Lawmakers have given the Trade ministry six months to conduct a comprehensive assessment on the qualification and suitability of trade attachés abroad in what could expose incompetent individuals who have failed to grow or find new export markets for Kenya’s goods and services.
The National Assembly Committee on Trade, Industrialisation and Cooperatives reckons that Kenya’s trade missions abroad have struggled to find new markets for Kenyan goods despite gobbling up a “huge share” of the ministry’s annual budget in allowances payable to attachés.
“An assessment should be conducted to determine if there is a linkage between the foreign markets and the skills possessed by the attachés stationed abroad,” the committee recommended in its report after hearing the ministry’s presentation on budgetary allocations for the financial year starting July.
“This should be achieved by matching the expertise and capabilities of the attaches with specific demands and requirements of the target markets.”
The proposed review, which should be tabled in National Assembly by December, comes at a time the country continues to struggle to diversify her major exports away from traditional tea, horticulture and coffee as well as find new markets.
The ministry officials have over the years blamed the slow shift to value-added exports on fears of “tariff escalation where when you sell a produce raw, you are largely charged zero duty whereas semi-processed or processed products are charged double-digit taxes”.
Official data show Kenya’s top five destination markets of Uganda, the US, Netherlands, Pakistan and Tanzania accounted for about 42.22 percent of the Sh868.55 billion total merchandise export value for 2022.
The share of the Big Five export markets has grown from about 39.92 percent of Sh612.93 billion total goods export value back in 2018, signalling overreliance on traditional destinations.
The slower growth in exports than imports has seen Kenya’s goods trade deficit – the gap between merchandise exports and imports – nearly double in six years to Sh1.62 trillion last year from Sh853.69 billion in 2016.
This has in part been helped by the weakening shilling.
“The committee noted that the offices of trade missions are not achieving value for money spent on sustaining them abroad. In addition, a huge share of the budgetary allocation is spent on allowances of the trade attaches,” the Trade Committee of the National Assembly writes in the report published last week.
“The offices are consuming resources without generating measurable returns such as getting new markets for Kenyan exports.”
Kenya in July 2018, for instance, unveiled the Integrated National Exports Development and Promotion Strategy in a bid to diversify its exports and expand destinations with a key focus on populous Chinese and Indian markets.
Five ambassadors were posted to the two giant Asian economies and tasked with expanding the market for Kenya’s traditional exports of tea, coffee, cut flowers, vegetables and fruits such as avocadoes.
This was expected to narrow the goods trade deficit between the two countries, which have over the years accounted for about 40 percent of exports into Kenya on average while buying less than two percent of goods, with containers going back largely empty.
Kenya’s goods trade deficit with China, however, widened to $3.62 billion (Sh503.18 billion where $1 is equivalent to Sh139) in 2022 from $3.51 billion (Sh487.89 billion) in the prior year, according to data collated by the Central Bank of Kenya.
“The ministry should conduct performance appraisals on the attaches and these assessments should be based on clear and measurable criteria, ensuring that the attaches are held accountable for their performance,” the parliamentary committee notes.
Read: Kenya eyes duty-free deal with 3 countries
“To enhance the effectiveness of trade missions abroad, it is crucial for the ministry overseeing these missions to undertake significant reforms.”
A persistently higher trade deficit, economists say, slows down the creation of new job opportunities for the growing number of skilled youth as most revenue earned within Kenya is spent on buying goods from foreign countries, thereby raising production and job openings in source markets.
A widening import-export gap also piles some pressure on the shilling as the demand for dollars outstrips the supply.
The Parliamentary Budget Office (PBO), the unit which advises lawmakers on economic and fiscal affairs, in 2021 also urged the executive arm of government to close 61 missions and hire foreigners for the country’s diplomacy work to lower the cost of rent and hosting diplomats abroad.
PBO said despite the expansion of Kenya’s footprint across the globe, the destination of Kenya’s exports had remained narrow with only 12 countries accounting for 70 percent of total exports in 2020.
“Honorary consuls offer an efficient diplomatic channel of increasing a country’s diplomatic network as they are more cost-effective than fully fledged missions because of the lower costs attached to maintaining honorary consuls as they… only require to be reimbursed for expenses incurred in offering their services,” the advisory committee wrote in its report.
