KENYA S TRADE WITH POLAND

Transcription

1 KENYA S TRADE WITH POLAND Trade Statistical Analysis Report Prepared BY EXPORT PROMOTION COUNCIL Page 1 of 17

2 Table of Contents EXECUTIVE SUMMARY Introduction: Kenya Poland Bilateral Trade Trend of Kenya Poland Trade Kenya s Exports to Poland Kenya s Imports from Poland Potential Exports to Poland: Analysis for Kenya s potential export products to Poland Coffee (HS: 0901) Cut-Flowers, fresh or chilled (HS: 06) Tea (HS: 0902) Vegetables, fresh or chilled (HS: 0709) Leguminous Vegetables, shelled fresh or chilled (HS: 0708) Preserved fruits-pineapples (HS: ) Tobacco and tobacco products (HS: 24) Conclusion and Recommendations Conclusion Recommendations List of Figures: Figure 1: Kenya-Poland Trade Trend... 6 List of Tables: Table 1: Kenya s Exports to Poland... 7 Table 2: Kenya s Imports from Poland... 8 Table 3: Kenya s Potential Exports to Poland Page 2 of 17

3 EXECUTIVE SUMMARY The total volume of trade between Kenya and Poland has remained generally low and the trend declined in the last one year to only US $ 31 million in 2011 from US $ 37 million in Over the period 2007 to 2011 the trade balances were in favour of Kenya in except for two years, 2009 and Kenyan imports from Poland were mainly textile articles, machinery, electronics and vehicles; while her exports to Poland were mainly a few agricultural commodities. On one hand, Kenya s export to Poland grew on average by 19% between 2007 and 2011, rising from US$ 7.9 million in 2007 to US $ 17.5 million in Kenya s main exports to Poland in 2011 were tea which accounted for over 93% of the total exports to the market. Other exports products were canned pineapples, cut flowers, coffee, fish, and sisal bags. Interestingly, Kenya s key exports to EU like vegetables are missing in her exports to this market and the flowers, fruits and coffee are of negligible amounts compared to what is imported into the market. The is despite the existing preferential trade for the African Caribbean Pacific (ACP) member countries and the EU, which means Kenyan products have no tariff barriers for most of the products exported into Poland On the other hand, Kenya s imports from Poland grew on average by 50% between 2007 and 2011, rising from US$ 3.9 million in 2007 to US $ 13.5 million in Kenya s main imports from Poland included textiles articles/worn clothing, paper, electrical/ electronics, machinery, motor vehicles, mineral fuels, articles of rubber, articles of iron/steel, prefabricated buildings, chemical products among others. This report highlights some products in which Kenya could further her trade interest with Poland such as coffee, tea, horticulture (vegetables, fruits and nuts, cut flowers), articles of apparels, animal/vegetable oils, leather, processed tobacco and products, processed fruit and fish and footwear. However, some Page 3 of 17

4 interventions recommended to be undertaken to improve exports to Poland. These include; carrying out market studies, organizing trade fairs & exhibitions to facilitate entry of new products and also bilateral trade negotiations to bring down some of entry barriers like non-tariffs among others. Page 4 of 17

5 TRADE BRIEF BETWEEN KENYA AND POLAND 1.0 Introduction: The Republic of Poland, has a population of about 38.4 million (2012), making it the sixth largest European Union member. Poland is therefore potentially an important trading partner of Kenya in view of the existing preferential trade for the African Caribbean Pacific (ACP) countries, and the ongoing EAC-EU EPA trade negotiations which builds on the EU-ACP trade arrangements. Similarly Kenya s membership to the EAC common market and COMESA presents a large captive market for Poland s exports. Kenya is the largest economy in the East African region, and is strategically located on the eastern coast of Africa making her the gateway for trade to land locked EAC countries, Mombasa being the most important port. Nairobi enjoys extensive infrastructure making it the regional hub for air transport, serving major markets like Europe, Middle East and other African countries; and is also the regional hub for trade and finance in East Africa. Poland was the only country in the European Union (EU) to avoid recession as a result of the global financial crisis. Its economy grew by 4.4 per cent in 2011, an improvement from 3.9 per cent in 2010 and 1.7 per cent in Inflation in 2011 was 4.2 per cent, up from 2.6 per cent in Kenyan economy also grew by 4.4 per cent in 2011, a drop from 5.6 per cent in The International Trade Centre trade data of 2011 indicates that Poland imported goods from the world worth US$ 203 trillion, while Kenya s exports to world for the same period were valued at US $ 5.85 billion. The indicative potential exports for Kenya to Poland stood at US$ 5.84 billion, considering that Kenya s exports to Poland was valued at only US$ 17.5 million in There is therefore significant scope for increasing trade between Kenya and Poland. Page 5 of 17

