attracting FDI, generating jobs, and growing g g p y g , g g j , g g exports are positive implications of higher productivity. 14
How can the export competitiveness be improved? � Setting up an Export Endowment Fund and Export Development Fund to support the export sector. � Rationalisation of tariff policy. p y � Medium term strategy to boost exports of goods and services particularly, improving exports of services, provide incentives to facilitate technology acquisition and adoption, replacement, and to launch comprehensive leather and leather products export plan. launch comprehensive leather and leather products export plan. � Greater market accessibility to US, EU and other emerging markets. � Proper utilization of the upcoming Special Economic Zones for providing zero duty facility for manufacturing for exports providing zero duty facility for manufacturing for exports. � Strengthen and utilize the trade officers for the protection and promotion of Kenya's commercial interest abroad. …………Macroeconomic stability, innovations, knowledge creating activities, technology readiness, and governance of the corporate and political institutions are the determinants of the trade competitiveness according to WTO competitiveness according to WTO . 15
Market and Product Prioritization to Enhance Export Competitiveness
Why Market Prioritisation � Persistent unfavorable trade balance � Geographical & product concentration in export Geographical & product concentration in export pattern � High expectations and limited resources � Facilitate resource allocation where most needed � Professional and research based approach to market development development � Best measurable outcome � Focus and long term commitment for success 17
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