The latest World Bank’s Economic Update on Kenya reports that the country relies on a fixed basket of products, which has seen it lose market share in the European Union (EU) bloc.
Kenya lags behind Uganda, Tanzania and Ethiopia as far as export diversification and product mix are concerned. It is steadily losing market share in the EU–its main market for agricultural exports.
Exports offered to the EU have stagnated on the same products year-on-year, including flowers, coffee, tea, avocados and green beans—for more than two decades, it reported.
The horticultural sector in Kenya makes a substantial contribution to the economy through foreign exchange earnings and employment. It faces various challenges, including logistical constraints, market access issues and the impact of climate change.
Kenya’s export strategic positioning needs realignment to conform with global megatrends in environmental sustainability issues, modal cycle time compression, quality and product-mix enhancement, and operational and cost efficiency.
The competitiveness of exports needs to be enhanced through measures and strategies aimed at reducing the administrative burden and costs while maintaining legitimate measures to protect health, safety and revenue.
Kenya should reduce the procedural burden for fresh produce exports by eliminating unnecessary elements and duplication in formalities, processes, and procedures. Additionally, the government should create a conducive environment for investment and expansion of the sector by streamlining taxation and the legal framework.
I recently attended a validation workshop hosted by TradeMark Africa for the study on the establishment of export supply hubs in Kenya.
Establishing export supply hubs will provide benefits such as access to international markets, improved quality control, economies of scale, infrastructure development, and competitiveness. Export supply hubs are centralised facilities expected to streamline the export preparation processes for the international market, enhance efficiency, reduce environmental impact, and ensure compliance with international standards and best practices.
Kenya’s long-term development blueprint, Vision 2030, aims to transform Kenya into an industrialised middle-income country, offering a high quality of life to all its citizens.
The government is promoting the Bottom-Up Economic Transformation Agenda, which recognises the role played by the agriculture and manufacturing sectors in income generation, wealth and job creation, increasing foreign exchange earnings, and poverty reduction.
County Aggregation and Industrial Parks will now be set up in 18 counties after the national and county governments signed an inter-governmental agreement.
The development augurs well with an initiative by TradeMark Africa dubbed the Business Environment and Export Enhancement Programme, which aims to increase green economic growth, create decent jobs and boost competitiveness and enhanced export trade of key commodities such as avocados, mangoes, vegetables and flowers.
At their core, Export Supply Hubs (ESHs) will be transformative forces engineered to provide unparalleled access, elevated competitiveness and facilitate industry growth (quantitatively and qualitatively) – thereby establishing a new paradigm shift in Kenya’s horticultural trade. The three pillars that will characterize the ESH are Efficiency and Access, Competitiveness and Facilitation.
Modal-shift to appropriately embrace both air and sea for international markets is now a necessity. Both improved international logistics and business environments are thus requisites for backward and forward linkages through the ESH.
The development of routes-to-markets like inter-continental Asia and the entire Asia-Pacific for Kenya’s fresh produce exports using multi-modal transport systems have great potential using the ESH-business model.
