 Welcome back. We are talking about Kenya export and imports. Yes, there is a benefit economy. Does it boost our economy or does it boost other countries economy by exporting to our country? And also we are trying to figure out, is the imports proportioned to the export? Is there any deficit and how can we cap up that deficit? Yes, to help me discuss this in our studio tonight is our guest, Brian. We are there. Karibusana, Brian to the studio. Thank you for having me. Feel at home. Thank you. Remember you can be part of this conversation using Y254 updates or Y updates. Or you can tweet me directly at www.mr.co.nz. You can send any question or your feedback. I'll be happy to sum up some of them during the show. But first let's just jump into the questions tonight, the discussion tonight. Because last week we saw President Huru Kenyatta, right? Went to Russia and he came back bearing gifts. The trade ties, the Russia Kenya business board council expect the trade to be enhanced between these two countries. Because currently we have a trade deficit of billion of dollars. So I don't know. Does it bear any fruit or is it just one of those agreements the President signs? I think it will bear benefits for us as a country because if you look at the Russia Kenya relations, the President has been pursuing them right from 2017 when he was invited for the Belt and Road Initiative in China. That is the first time Mr. Huru and President Putin they met and that's the first time they had the conversation about improving the relations between Kenya and Russia. So I believe this was not just a normal agreement. It was something that is meant to actualize. Okay, let me take you back a little bit because as much as we are signing this agreement, we need to export our products as well. There is production of tea, kofi, but you've seen a lot of this production going down. Or is it oversupply of the market? Do you think we produce enough to export and how is the production so far in 2019? I think we do produce enough export because now the capacity that you produce your product is dependent with the available market. So if we can be able to get a wider market, definitely we are going to expand our supply, our production capacity. So the current rate at which you have been producing it is coherent with the available market. So if we get an extra market in Russia, definitely our production is going to increase. But you know Kenya is the second largest, I think second largest exporter to Russia, right? Yes, and oversupply, we've had oversupply of tea. You've seen KTDA going through some rangos the past few weeks with these oversupply of flowers. To an extent even the flower company Finlay closing down, which is expected to close down I think in December 25th and employees are rendered jobless. Because they say these oversupply of these products in the European markets, which leads to job losses. So should we scout for other markets? Because it's the European markets where mostly we export these flowers and tea, should we scout for other markets to export these products? I think if we have been having an oversupply in Europe, actually Europe has been our main market for hortikacha in agricultural products. So I think then approaching Russia and any other market is a good initiative because we are now trying to escape where they have been an oversupply and looking for a better market where by now we can take this overflow of production. So we should scout for other markets apart from Russia, Europe and China. How do we compete in the international markets surely because there is oversupply? Other countries will also be thinking about let us also move to other countries apart from Europe, China and Russia. Let us move to America, let us move to other continents as well. How do you compete? How do you compete to this market? I think in international trade this idea of comparative advantage whereby you may have Kenya and the likes of Sri Lanka or even China producing tea and even Russia produces some amount of tea although to a small quantity. So but each country focuses on its own comparative advantage whereby you may find that Kenya has I think the best quality of tea or its second to Sri Lanka. So I think we do compete based on our agriculture by improving our quality, the quality of our products. So our competition in the market has been good and that is why our agricultural exports have always been high. Okay, that's an advantage. It is good, it is high but other countries are also coming up with good and high things in high production which is very true. So do we need marketing strategies? I think what we need right now is diversification. We stop looking at how we are going to increase our agricultural exports and we look at how we are going to export more services because now the current economy in the world is now moving into services and actually if you look at the agreement from the recent visit by our president nowhere is he looking at agriculture, he is looking at the general trade, energy, culture, tourism because now the government has realized that if you continue dwelling on agriculture then you are not going to increase our exports and therefore it's time we focus on other things including inviting those countries to invest in our country. And also our exports to East Africa has been declining as well? Ya, because East Africa is largely agricultural based. So now if you are producing tea here, there is another tea producing in Uganda. And it is maize in Tanzania. Exactly. Where will you export? So I think that is one of the reasons why our exports to the EEC has been declining because now each of us is having his own similar products. You said the president is actually encouraging Russia to invest in Kenya who the energy in scholarships and all that. What else can Kenya sell? We can sell the labor. Because now we find that these countries they have been having a decline in population growth and in the current economy when you're having a decline in labor growth it's a threat to the economic growth in general. And therefore as Africa it's upon us to focus on improving our skills and our human capital so that we can now attract them to use our labor to make their production like the way China did in India. So now because you have realized that you don't have the capacity to create more jobs at your, it's kind of like our economy is saturated. Now let's invite those who have more capacity to use our labor. Yes apart from labor and other things, how can we make our production and our services more competitive? For them to actually take our labor services, how do we make it competitive? Competitive. I believe we haven't focused much on services and therefore before we get to the point of making them more competitive it's about to innovate. Our economic complexity has been very low. We are 86th in the world in terms of economic complexity and the concept of economic complexity is based on the availability of information and how that information is being transferred into economic activity and therefore we first of all have focused on improving