Kenyan Industrialization Impact on Trade and Economy

Trade has existed for centuries, gradually changing and growing. With international trade, countries
have different levels of abilities in producing certain goods or services over others. This difference arises
from factors such as geographical locations, cost and efficiency wise in producing such goods and
services. In spite of this, trade remains a key factor in almost every nation, leading to some of them
establishing themselves as economic powerhouses in the world.
In Kenya, there is a negative trade balance. The average value of exports is at about 6.1 billion US dollars
while the imports is at about 17.1 billion US dollars. This gives us a negative trade balance of about 10
billion US dollars. The average GDP for Kenya is 79 billion US dollars and the GDP per capita is about
3,290 US dollars.
The negative trade balance in Kenya has been rising consistently over the past decades. In 1995, it was
only as low as 656 million US dollars. This rise can be attributed to several factors but one major one is
the nation’s failure to improve its level of industrialization.
Kenya still remains a developing country whose economy only ranks at 63 in the world in terms of GDP.
This is due to the subpar level of industrialization. One sure way of growing a nation’s economy is
through production from industrialization.
This level of industrialization has led to Kenya being more a consumer and less a producer. Furthermore,
some of the products Kenya exports are exported in raw form and later exported in refined form, at
higher rates. A good example is coffee. With such forms of trade, it would only make sense that the
nation has a negative trade balance.
Another reason is the government’s failure to support local industries. There are several industries that
have been on the decline or completely shut down in the country in the past decade. Amongst these is
the sugar industry, which at the moment is on the brink of collapse. Over the past years the government
has resolved to importation of the product, despite the nation’s own ability to produce it.
The fishing industry has also suffered for various reasons lately. Despite having a portion of the second
largest fresh water lake in the world, the nation has been importing fish in the recent years, further
killing the fish industry. With this being a product that the nation should potentially be exporting, the
economy is taking a real hit because of this failure.
The negative balance of trade also arises from corruption within the Kenyan industries. Corruption has
always been a major problem in African nations and Kenya is no exception. The nation ranks highly in
terms of corruption, and this has led to poor management of industries. It has also led to the
discouragement of foreign investors and hence a reduction in capital. All these lead to the local
industries either failing to grow or collapsing.
The largest economies in the world make a huge amount from exports. A nation like Singapore ranks
highly and it is known for being a big manufacturer, which leads to them having more exports. If the
Kenya is to improve its economic status it should work towards a positive trade balance. This can be
achieved through eliminating the challenges facing its local industry and improving its production levels.
The government should also adopt better trade policies.