East Africa urged to pursue export-led growth to boost forex earnings

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Economic experts on Thursday urged the East African Community (EAC) member states to pursue an export-led growth strategy in order to boost their foreign exchange earnings.

“Growing export sales through diversification of markets can result in employment creation and higher incomes for East Africa,” said Hadijah Nannyomo, partner of global advisory firm Ernst and Young, during a pre-budget meeting to highlight expectations of the 2022/2023 budget which will be read on April 7.

Nannyomo told journalists in the Kenyan capital, Nairobi, that the trading bloc with relatively limited domestic markets can tap into the lucrative global trade in manufactured goods.

The EAC treaty requires Kenya, Uganda, Tanzania, Rwanda and Burundi to read the budget on the same day to promote harmonization of fiscal policies. Kenya will however table its 2022/23 fiscal budget earlier due to the general elections to be held in August.

Data from the Central Bank of Kenya indicate that the country’s foreign exchange reserves currently stand at approximately 900 billion shillings (7.8 billion U.S. dollars).

Nannyomo said that an export-led strategy will boost foreign exchange earnings through the prioritization of investment in industries where a country enjoys competitive advantages such as the abundance of raw materials. She revealed that export-oriented growth can also be achieved through attracting foreign firms with modern technology to establish local operations with the aim of producing goods for international markets.

Julius Ngonga, the partner of East Africa leader, strategy and transactions at Ernst and Young, said that the Ukraine-Russia conflict has disrupted East Africa’s exports and imports from both countries.

Ngonga observed that the region’s governments will have to implement fiscal measures in order to protect affected sectors from the interrupted trade resulting from the conflict.

Anthony Muthusi, the managing partner of Ernest and Young Consulting, said that the region requires an export-led strategy that will help East Africa reduce its dependence on the export of raw materials. He added that exports of manufactured products will also integrate the region into the global value chains. Enditem

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