Is the Somalia, Kenya trade, on a leveled playing field?

0
627

Kenya which has been struggling to support her local industry would gain more by formalizing trade channels with Somalia while the latter would be a bigger beneficiary if the cargo planes delivering khat could take back fish and other commodities and earn the rebuilding nation some revenues.

In August 2008, a small aircraft delivering Khat from Kenya to Somalia crashed south of Mogadishu   killing all three crew members on board. The crash was blamed on humidity as eye witnesses described the vessel circling twice over the landing zone and eventually hitting a telephone line two kilometres away and crashing

The pilot   identified as a Captain Mwashimba, the co-pilot as Captain Ali and one other man were burnt in the aftermath of the crash. Six years later in July 2014, another tragedy happened, this time on Kenya’s soil. Four crewmen were killed in an early morning crash when a plane carrying another consignment of Khat crashed into a commercial building in the Kenyan capital Nairobi shortly after taking off from JKIA international airport in Nairobi.

Like the 2008 case, the cargo was enroute to Somalia where Kenya has one of her largest markets after the UK and Holland banned the commodity with some arguing Somalia being the last market for Kenyan Khat.

Such is the trend of trade between the two neigbouring countries with most products leaving Kenya for Somalia which is a net importer of goods.

Although reliable data is hard to come by, available records show Somalia mainly imports food, fuel, construction materials, manufactured goods and Khat. Main import partners are: Djibouti, India, Kenya, Pakistan, China, Egypt, Oman, United Arab Emirates and Yemen

Khat, a mild narcotic, is the second top import product after sugar going across the Kenyan border to Somalia.

The Inter-Country trade is part of the huge trade deficit following the Country’s economy remaining highly dependent on imports without substantial corresponding export. These imports mainly comes from Ethiopia (32 per cent), Kenya (23 per cent) as the rest come from the east and the OIC countries.

For instance, in 2013 Somalia ran a trade deficit of 39 per cent of GDP, after importing goods and services worth 62 per cent of GDP and exporting goods worth just 14 per cent. The deficit was financed through remittances (equivalent to 41 percent of GDP) and direct donor support (equivalent to 9 percent of GDP).

The large trade deficit signals opportunities for Somalis to produce for the domestic economy, boost exports, and reduce reliance on imports. Somalia’s imports of USD 705 million in 2010 comprised basic consumer goods, such as vegetables (28 per cent), raw sugar cane (10 per cent), and rice (7 per cent).

A reliable source privy with details on cross border trade between the two countries who chose to divulge in private as the statistics were yet to be officially released told The Somalia Investor Magazine that the business is largely skewed in favour of Kenya.

“Most of what we see from the trend is that most of the goods are brought into Somalia and nothing or very little is taken back to Kenya. The cargo planes seem to be making empty return trips. The problem could be restrictive nature of trade authorities at the Kenyan side or because most goods are taken through the porous border points via land,” said the source with senior access to data by a global organization.

The skewed nature of trade could be a huge favour for Kenya in the event that there are no significant influx of the commodities via the porous land border points as alleged by the source. Somalia on the other hand could be losing as the trade deficit figure continue to soar with the imbalance.

If it is through  that there are goods infiltrating from the Horn of Africa nation into Kenya through the borders, the East African economic giant is also losing in taxation as the goods smuggled in which end up cheaper hurt her market.