Rédaction Africa Links 24 with Daily Nation
Published on 2024-02-01 21:00:00
Kenya is currently facing a critical point in its economic development. The value of the shilling has declined significantly against major world currencies, reaching a record high of 160 to the US dollar. This depreciation has also affected the value of the shilling compared to other regional currencies such as those of Uganda and Tanzania.
The consequences of this depreciation are far-reaching, driving up the costs of imports for essential goods such as food, fuel, raw materials, and medicine. These increased import costs have led to inflationary pressures and significantly impacted the overall cost of living in Kenya.
To reverse this trend and prevent further devaluation of the local currency, Kenya can explore an export-led growth strategy. This approach holds the potential to mitigate the free fall of the shilling and improve the country’s economic prospects.
Export-led growth has proven effective for developing economies facing currency depreciation and trade imbalances. By focusing on harnessing its manufacturing potential and diversifying export markets, Kenya can bolster its economy and restore the value of its currency. An assessment by the Kenya Association of Manufacturers identified potential export growth across various sectors such as textile and apparel, leather and footwear, pharmaceuticals, and building and construction, among others.
A notable case study is South Korea, which was once one of the world’s poorest countries with a GDP per capita lower than that of Kenya. However, by adopting export-oriented policies and prioritizing economic growth, South Korea significantly improved its economic standing. Kenya can learn from this example and consider adopting a similar approach to achieve high growth trajectories.
While emphasizing export-oriented policies, Kenya should also consider import substitution, particularly in the agriculture sector. The country currently spends billions of dollars on importing basic food items, presenting an opportunity for domestic production and self-sufficiency. Collaborative efforts between the government, private sector, and other stakeholders will be crucial for the successful implementation of an export-led growth strategy. Strong partnerships will enable a coordinated approach towards revitalizing Kenya’s currency and strengthening its manufacturing sector, ultimately benefiting the nation’s citizens.
In conclusion, Kenya stands at a crucial juncture in its economic journey, and embracing an export-led growth strategy could be the key to reversing the depreciation of the shilling and improving the country’s economic resilience. By leveraging its manufacturing potential, diversifying export markets, and fostering collaboration among stakeholders, Kenya can pave the way for a brighter economic future and elevate its global standing.
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