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Kenya Balance of Trade

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Kenya Balance of Trade

Balance of Trade is the difference between the imports and exports revenue of goods in a nation. Kenya balance of trade can be said to be headed in the wrong direction as deficits continue to grow. Currently Kenya balance of trade is over Kshs 60 billion deficit every month and some months recording close to Kshs 90 billion. In short we could have deficit in balance of trade of Kshs 1 trillion in the near future, which is about 15% of the current GDP. In 2003 this total was about Kshs 100 billion yearly which means this has grown close to 1000%. GDP has only grown by less than 50%. This also means that most of the growth in GDP in the last 10 years has been based on Imports.

How can this be corrected?

After finding Oil and Natural gas, this can be one way to correct this. This will mean reduction or zero imports of oil consumed domestically and further export would mean these natural resources impacting BOT from both exports and imports.  

Utilization of our Kenya land more efficiently is something that should also be on the table. Currently Kenya land already serviced by roads and not utilized is approximately 5 million acres. The deficit in BOT caused by food importation would instantly be reduced. 

Kenya is now ripe for car assembly plants, technology industries, textile production plants and others. With 47 County Governments that can generate business opportunities, the BOT deficit can be reduced through development of industries in Kenya to produce some of the goods imported and reduce the growth of trade deficit.

Kenyans abroad can lead this by using Constitution Article 185 (4) A county assembly may receive and approve plans and policies for—(a) the management and exploitation of the county’s resources; and (b) the development and management of its infrastructure and institutions.

More agricultural exports and better prices could also reduce the BOT deficit. This again can be achieved from more production of export goods through better utilization of land.  

Kenya cannot continue to grow BOT deficits. Kenya shilling will continue to weaken if BOT deficits continue to grow. Unemployment will continue to increase. 


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