Increase in trade, specifically exports, is always a welcome addition to the economy of any given country. For the logistics industry, our joy at additional export demand comes from more than our patriotism: it is also based in our wallets.
Export booms create a myriad of business opportunities in the logistics industry. Warehousing for increased exports would be required, specialized for the different cargo being exported. Firms dealing in freighting, – sea, road, rail or air – will also find demand for their profession in this scenario. Similarly, companies dealing in clearance and forwarding are likely to be spoiled for choice in clients needing assistance with their exports. Kenyan developments that stimulate export growth always have us cheering, and for that, 2013 has been a fantastic year so far.
The signing of the Economic Partnership Agreement between Kenya and the European Union (EU) received attention in mid to late September, and with good reason. This potential partnership provides for preferential duty free access for Kenyan exports into countries within the EU.
A contract of this magnitude would guarantee Kenya much needed tax exemptions on key exports that rely on the European market, such as the agricultural sector, thus avoiding disruption of key income generators such as peas or coffee. The Agreement has been in negotiations since the 2007 expiry of the African Caribbean and Pacific agreement, with the European Union declaring a deadline for October 2014 after which the agreement would be extended to Kenya’s competitors in various fields.
With countries such as Peru or Columbia eager to take over Kenya’s market share in the EU, the possibility of exports which depend on the EU being crippled by an increase in taxes is very real. Flower exports alone faces the redundancy of up to 50,000 jobs in the event of such a catastrophic loss of business, so it is safe to speculate that the government will assent to signing the Agreement, perhaps after further negotiations.
International trade of a more local flavor could likewise experience growth with our neighboring Uganda doing their part to free up trading. In July this year, Kenya’s Finance Cabinet Secretary announced that Uganda had agreed to reduce her list of goods prohibited from import from Kenya. Such lists are put together in a bid to protect local industries by forbidding the import of goods that may be cheaper than those produced locally, effectively robbing local goods of potential customers. Countries also levy heavy taxes on goods named in such lists, again, to ensure that they are unattractive to local consumers.
The original list of goods Uganda had refused to import from Kenya contained 139 items, brought down to just 49 in a show of good faith. As the Kenyan manufacturing industry smiled, we in logistics smiled as well, knowing the anticipated growth in exports also meant more lucrative opportunities for us.
The ability to identify potential opportunities also kept us smiling even as the worrying news that neighboring Tanzania was gearing up to replace the Port of Mombasa as one of the most important and necessary ports in the region. With Tanzania sinking $10 billion in the construction and upgrade of its port at Bagamoyo, we were ecstatic to hear President Kenyatta announce in August that much needed reforms were coming to the Port of Mombasa.
The government’s plan to revamp operations in Mombasa include laying down a multi-billion railway connecting Mombasa directly to Uganda and Rwanda, effectively stamping out the competition in Tanzania with a more convenient option for traders. Plans are also underway to add on to existing docking stations in a bid to ease current congestion at the Port by increasing overall capacity. With more ships and cargo coming to the port guaranteed of a quick and painless clearing experience followed by direct transport to the capitals of Rwanda and Uganda, there is set to be an impressive increase in traffic at the port. This of course means an increase in ways for the logistics industry to do our part in contributing to our economy.
The profit cycle is thus maintained as follows: the country grows in economic leaps and bounds, stimulated by increased revenue from exports, the supply chain management industry grows along with it, supporting export activities at each different level, in turn helping the economy further improve, and so on. We do our patriotic duty to ensure the economic future of generations to come: do you?