Trade is when people exchange goods with another kind of goods. This is called barter trade. Trade also refers to the exchange of goods and services with money.
In traditional societies, trade took place between neighbouring communities. Most communities traded in what they produced. In return, they got what they did not produce.
A place where people meet to trade goods is called a market.
a) Availability of different kinds of goods: people can only trade if they need things they do not produce.
b) Transport: This helps to move goods quickly, and those that are perishable can then be sold quickly before they go bad. Some goods are heavy and need to be transported in lorries.
c) Availability of market or demand for the goods: For example, an increase in population gives rise to an increase in demand for different products. Such items will then become items of trade.
d) Development of industries that produce different kinds of goods.
e) Security or political stability of the country.
f) Markets determine the demand for goods and services. The higher the population, the larger the market.
There are two forms of trade,
Can take place within a community, neighbouring communities, district, or provinces. Internal trade can either be wholesale, retail or hawking.
Is a trade that takes place between different countries. It uses foreign currencies like the US Dollar, Pound Sterling, Japanese Yen and the Euro. The goods that are sold by one country to another are called exports. Goods bought by a country from another country are called imports.
Most exports from Kenya are agricultural products, including tea, coffee, fruit, vegetables and flowers.
Few non- agricultural products that the country exports are cement,soda ash and pertroleum products produced from the process of refining imported crude oil.
Eastern African countries grow similar crops as Kenya. The non- agricultural products, however, are exported mainly to the countries in the African region
Kenya and the Eastern African region have important invisible exports like wildlife, culture and tourism. Trading partners with Kenya and Eastern African region besides European countries are the Middle East countries, the Far East countries, Australia, New Zealand and some African countries.
Imports to Kenya and the Eastern African region include the following:
This chart shows merchandised goods which Kenya commonly exports to the rest of the world.
a) Developing transport and communication.
b) Organising seminars and workshops for investors.
c) Joining international trade organisation to create bigger market.
d) Promoting security.
e) It offers financial support in form of loans.
f) It creates markets by signing trade agreements with international partners.
g) It builds market stalls for traders.
h) Organising trade fairs and exhibitions where traders display their goods to the consumers.
i) The govenment provide subsidies through tax relief for local manufacturers.
Regional trade has given rise to trading blocks. Main trading blocks are discussed below:
ECOWAS was established in 1975 after the member states signed a treaty in Lagos, Nigeria. The fifteen member states are:
• Benin • Ghana
• Liberia • Nigeria
• Burkina Faso • Guinea
• Senegal • Cape Verde
• Guinea Bissau • Mauritania
• Sierra Leone • Gambia
• Corte d'Ivoire • Mali
• Togo
a) To increase volume of trade between member countries.
b) To reduce and even in some cases remove customs duty on goods imported from member states.
c) To trade through the exchange of a common currency acceptable to all member states.
d) The affairs of ECOWAS are managed and run by an elected Executive Secretariat headed by an elected Secretary-General who serves in offi ce for four years.
The main work done by each of the four different commissions involves the following:
a) Promoting trade, customs, immigration, monetary issues and payments. ECOWAS hope that in future they can introduce a common currency to be used throughout the region.
b) Promoting agriculture, industry and natural resources.
c) Handling issues relating to transport, communications and energy.
d) Promoting social and cultural affairs.
a) Political instability in some member states limits trade.
b) It covers a big region with different government structures, culture and language, which limit trading activities.
c) Lack of a common regional currency.
d) Some member states trade more with their former colonial masters than with their neighbouring states.
e) Poor means of transport and communication slows down the movement of people and goods.
This is a trading organisation for Eastern, Central and Southern Africa. It was established in 1982 and was fi rst called the Preferential Trade Area (PTA). Later in 1995, it became known as COMESA. Its member states include:
• Sudan • Burundi
• Comoros • Ethiopia
• Djibouti • Kenya
• Malawi • Egypt
• Rwanda • Zambia
• Swaziland • Uganda
• Eritrea • Mauritius
• Seychelles • Madagascar
• Zimbabwe • DRC
Although the union does not have a common currency, it transacts its business using the PTA Unit of Account which is an acceptable form of payment for goods in the region. The headquarters for COMESA is in Lusaka
(Zambia). COMESA is the largest trading region in Africa.
a) To create a favourable common market for member states with reasonably priced goods.
b) To improve trading activities by offering financial assistance to member states from the regional PTA Bank in Burundi.
c) To promote the economic growth of member states.
d) To eliminate factors that negatively affect trade in the region like: high tariffs and taxation rates, lack of a common currency, poor means of transport and restricted movement of people and goods across borders.
a) Low demand for goods due to production of similar goods.
b) Some member states are more industrialised than others. Therefore, this
creates a trade imbalance as they benefit more.
c) Some countries protect their domestic market by blocking free fl ow of goods and people from other member states.
d) Most of the member states also belong to other regional trading blocks.
e) Some member states do not have strong economies. As a result, they do not have much money to buy goods.
The organisation came into being in 1979.
SADC member states include:
• Angola • Botswana
• DRC • Lesotho
• Mauritius • Namibia
• Seychelles • Tanzania
• Zimbabwe • Malawi
• Mozambique • Swaziland
• South Africa • Zambia
• Madagascar
South Africa joined SADC in 1995 after the defeat of the apartheid regime during the 1994 elections won by President Nelson Mandela.
The SADC Secretariat is based in Gaborone,
Botswana.
a) Its main objective was to reduce over dependence of members on other states especially South Africa.
b) The organisation was intended to help member countries to become self-reliant.
c) The organisation aimed at mobilising resources in the region for the benefit of member states. This involved the development of transport and
communication links, the development and training of manpower as well as
development in agriculture.
d) To help improve transport and communication in the area, the SADC
created the Southern Regional Transport and Communication Commission which was located in Maputo, Mozambique.
The organisation is faced with a number of
problems. The main ones are:
a) Sometimes member countries put national interests fi rst before that of SADC.
b) Different political ideologies have tended to interfere with the operation of the co-operation.
c) The member states are each at different levels of development. This has led to unequal distribution of the economic benefits. This has made some countries unhappy.
d) The group has a weak fi nancial base. Some member countries do not pay their contributions.
e) The member countries produce similar commodities which makes it diffi cult to market their own produce within the region.
a) It creates a large market for goods and services produced in member states.
b) It promotes good relations and understanding among member states
. c) It reduces reliance on expensive goods and services from outside the region.
d) It promotes economic and industrial growth of member states.
e) It increases job opportunities for people in member states. This improves standards of living for the citizens.
f) Member states can collectively bargain for better prices of their export goods.
g) Improved transport and communication facilities to support trading activities.
Business opportunities are chances of doing business or openings of carrying out trade.
Business opportunities in Kenya include:
a) Manufacturing and processing industry.
b) Farming.
c) Transport and communication.
d) Trade.
e) Education.
f) Sports and games.
g) Mining.
h) Fishing.
i) Hospitality industry.
