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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. Whoever is elected will have to lead the country 2013 – 2017 to a better balance of trade. 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 2012, 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. A taxation of all lands that is registered as private land that is over 500 acres and is touching any of the national and international serviced roads with a depth of 5 km both sides would immediately lead to production of more food supplies. The 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 48 Executive governments that can generate business opportunities, the balance of payment can be reduced through development of industries in Kenya that can 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 be a factor that Kenya could consider 2013 – 2017. This again can be achieved from more production of export goods through better utilization of land.  

Kenya cannot continue to grow trade deficits at the rate recorded in the last 5 years or the Kenya shilling will continue to weaken to its collapse. Unemployment will also reach levels that may become a security problem. The next president may find it important to move toward balancing trade or having a positive Balance of Trade rather than increasing the deficit even more. However, governors can also chip in by luring industries to their counties. 

 

 

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