Posted on January, 26, 2022 at 09:37 am
Kenya’s competitiveness in the export market has eroded in the last decade, stifled by a lack of entry by more productive companies and specialisation in commodities that have low demand growth.
The competitiveness erosion has particularly affected the agriculture and manufacturing sectors, with the latter identified as key in transforming Kenya into an industrialised, middle-income country by 2030.
The International Monetary Fund (IMF), in an analysis of the non-price competitiveness of the Kenyan economy, says that the country’s ability to grow its exports is also hampered by barriers to entry.
This is most prevalent in sectors with a high concentration of State-owned enterprises, corruption, poor access to finance, and non-tariff barriers in trading partners.
“The lack of dynamism in the exports sector seems to be the main explanatory factor for the loss of competitiveness as well as specialisation in products with low demand growth and subject to competition from producers from relatively low-income countries,” says the IMF.
“The Kenya Association of Manufacturers (KAM) pointed out that export growth has been driven primarily by existing products in existing markets with little new product or market discovery. As such, Kenya may be able to improve export performance and competitiveness by facilitating more dynamism in the export sector.”
Source: Business Daily