The Effect of Trade Policies on the Performance of Commercial State Corporations in the Agricultural Sector in Kenya

Abstract

Trade policies influence businesses in many ways, such as create advantages and opportunities for organisations. Conversely, they can place obligations and duties on organisations in that they may enhance or restrict the ability of the businesses in fulfilling their goals and objectives. Trade policies do have the same effect in the markets for both private and public sector players but while private sector businesses have mechanisms to counter the adverse effects of these policies, the public sector corporations being used for strategic interventions have no other recourse because it is wholly owned by the government and thus are must abide by the instructions or directives given even if it will have an adverse effect on the bottom line. The key elements of trade policies are tariffs, duties, subsidies and quotas. The study reviewed the effect of trade policies on the performance of commercial state corporations in the agricultural sector in Kenya. The study established that the importation of cheaper goods results in unfair competition with locally produced goods of similar nature, leading to reduced sales of locally produced goods and forcing local manufacturers to cut down on production, thus having an adverse effect on the organization’s performance. Subsidized products have a negative effect on the organization’s marketing strategies and causes unfair competition between private businesses and subsidized government businesses. The study recommends that the findings be used to advocate for more autonomy in the management of the state corporations in order to achieve their mandate to be more competitive. It further recommends that further studies be carried out on the effect of trade policies on the performance of commercial state corporations in other sectors of the economy.