6 2.0 Kenya Poland Bilateral Trade 2.1 Trend of Kenya Poland Trade Figure 1: Kenya-Poland Trade Trend Source: International Trade Centre (ITC) database, 2012 The volume of trade between Kenya and Poland remains generally low and the trend declined in the last one year. Total trade increased from US $ 11.8 million in 2007 to US $ 30 million in 2009 and to US $ 31 million in Over 2007 to 2011 period, the trade balances were in favour of Kenya in except for two years, 2009 and Kenya exports to Poland grew by 19% over the five year period, from US $ 7.9 million in 2007 to US $ 17.5 million in 2011, while her imports grew by 50% rising from US $ 3.9 million in 2007 to US $ 13.5 million in Kenyan imports from Poland were mainly textile articles, machinery electronics and vehicles; while her exports to Poland were few agricultural commodities. The values of Kenya s exports to Poland, from 2007 to 2011 have remained low over the five year period despite the fact that Europe countries of absorbs Page 6 of 17

7 about 26% of Kenya s exports. European Union, of which Poland is a member, remains an important market for Kenya s horticulture (cut flowers, vegetables, and fruits), tea and coffee. Due to the existing preferential trade for the African Caribbean Pacific (ACP) member countries and the EU, Kenyan products have no tariff barriers for most of the products exported into the EU region, and this advantage should have boosted Kenya s exports into Poland. Kenya s imports from Poland have also remained low in the period under review. On the whole, the reasons behind the low volume of trade between the two countries need to be investigated with view to addressing the underlying factors, especially Kenya s exports of horticulture to her important market/region. 2.2 Kenya s Exports to Poland Table 1 below, Kenya s exports to Poland were worth US $ 17.5 million in 2011 and on average increased at 19% annually between 2007 and Table 1: Kenya s Exports to Poland Product Label Kenya's exports to Poland Poland's imports from world Kenya's exports to world Value in 2011, USD millions growth in Share in value Kenya's between exports, , % %, p.a. Value in 2011, USD millions growth in value between , %, p.a. Share in world imports, % Value in 2011, USD millions growth in value between , %, p.a. Share in world exports, % All products , , Tea , Canned pineapples Cut flowers Coffee Live Fish, , Calculating ; accounting machine , Precious stones Sacks of jute/sisal for packing of goods Articles of wood , Source: International Trade Centre (ITC) database 2012 Page 7 of 17

8 Kenya s main exports to Poland in 2011 were tea which accounted for over 93% of the total exports to the market. Other exports products were canned pineapples, cut flowers, coffee, fish, and sisal bags. Interestingly, Kenya s key exports to EU like vegetables are missing in her exports to this market and the flowers, fruits, and coffee are of negligible amounts compared to what is imported into the Poland market. 2.3 Kenya s Imports from Poland Table 2: Kenya s Imports from Poland Product Label Kenya's imports from Poland Value in 2011, USD Millions growth in value , %, p.a. Share in Kenya's imports, % Poland's exports to world Value in 2011, USD Millions growth in value , %, p.a. Share in world exports, % Kenya's imports from world Value in 2011, USD Millions growth in value , %, p.a. Share in world imports, % All products , , Textile articles, worn clothing Paper and paperboard, articles , Machinery, , , Electrical, electronic equipment , , Mineral fuels, oils products , , Razors and razor blades , Rubber and articles thereof , Articles of iron or steel , Stopper, caps , Chemical products , Furniture, prefabricated buildings , Food preparations,-protein concentrates , Vehicles , Organic chemicals , Optical, medical apparatus , Essential oils, perfumes, cosmetics , Fibreboard of wood or other ligneous materials , Dairy products, Milk and cream , Beverages, spirits and vinegar Preserved fruits-apricots, strawberries, beaches , Pharmaceutical products , Source: International Trade Centre (ITC) database 2012 Page 8 of 17

