Kenya plans to adopt an export-led development model in order to reduce the country’s growing trade imbalance, a government official said on Wednesday.
Julius Muia, principal secretary, National Treasury, told a virtual meeting that the country has persistently witnessed a trade deficit because of importation of goods that can be sourced locally.
“We have come up with the special economic zones that can provide incentives for the manufacture of goods for foreign markets as a way to boost our exports,” Muia said during the launch of the manufacturing resilience and sustainability strategy priority policy toolkit.
He said that Kenya has also signed a number of preferential trade agreements with a number of developed countries with lucrative markets for locally produced products.
“We have also enacted reforms in order to improve the ease of doing business in Kenya,” he added.
The Treasury official observed that Kenya is also benchmarking with other countries that developed successful export industries.
Muia noted that the tax incentives that have been put in place to attract both domestic and foreign investors had not achieved the intended impact as envisaged.
He noted that in 2018, the government gave away about 540 billion shillings (about 5 billion U.S. dollars) in tax incentives representing about six percent of the gross domestic product which is double the world average.
“We have therefore concluded that tax incentives are not the most important factor in attracting investments into the country,” he added.
Lawrence Karanja, chief administrative secretary, Ministry of Industrialization, Trade and Enterprise development said that the country’s trade remedy agency will ensure that foreign goods are not dumped into the Kenyan market.
“We want to shield our local producers so that we develop a vibrant manufacturing sector,” Karanja added.
He revealed that in order to reduce the country’s import bill and boost local industrialization, the country has developed a list of goods that will be exclusively sourced by public entities from domestic producers.