A (Brief) History of Kenya Trade


Kenya's Trade deficit means less consumption of what is made and produced in country by its population

Kenya’s mountainous trade deficit threatens small-scale industry nationwide


by Mariga Thiothi/pictures: Julian Njorge


Back in the 1980s and 90s Kenya made its entry into the global economy through the World- Bank mandated Structural Adjustment Programs and it’s been mixed results for the standards of living for ordinary citizens ever since.


Over the years international trade has benefited Kenyans in many ways including growth of industries, lowered cost of goods and creation of opportunities, but it has come at a high price on the environment and on the back of the small-scale farmers. Such large trade deficits are detrimental to an economy and it gets progressively worse.

The programs involved the introduction of free-trade that broke the ceiling of the previous protectionist system policies that had government parastatals controlling all industries and agriculture and it created an economic shift away from this system with the intention of empowering private citizens.


The eventual effect however has seen an increase in the gap between the rich and the poor. The majority of Kenya’s wealth being held by a paltry 0.1 percent of the population. Kenya was ranked 8th on the World Poverty Clock global extreme poverty list and Oxfam projects 2.9 million more people living in extreme poverty within the next five years, if the socio-economic disparity continues at the current rate.


The biggest questions that have emerged over the decades have been around the impact of the global trade system on developing countries and ‘open trade’ and who it benefits. Due to various factors including higher costs of production and exportation of raw materials, Kenya has found itself in a recurring balance of trade deficit meaning that it imports significantly more than it exports. In the first 10 months of 2018, Kenya imported goods worth close to Kshs 1 Tn, compared to exports worth Kshs 290 Bn, which affects all sectors of the economy.


This trade gap creates fundamental disparities which lead to the weakening of local staple industries, evidenced by the epic collapse of the local sugar industry. That same trend also threatens other industries such as fishing and textiles. The long-term effect of this kind of trade deficit is can also be seen in Kenya’s rising youth unemployment and the vulnerability to economic downturns nationwide. “We’re supporting multinational monoliths at the expense of citizens who are voiceless against capitalism and eventually working against ourselves” says Natasha Mwangi, a Tax Associate at Deloitte. “There’s great potential for economic growth through supporting local companies through locally retained profits, increased employment and increased demand for local raw materials.”


Capitalism favours multinationals and corporations, and independent local makers and farmers are struggling to thrive in this modern consumerism model. An example of this would be Kenyan tea and coffee farmers. Kenyan tea and coffee is one of Kenya’s largest exports and it’s one of Kenya’s main brands. While the trade volume and crop output looks good on paper, local farmers don’t see the bounty of their harvest. While these farmers struggle to make ends meet, the big profits on these high-priced commodity items are made by middlemen and retailers. The global coffee industry is worth between $50 billion to $100 billion but only one sixteenth of this reaches the small scale farmers. A Fairtrade International and True Price pilot study across 465 countries in Asia and Africa including Kenya, found that only in Indonesia did coffee provide a sustainable income for a family. Kenyan coffee farmers this year received the lowest price they had in 5 years with coffee going for 27 Kshs per kilo. A cursory look at a local high quality brand of local coffee on Kenyan shelves show that their products retail at 1,850 per kilo. A stark disparity. A recent article by the Standard Newspaper on the struggle for local farmers, showed how lack of protection of local farmers had led to the near collapse of local agricultural sectors and called for urgent intervention.


Over the years international trade has benefited Kenyans in many ways including growth of industries, lowered cost of goods and creation of opportunities, but it has come at a high price on the environment and on the back of the small-scale farmers. Such large trade deficits are detrimental to an economy and it gets progressively worse.


The idea of bolstering local trade is not new, but it has become a more crucial agenda that must be adopted by the general public in order to avoid the collapse of local industry. It really comes down to the consumer themselves creating change through their local consumption habits.


Sapna Chandaria, a Co-Director at Kenya’s newest conscious trade organisation, Afridukas, says that “Kenya must pay more attention to internal investment of industry and trade, and look at bolstering internal trade. Trending conversations around local trade are not just new media hype, but rather a crucial discussion of economic empowerment and the survival of the small scale agricultural industry on which this country relies.”


Afridukas is a much needed local initiative to promote local growers, and makers and kiosk owners. Based on fair trade and local trade principles, Afridukas buys from local smallholder farmers, eliminates the middle-man and makes products more affordable for consumers while giving better margins to kiosk owners

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