9 As shown in the above table, Kenya s imports from Poland were valued at US $ 13.5 million in 2011, and have generally grown by an annual rate of 50% over the period 2007 to The main imports from Poland included textiles articles/worn clothing, paper, electrical/ electronics, machinery, motor vehicles, mineral fuels, articles of rubber, articles of iron/steel, prefabricated buildings, chemical products among others. Page 9 of 17

10 3.0 Potential Exports to Poland: Table 3: Kenya s Potential Exports to Poland Product Label Kenya's exports to Poland Poland's imports from world Kenya's exports to world Value in 2011, USD millions growth in value , %, p.a. Share in Kenya's exports, % Value in 2011, USD millions growth in value , %, p.a. Share in world imports, % Value in 2011, USD millions growth in value , %, p.a. Share in world exports, % All products , , Tea , Cut flowers Edible vegetables Coffee Tobacco and tobacco substitutes Animal, vegetable fats and oils 0 1, Inorganic chemicals 0 1, Articles of apparels 0 1, Soaps and detergents Canned pineapples Articles of apparels 0 2, Raw hides and skins and leather Sugars and sugar confectionery Beverages, spirits and vinegar Precious stones Edible fruit and nuts 0 1, Fish , Sacks of jute/sisal for packing of goods Footwear, 0 1, Source: International Trade Centre (ITC) database 2012 Kenya s potential exports to Poland are mainly; coffee, tea, horticulture (vegetables, fruits and nuts, cut flowers), articles of apparels, animal/vegetable oils, leather, processed tobacco and products, processed fruit and fish and footwear. Further analysis of some of the potential products is briefly described below. Page 10 of 17

11 3.1 Analysis for Kenya s potential export products to Poland Coffee (HS: 0901) Kenya s exports of coffee were valued at US$ 224 million in 2011 and grew by 9% per year over the 2007 to 2011 period. Coffee accounted for about 4% of Kenya s total exports in 2011 and her key export markets included Switzerland (23%), United Kingdom (12%), Germany (12%), USA (11%) and Belgium (11%), all with combined share of 69%. Although this show Kenya s coffee export markets are not highly concentrated, there is still need for market diversification to other countries such as Poland. Globally, the coffee exports amounted to US $ billion in 2011 and trend growth was 17% annually over the 2007 to Leading global exporters of coffee were Brazil (22%), Vietnam (7.8%), Germany (7.7%), and Colombia (7.4%). On the other hand, the world leading importers on the other hand were USA (21.7%), Germany (15.6%), France (6.5%) and Japan (5.7%), all representing about 50% of world demand, worth US $ 36.2 billion. Coffee imports into Poland were valued at US$ million in 2011 which accounted for about 1.5% of global imports of the product. During the period , import of coffee into Poland increased on average by 25%. The competition in the market however emanated from Germany, Vietnam, and Brazil, who controlled about 77.0% of total market share. Coffee imports from Kenya represented only 0.1% of Poland demand, while the other African countries, Uganda and Ethiopia, accounted for 2.2% and 1.6% shares respectively. It is worth noting that Germany is one of Kenya s leading markets for coffee, and therefore may be re-exporting to this market and Kenyan coffee can be directly exported to the market. Note: Brazil is the world's largest coffee producer and produces around 25% of the world's supply of coffee. Eighty per cent of coffee from Brazil is Arabica, which is also Kenya s major type. Page 11 of 17

