The government has raised concern over the steady decline of Kenya's regional trade market share which is threatening to wipe away economic gains.
The Industries, trade and cooperatives ministry says unlike previous years where Kenya enjoyed dominance as the economic powerhouse for the region dominating in agriculture, tourism and export industry, the country has begun loosing grip to her peers.
The decline in the manufacturing sector’s output has also affected trade with industries struggling to cope in a tough business environment, characterised by massive layoffs and closure of some businesses.
Manufacturers are grappling with high cost of energy at Sh11 per kilowatt hour, compared to Ethiopia, where factories are enjoying lower tariffs of between four and five cents per kilowatt hour.
East African Affairs Principal Secretary Betty Maina, said this was a pointer that the country needs to improve the quality and competitiveness of local goods in order to regain market access within the region.
“This has been gradually taking a turn with most of the countries in the region that once relied on our products and commodity resorting to other markets that they have identified cheaper and of better quality,” Maina told the Star in an interview.
Threats from illicit trade are also a major concern for manufacturers. According to the Kenya Association of Manufacturers, local industries are losing at least 40 per cent of their market share to counterfeiters which has “unfairly” reduced the industry’s earnings.
India and China control a major stake of imports to Kenya, latest data shows.
The Kenya National Bureau of Statistics data shows in 2015, Kenya’s exports to Uganda dropped by 30 per cent to Sh15.8 billion, while exports to Tanzania stood at Sh7 billion.
Maina said restrictions and barriers in and out of the three countries had propelled the diminishing trade that was marring the region.
This is despite the East African Community agreement to remove both trade barriers, both tariff and non-tariff , to allow free and effective trade.
“The restrictions have pushed our previous partners to make business deals with alternative markets such as India and China who have spotted a niche in the African market for their products, thus sneaking and taking advantage to sell their wares,” she said.The PS said the government is keen to collaborate with EAC member states to open up the market.
“The trade barriers have made easier for other nations to export goods to the region despite their local availability,” she said.
Kenya exports mainly edible oil, fabrics, food, animal products, tobacco and cement to the region.