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-Nature of Kenya’s imports and the unfavourable balance of trade: Most of the imports are heavy industrial materials and finished products. These products are expensive as compared to Kenya’s exports thus results in a large deficit balance of payment. As such Kenya’s balance of trade is unfavourable due to the trade deficit.
-Value of Kenya’s Exports: Kenya’s exports are mainly based on processed raw materials. Minerals and processed agricultural materials from Kenya are generally bulky and of low value. Thus the total production and export cost is not commensurate with the profit accrued from such sales. Furthermore, the marginal profit gained cannot compare favourably with the heavy payment made for imports.
-Pattern: The flow of trade still follows colonial patters where former colonies tend to trade more with the former colonizers.
-Transport and communication network not well developed between Kenya and other African countries. This affects the flow of goods to and from these countries.
-Smuggling: Smuggling has had serious effects on the trade between Kenya and her neighbours. Some people sneak in goods from other countries and at the same time export Kenya’s products to such countries through the black market. Such trade is detrimental to the economic growth of the country because such traders avoid paying taxes.
-Nature of Kenya’s export: Export earnings depend on the quality of goods exported and the demand for them on the international market. Variations in demand result in the fluctuation of prices of the goods in world market. The imposition of quotas regulates the supply from each country to avoid any economic glut, which has negative effects on Kenya that depends heavily on particular commodities for export. Coffee, a major export from Kenya, has for example, suffered with the introduction of quotas by International Coffee Organization. The result has been low payment to coffee farmers. Given the fact that Kenya’s exports are mainly agricultural, they are vulnerable to climatic changes, pests and diseases. The fact that most of the other African countries also produce agricultural goods and other primary products the demand for Kenya’s goods among the neighbouring states is reduced.
maurice.mutuku answered the question on August 15, 2019 at 14:11
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