12 3.1.2 Cut-Flowers, fresh or chilled (HS: 06) Horticultural products, which include cut flowers, are now Kenya s second leading commodity export after tea. The country exported a total of US$ 512 million worth of cut flowers in 2011 which accounted for 2.4% world share. The exports grew marginally at only 1% over the period 2007 to Her major export destination for cut flowers included Netherlands, United Kingdom, and Germany which absorb a share of 53%, 22%, and 6% of her total flower exports respectively. Kenya s export market for cut flowers is therefore highly concentrated, a fact which call for exploration of other potential markets for diversification. The Cut flower export to world is however dominated by Netherlands which controls up to 53% of the total world exports valued at US $ 21.5 billion in World exports of flowers grew at 2% per year between 2007 and Other key players in world flower export market include Colombia (5.9%), Germany (4.8%) and Italy (4.4%) with combined market shares of about 15%. Poland imports of flowers were valued at US $ million which accounted for about 1.4% world share. Netherlands and Germany were the key suppliers of cut flowers into Poland market with market shares of 74.6% and 9.9% respectively. Other suppliers included Denmark and France with 3.5% and 2.5% respectively. Imports from Kenya represented only 0.1% of Poland s total demand for cut flowers. It is probable that most of Netherlands imports from Kenya are value-added and get re-exported to world markets including Poland Tea (HS: 0902) Kenya exported tea worth US$ 1.2 billion in 2011 which represented about 18.6% of world total exports and the trend growth was an increase by 13% between 2007 and Her Key export markets were in Pakistan (19.2%), UK Page 12 of 17

13 (16.9%), Egypt (16.6%), Afghanistan (13.3%) and United Arab Emirates (5.2%) respectively of the total exports of this product. In the global scene, key competitors included Sri Lanka (23.3%) with export market valued at US $ 1.4 billion in 2011 with trend average growth of 9% annually between 2007 and Imports of this product into Poland were worth US $ 139 million (about 2.3% world share) and increased on average by 18% annually over the period 2007 to The major suppliers to the market were UK (28%), Kenya (13.1%), and Sri Lanka (13 %), respectively, whose combined market share totalled 54.1% Vegetables, fresh or chilled (HS: 0709) Kenya s exports of vegetables were valued at US $ 57.7 million in 2011 and grew by -22% per year over the period 2007 to United Kingdom is a major export destination for Kenya s vegetables accounting for up to 76% of total exports of the products. Other key export market for Kenya s vegetables include Netherlands and South Africa with shares of 13% and 5% respectively. The key world players in the vegetable export market included Netherlands, Spain and Mexico, with market share of 18%, 14%, and 13% respectively of the total supply worth US $ 10.9 billion in The world supply of the vegetables grew on average by 3% per year between 2007 and Poland imports of vegetables were worth US $ 110 million in 2011 and the growth of imports averaged 10% annually between 2007 and The main suppliers of this product to the market included Spain, Netherlands, and Germany, who control market share of 47.4%, 25.1%, and 8.7% respectively. Imports of vegetables from Kenya were worth only US$ million represented about 0% of the import market. Over reliance UK alone (accounting for over 76% of Kenya s total exports) exposes the country to the adverse dynamics in UK market and impacts on the income of workers and farmers dependent on the vegetable exports. Other Page 13 of 17

14 markets such as Poland need to be explored with a view to mitigating the exposure on UK market Leguminous Vegetables, shelled fresh or chilled (HS: 0708) Kenya s total exports of leguminous vegetables in fresh chilled forms amounted to US $ 153 million in 2011, and were mainly destined to United Kingdom (63%), Netherlands (15%) and France (9%). The exports grew on annual average by 26% between 2007 and The combined market share of top three exports market destinations was approximately 87% which shows very high market concentration and therefore the need for market diversification. The world leading exporters included Morocco, Kenya, Netherlands, and USA with relative market shares of 19.8%, 12.9%, 8.9% and 8.2% respectively of total supply worth US $ 1.2 billion in Imports of this product into Poland were worth US $ 1.92 million (about 0.2% of world imports) and increased on average by 14% annually over the period 2007 to The major suppliers to the market were other EU countries, Czech Rep., and Netherlands, whose combined market share totalled 53.9%. Kenyan market share was 5.2% Preserved fruits-pineapples (HS: ) Kenya exported preserved fruits (pineapples) worth US$ 52 million in 2011 which represented about 4% of world total exports and the trend growth was a decrease by 5% annually between 2007 and These products accounted for 1% of Kenya s total exports. Key export markets were in Europe and included; Spain, Germany, Netherlands, and Italy which accounted for 19%, 19%, 13% and 9% respectively of the total exports of the product. In the global scene, key export players included Thailand (51.5%), Philippines (15%), Indonesia (13.1%), and Kenya (4%), who controlled a total of about 84% of world export market valued at US $ 1.3 billion in 2011 with trend average growth of 4% annually between 2007 and Page 14 of 17