our economy by availing information and making sure that that information has been transferred into the economy through creation of new services and therefore when you have new services now then you can focus on how to make them more competitive. Making them more competitive. Let me just take you back to the tea. You've heard tea rangos and people making laws people losing their jobs in the tea industry as well as the hot culture. How can we make these products attractive? I don't know how do we de-assify these products for them, for us to be able to actually sell and improve the economy and even improve the farmers' life because they are farmers who depend on this. So I think the fact that tea sales have declined over the last year doesn't necessarily mean that we have a problem as a country because international trade has been down over the last year it's not about Kenya alone, it has been trade in general and therefore the decline in the tea exports in 2018 may have been as a result of the decline in general international trade so it doesn't necessarily mean that our quality has gone down so therefore it's about waiting for the geopolitical state of the world to stabilise and now trade is going to boom again to be normal again but we've seen something that is very interesting about this country is how we produce our coffee, export it import it as refined coffee why can't you produce our coffee instead of exporting it as raw coffee? In international trade you realise that it's a give and take for example our second export commodity is refined petroleum but our major import is refined petroleum so you wonder how are we exporting refined petroleum and then importing it again even Russia they'll buy tea from Kenya and you may find them selling some more for example we import wheat yet we export some wheat it's about give and take so you produce this amount and you give it to other countries who have better technology and let them manufacture it and refine it and then you buy it that's how trade is built when it comes to international market my thinking is that the Ministry of Trade the Ministry of Foreign Affairs should be at the forefront fighting for the common business man just to ensure that they actually access this market but by question is there enough support for this trader? I think presently there may not be enough support but going forward I think there will be enough support the government has realised that we have been having a policy challenge whereby we haven't been having policy to attract foreign investments and therefore in the recent past the government has been focusing on refining our policy to make sure that Kenya is attractive to other countries and therefore grow our trade for example the government is looking up to introducing a holistic policy in terms of investor attraction previously you find that governments focus on attracting investors but when they land in our country you leave them not to do business which in the current customer service doesn't work after attracting them you have to give them a better environment so that they are going to stay not that someone comes and invests in your country for one year and then the second year they are out you have to allow them to come and make the environment suitable so that they can stay for longer for 2 decades, 50 decades like the likes of Del Monte so you can actually access the market let me ask you, is this trade tag really benefiting? very beneficial very beneficial for us for example over the last 2 years since the last election our government has been I would call it obsessed with the big four agenda and therefore and if you look at the key point of the big four agenda which are food security affordable healthcare manufacturing and affordable housing we do not have as a country enough domestic ability to actualize the big four and that is why everywhere our president has been going he has been drumming up support for other countries to come and support us and therefore I believe Rashi is in a position to assist us in actualizing some of those points for example manufacturing Rashi is a giant in the manufacturing sector so they are in a better position to help us achieve that goal number two when you have a better time with Rashi we stand to benefit in terms of scholarships in science and technology Rashi is a giant it's not the best but they are among the top and therefore we are in a better position to receive scholarships for our country people and therefore we are going to have better scientists in future and again we realize that the hydroelectric power that we have been relying on as a country is insufficient the reason for which our government has been aiming at introducing nuclear power and Rashi is among the best I think if not number two it is number one so I think there is a lot to benefit from these ties a lot Okay from my thinking and what we have observed in the market right now the trade ties it only leads to other countries exporting to us we import more than what we export for instance, let's take for instance China let me just tell you have you ever gone to Lithuania made in China there is no made in Kenya or made on whatever it's just made in Kenya does this tie lead to more import than export? I think for an agreement to result to the now the effect of China what you are having right now it's not a problem with the tie it's a policy the government hasn't defined after you come to Kenya as a foreigner what are your limits what can you do and what can't you do and therefore we cannot limit ourselves from getting more agreements with other countries because the ones we are having have been maybe hitting our people so it's better for us to continue seeking more variety of ties we get from the United States we get from the EU India, Japan China and any other and when they come we define our policy to make sure we benefit from these ties so therefore seeking more ties is a good idea so you say ties is a good idea and policy final comment as we end the show so I believe the current initiative that our government is making of seeking to introduce a holistic policy investment policy is a brilliant one because previously we have been having investment policies that have been conflicting and therefore you find that someone an investor has come to invest in our country but then the environment is so hostile that's why we have been having even franchises and foreign companies closing down so I think the initiative in aligning the policy is a brilliant one and it's going to help us in fact the moment the policy is finetuned we won't be having to go to other countries to beg them to invest it will be now like a magnet attracting them to invest in our country well thank you so much Brian Wetherer that was Brian Wetherer economic analyst and that's all we have for you here so I want to thank everyone including Asunta Brian and Timu in another Brian elsewhere for making this production a success also Hilary Abig thank you to you, Faith Yvonne and the rest of the crew well don't go anywhere because the buzz is up next good night and God bless you