Getting The Diaspora Included in the Export Sector


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  • By Edwin. N. Kimani

    Early this year, I met guy who had just come back from the United States to attend dowry negotiations of a cousin whom we shared. This meeting was prompted by the constant bugging by mothers and aunts who made sure that we got to know each other. We engaged in a brief chat on his experience there and his interaction with his family back home. His story of frequent calls from family to request support is not uncommon. He noted that his upcountry folks had ‘plenty of land’, kept chicken and cattle, grew vegetables but seemed unable to sustain themselves with all their ‘wealth’.

    On the other hand, I got to give him the view from Kenya. You see, Kenyans are very enterprising and resilient (World Bank and IMF agree with me on this), however, selling chicken, vegetables and other cattle may not really cut if the whole village sells the same thing in the market. Also, a long electioneering period in 2017, increased taxes and inflation turn our pockets and wallets upside down.

     The Kenya’s Narrative

    The stories below reflect the ordinary Kenyans, especially an enterprising and resilient youth who are engaging in enterprise and are in need of accessing new markets. The underlying challenge, is lack of access to new markets for their products, now, this is how the diaspora comes in.

    Munyi, (not his real name) is a coffee barista I met at my previous employment. He knows his stuff. He’s the kind of guy who fixed something to light up your day, get you through a boring early morning meeting or even, make your Saturday afternoon exciting. With the approaching electioneering period, the company had to scale down and he was laid off with the promise that he would be recalled when things stabilized. He, among others, left and sheltered up at their upcountry home. Things got worse when business took too long to stabilize and Kenyan government introduced a raft of taxes in its 2018/2019 budget. The company would never hire him again as it found itself in dire financial straits. He started his own small coffee processing company. I met him a few months ago from a mission to promote his own brand of coffee. I bought a pack and I must truly confess that it tasted really good. If only other people knew about his skill.

    On the other hand, is Andia (also not her real name), an administrator in a research firm. She doesn’t earn enough to sustain herself, so she started growing and selling mushrooms. She read a lot about mushrooms and wishes to expand her market and operations. However, she’s afraid that the market hasn’t embraced her product and thus leaving employment could be a frightful gamble. The job market in Kenya is atrocious as it is now ordinary to hear of Masters level graduates going for a whole year without a job.

    The Diaspora: The Export Economy’s Building Block

    We Kenyans, love the diaspora. Personally, I have seen them help their families back home pay medical bills, construct houses and start businesses among other things. They are those relatives that have helped the economy pull through during the toughest economic of times. I mean, look at the stats from the KNBS, every time Kenyans have found themselves in some tough economic times, the diaspora has risen to the occasion by sending remittances whose value has been in the billions of shillings. But, truth be told, the diaspora has for some time wanted to get involved in the actual nation building, not just as a bailout player but a true economic participant at all times. Also, they have wanted their knowledge and money to play a better role as active players in the Kenyan economy in lifting the economy.

    This got me thinking, of the many ways the diaspora can be involved in the actual economy and to a larger extent, the emerging enterprises in the country. This is by creating market links that have not existed.  A look at the above narratives, it is clear that what the above entrepreneurs need is beyond financial assistance and has a lot to do with market linkages that help them penetrate new and established markets.

    Munyi, would be happy to have his wonderful Arabica coffee enter the United States or Canada. He would grow his business and brand, diversify his market and improve his profit margins. Andia on the other hand would concentrate on her passion of growing mushrooms. Access to the United States would breathe a new lease of life to her business. In creating this market linkages, many would ask, what are the enabling policies that would help us exploit this opportunity?

    Export Enabling Policies

    Back in law school, as I was taking my Masters class on International Trade, Investment and Tax, we joked about how Kenya is willing to sign treaties with almost any country for some of the vainest reasons on earth. But not all, here is AGOA (African Growth and Opportunity Act). In July 2018, the 17th AGOA Forum was held in Washington D.C whose theme was “Forging New Strategies for U.S-Africa Trade and Investments.” This piece of legislation in the U.S is by far one of the most important in creating market linkages between the United States and Africa, Kenya included. This one significantly enhances market access to the U.S for qualifying Sub-Saharan African (SSA) countries.

    Fun fact: Under AGOA, a farmer in Kenya can export live goats, chicken and donkeys among others!

    Under the eligible products list, one sees that AGOA provides duty-free access to textiles, apparel and a list of list of thousands of products.

