Kenya tops in intra-EAC trade as Covid cuts foreign imports

Kenya recorded a jump in trade value with her East African Community peers in the third quarter of 2020, as the Covid-19 pandemic paved way for the growth of intra-regional trade.

The total volumes shipped from Kenya (exports) to the region were valued at Sh165 billion in quarter three (July-September) 2020, picking up from slow performance of Sh130 billion in the second quarter when the impact of Covid-19 was rife on regional economies.

Pre-covid, the volumes were valued at Sh175 billion (January-March), a survey by TradeMark East Africa, United Nations Economic Commission for Africa (UNECA) and African Economic Research Consortium notes, with Kenya recording a strong performance as the year ended, buoyed by the manufacturing sector.

Dubbed 'Waving or Drowning– Impact of the Covid-19 pandemic on East African Trade', the report notes an increase in industrial supplies (non-food) and capital equipment from Kenya to her neighbours.

Overall, the region's economies remained strong during the year with intra-EAC trade growing on the account of reduced imports from international markets mainly China, occasioned by the pandemic's disruption on the global supply chain.

Uganda, a key trading partner with Kenya, was the second biggest exporter in the region with quarter three volumes closing at Sh137.4 billion up from Sh91.6 billion.

Tanzania's expports to the region were valued at Sh133 billion, recovering from a low of Sh10.1 billion in the April-June quarter.

Another notable performance was from Rwanda which though on the lower end, the economy managed to export goods worth Sh55.7 billion to her peers, up from Sh32 billion in quarter two.

Uganda was the biggest trading partner with Kenya with exports from Kenya to Uganda mainly being palm oil and its fractions, iron or non-alloy steel, petroleum oils and salt among other goods.

Intra-EAC trade hit a negative 110 in April when countries closed their borders to mitigate the spread of the virus.

It started picking in May in three countries (Kenya, Uganda and Burundi).

“Kenya and Uganda (South Sudan’s main regional trading partners and on whom the country is dependent for most of its essential imports), show only a modest disruption in the case of imports from Uganda, and a very significant increase in imports from Kenya,” the survey reads in part. 

Adoption of measures to minimize disruption on the main transport corridors while still observing the Covid-19 health protocols also helped boost intra-regional trade, according to the survey, despite increased transit time along the two corridors serving the region.

These are the Northern Corridor which runs from the Port of Mombasa into Uganda and other landlocked countries, where transit time increased to an average 10.5 days between Mombasa and Malaba, from seven days.

The time taken to move cargo between the port and the Kenya-Uganda border of Busia increased to 16.6 days from 8.3 days.

The Central Corridor which runs from the Port of Dar es Salaam also recorded delays with transit between Dar es Salaam and Kigali increasing to 10 days from an average of 4.6 days.

Dar es Salam-Bujumbura ( Burundi) had a transit period of 7.3 days up from 5.3 days while moving from Dar es Salaam to Kampala took 7.3 days from an average of six days.

“We need to ramp up trade facilitation efforts to spur innovation, and we urge the government to incentivizes priority goods so as to protect lives,” TMEA chief executive Frank Matsaert said during the report launch on Wednesday evening.

Dr Mama Keita, Director of UNECA in Eastern Africa, said: "Given the potential of trade to promote economic growth and sustainable development, there is an urgent need to diversify countries' economies and export base if they are to be more resilient to external shocks and register strong and sustained growth rates in the future."

Latest Kenya National Bureau of Statistics–Leading Economic Indicators, shows the value of Kenya's domestic exports rose 6.4 per cent in 10 months to October last year.

Total exports (including re-exports) hit a high of Sh532.9 billion in value compared to Sh499.9 billion in a similar period the previous year.

Domestic exports ( originating from Kenya) for January to October closed at Sh464.9 billion, an increase compared to Sh437 billion worth of exports shipped out of the country in a similar period in 2019.

Imports during the period went down, improving the balance of trade deficit which stood at about Sh6.5 billion from Sh8 billion, even as total volumes of trade dropped.

Total import value for the year to October was Sh1.341 trillion, a drop compared to Sh1.486 trillion the country spent on imports in a similar period the previous year.

Uganda was the leading destination for the country's domestic exports with food and beverages, industrial supplies (non-food), fuel and lubricants, machinery and transport equipment as top exports for the country.

Pakistan which takes up 38 per cent of Kenya's tea exports was the second export market despite a drop in volumes of teas exported since the onset of the pandemic in March.

Other top export destinations were Netherlands(mainly flowers), UK, US, Tanzania, Egypt, Rwanda, UAE, Germany and France.

China continued to dominate as the top import source market for Kenya during the period, accounting for Sh293.1 billion worth of goods that came into the country, followed by India where the country purchased Sh156.8 billion worth of goods.