15 Imports of this product into Poland were worth US $ 22.7 million (1.6% of world total imports) and increased on annually by 1% between 2007 and The major suppliers to the market were Thailand (74%) and Germany (11.6%). Other suppliers to the market were Indonesia (5.5%), Kenya (4.2%) and France (1.4%) Tobacco and tobacco products (HS: 24) Kenya s exports of tobacco and products were worth US$ million in 2011 which represented about 0.6% of world total exports. About half of these products are accounted by cigarettes exports. The trend growth was an increase by 11% between 2007 and The tobacco and products accounted for 4% of Kenya s total exports. Key export markets included; Egypt, Somalia, Sudan and Uganda which accounted for 30.1%, 14.1%, 8.9% and 6.3% respectively of the total exports of the product. Globally, key exporters included Germany (14.3%), Netherlands (14.2%), Brazil (7.5%), and Poland (4.6%), who all controlled a combined share of 31% world export market valued at US $ 39.4 billion in The export trend growth between 2007 and 2011 was an average annual of 5%. Poland s imports of tobacco and products were worth US $ million in 2011 (about 1.4% world share), which increased on an annual average by 12% between 2007 and This was sourced mainly from Brazil, Germany, USA and France who all accounted for 51% market share. Kenya s exports were worth only US $ 0.34 million (0.1% share). This does not compare well with African suppliers to the market, namely Malawi, Tanzania and Uganda, who respectively supply the market tobacco worth US $ 27.3 million (4.3%), US $ 17.2 million (2.7%) and US $ 5.1 million (0.8%). Page 15 of 17

16 4.0 Conclusion and Recommendations 4.1 Conclusion This analysis reveals low trade volumes between the Kenya and Poland which has remained relatively constant over the last five years. Kenya s key exports to EU like horticulture (e.g. vegetables) are missing in her exports to this market and the flowers, fruits, and coffee are of negligible amounts compared to what is imported into the Poland market. This is despite the existing preferential trade for the African Caribbean Pacific (ACP) member countries and the EU (Poland as a member), of which Kenyan products have no tariff barriers for most of the products exported into the EU region, and this advantage should have boosted Kenya s exports into Poland. It is therefore important that to increase the trade volumes between them, the two countries must have bilateral agreements to remove trade barriers in order to enhance trade. The country also need to directly export products (such as horticulture and coffee) that may have been re-exported through key EU markets. Kenyan government must also try to promote more products especially those currently present in other neighbouring European countries. The potential products which need to be developed to suit market conditions in Poland include among others, coffee, tea, horticulture (vegetables, fruits and nuts, cut flowers), articles of apparels, animal/vegetable oils, leather, processed tobacco and products, processed fruit and fish and footwear. Since Kenyan products have no tariff barriers for most of the products exported into the EU region because of the existing preferential trade for the African Caribbean Pacific (ACP) member countries, the country must undertake market survey to understand the reasons for low exports to the market. Analysis of consumer and quality preferences and other norms in the market need to be investigated and information disseminated to exporters with a view to undertaking appropriate adaptation in the products. Page 16 of 17

17 4.2 Recommendations Following the analysis, the following recommendations may be considered: (a) (b) (c) (d) There is need for enhancing bilateral trade agreement between the two governments to improve on market access especially to bring down nontariff barriers between the two countries. Product specific market expansion strategies including participation in Trade Fairs, Trade Missions in collaboration with relevant Trade Support Institutions need to be explored to enhance penetration of the identified products in the Poland market. Collection of information/market intelligence pertaining to market access requirements for potential products including tariffs and non-tariff barriers, consumer preference, packaging & labelling requirements and suitable distribution channels. The Kenyan Mission responsible for Poland to facilitate collection and dissemination of trade leads/inquiries for the benefit of Kenyan exporters, and also compile comprehensive importer s database for the identified products for dissemination to Kenyan exporters, EPC and Kenyan Trade Support Institutions. Page 17 of 17