    Apart from AGOA, Kenya is still part of the Economic Partnership Agreement between the European Union and East Africa. This agreement helps East African citizens export to the European Union duty free. It is actively exploring trade treaties with the Middle East and has currently focused on getting a working trade treaty with China and the U.K

    It is clear that the country has its own ambition of becoming an export oriented economy. To be one, it has enacted The National Trade Policy. This trade policy in particular introduces a trade agenda in several sectors such as agriculture, industry, infrastructure and ICT.

    It creates opportunities for trade-led sector policy formulation to achieve sector specific trade targets. For instance, agricultural and industry policies must be geared towards responding to the national trade agenda of product and destination market diversification. Similarly, energy and infrastructure policies must contribute towards promoting competitiveness of Kenya’s trade sector. ICT, on the other hand must drive trade, in keeping with the global experience, where e-commerce is overtaking traditional commerce because of the savings associated with low cost of trading under e-commerce.

    Apart from AGOA, Kenya is still part of the Economic Partnership Agreement between the European Union and East Africa. This agreement helps East African citizens export to the European Union duty free.

    So, with all these word on policy, how does the Diaspora come in?

    Getting the Diaspora Involved: Creation of the Missing Market Linkages

    The diaspora is the overlooked arrow in export sector’s quiver. A Kenyan in the diaspora could benefit him/herself and the likes of Andia and Munyi by being the market links in the market. They could be involved in the following ways:

    1.      Marketing

    In today’s world, the role of marketing as a market link is too important to be ignored. Large and small enterprises are today competing for the same market and the most innovative and proactive have emerged victors.

    Marketing plays an important role in establishing relationships between customers and the entrepreneurs offering to the market. It gives consumers the confidence to want to try a new product in the market as opposed to situations where the products enter the market without publicity. This makes the marketing function critical in every organization. Marketing shapes the image of the organization, how people associate the organization’s products or services and indeed give people the confidence about their products or services.

    Marketing abroad would provide Munyi with customers in the diaspora and increase the overall confidence of foreign consumers in trying new products. Marketing, as an important market linkage for SMEs, is even more important in gaining a competitive advantage.

    For sure, Munyi would be happy to see awareness of his brand in the United States or Europe. By leveraging on the presence of the diaspora as marketing agents, he will gain a competitive advantage over the big brands crowding the small urbanized middle class in Nairobi. This creates a stream of income for both the one providing the enterprise support services of marketing for Munyi, this being the diaspora, and Munyi himself.

     

    2.      Distributorship

    Entrepreneurs such as Andia and Munyi, generally have two options when it comes to getting their products to end users — selling direct or using distribution. In this case, their limited resources don’t grant them the latitude of enjoying the option of selling their products directly to the consumers abroad. Their way into the vast foreign markets is through distributorship.

    The advantage to distribution is that it allows them to focus on their core business of making products and leaves the selling to the distributor.

    The diaspora can play the role of distributors. Distributors can play the vital role of keeping the lines between Andia and her clients operating smoothly, expedite response times and enhance her reach.

    For example, given the size and scope of the U.S. economy, distributors have long been relied on to serve as a bridge between producers and customers. In the lives of the very enterprising Munyi and Andia, this link is very important. Figures show that in the U.S economy, wholesale distributors make up an estimated 5.75 percent of the gross domestic product and Canada, and employ 3.3 million workers. This sounds great!

    Now back home, we have heard that some of those in the diaspora have trucking companies. This is a great opportunity for both those in such trucking companies and for entrepreneurs in Kenya. Those in the transport industry would distribute the products thus giving the entrepreneurs the much needed presence and the ability to respond to demand.

    3.      Logistics, Warehousing and Packaging

    Munyi has to plan well ahead of his products arrival to the foreign markets. The coffee has to be stored on its arrival. Planning on its delivery to distributors, retailers and even consumers has to be done. It probably has to be repackaged for various reasons ranging from compliance, differentiation to consumer attraction.

    Storage and warehousing comes in handy when the goods arrive in the target (foreign) market. Storage and warehousing allows for planning on distributorship that is executed through a logistics system.

    Packaging would go a long way in protecting the products offered. Product packaging not only protects the product during transit from the entrepreneur to the retailer, but it also prevents damage while the product sits on retail shelves. Packaging also attracts consumers. How a product is packaged may be what attracts the consumer to take a look on the product as is sits on store shelves. For this reason, it is advisable for the diaspora to engage in research on color schemes, designs and types of product packaging that is the most appealing to its intended consumer.

    Warehousing, Logistics and Storage are a very important part of business. It provides storage for the finished goods and also includes packing and shipping of the order. Efficient warehousing provides an important economic benefit to the business as well as the customers.

    A centralized location for Kenyan entrepreneurs’ goods storage help to reduce the production gap. For those providing this services in the diaspora can receive, store, distribute, and ship products with much ease to save time and cost.

    Munyi and Andia, with limited resources, would benefit from a well-organized logistics, warehousing and packaging system. It would organize their business, monitor the flow of their products and help them match demand.

    4.      Inventory Management

    Inventory management involves keeping track of a company’s stocked goods. This helps business owners know when it’s time to replenish products, or buy more materials to manufacture them.
    Effective inventory management is essential for ensuring a business has enough stock on hand to meet customer demand. If inventory management is not handled properly it can result in a business either losing money on potential sales that can’t be filled, or wasting money by stocking too much inventory. An inventory management system can help prevent these mistakes.

    For Munyi and Andia, their inventory is one of its most valuable assets. Their inputs and finished products are the core of their business, and a shortage of inventory when and where it’s needed can be extremely detrimental.

    For these reasons, inventory management is important for businesses of any size. Knowing when to restock certain items, what amounts to purchase or produce, what price to pay – as well as when to sell and at what price – can easily become complex decisions.

    The challenge they will most definitely face is keeping track of their inventory. The diaspora could come in and rescue the situation, while at the same time create income for themselves. Their presence, resource, knowledge of the market could come in handy by managing their inventory, thus helping the budding entrepreneurs keep up with demand.

    Munyi, in his coffee business, will need someone to keep track of his coffee by notifying him on the best time to replenish his products. Being disadvantaged in terms of distance, the diaspora could manage his inventory for him which would help him reach and manage his customer base abroad.

    5.      Trade Shows and Expos

    Trade fairs and expos are a crucial factor in helping new businesses acquires the leads, networks, information and polish they need to succeed in the business world.

    For what they’re worth, trades shows and exhibitions can prove to be brilliant ways to promote individual business as well as collective trade. Moreover, they play a pivotal role in helping businesses meet with other players of the industry which fosters the process of learning. A trade show is essentially an event meant to exhibit the goods and services belonging to a specific industry to the potential buyers and businesses. Exhibitions are also similar in nature, with the only difference being that they are open for general public as well.

    Trade shows and exhibitions can be an excellent way to promote a business and the products and services that it offers. They are also a great way to network with other industry members and grow the customer base exponentially. In addition, trade shows have certain other aspects which are quite promising.

    Munyi, would be happy to piggyback on the fact that Kenyan coffee is the best in the world. Knowing that he is selling the best product in that line of that commodity would drive him to leave a lasting impression on would be leads to his next market.

    The diaspora can organize such events in different states and generate a buzz on the anticipated participants of such events. This brings awareness of Kenyan goods to markets abroad which in turn opens new markets for local entrepreneurs.

    Conclusion and The Upshot

    The diaspora should no longer be Kenya’s lone economic silver bullet during economic hardships. It is important that we explore ways of having them as part of the building block of Kenya’s export economy. For this to happen, pooling of knowledge from experts both locally and in the diaspora is necessary in order to explore policy frameworks that allow for export and creating of market linkages.

    Knowledge of the policy framework exists both locally and in the diaspora. For example, in the United States, Kenyan lawyers admitted to practice in the various states exists. Their knowledge of the various policy frameworks in the United States such as AGOA is important in trade facilitation and creating market linkages.

    In Europe, an exploration of the EAC – EPAs and harnessing the Commonwealth trade advantage is important.

    Professionals and business owners such as truck owners and marketers among others are equally important in creating and sustaining the market linkages. The above examples are not conclusive as there exist many ways that could create market linkages but share a glimpse of how this can be done.

    The underlying message in this article is that the diaspora is the unexplored and untapped resource to the achievement of an export economy. For the diaspora, it is important to consider the creation of market linkages, between the local economy and the foreign markets.

    About The Author and the Company

    Edwin Kimani is an Advocate of the High Court in Kenya. He is currently pursuing International Economic Law at the University of Nairobi. He has extensive knowledge and working experience in the legal sector. He is passionate about helping enterprises grow and seek new markets.

    He is the managing partner of Avikele Legal Services, a professional service and consulting firm that has had engagements in East and Central Africa. The firm focuses on areas of tax, transactions, compliance and assurance, commercial dispute resolution and well as offshore services.

    For more about the firm please see avikeleservices.com. Follow our Knowledge Center page on Medium

    The rest of this is a Second article

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