•Expenditure on merchandise imports rose by 17.5 per cent to Sh2.5 trillion as the country’s trade deficit hit a new high last year, despite growing exports volume.
•Earnings from exports of goods grew by 17.4 per cent to Sh873.1billion in 2022, the Economic Survey 2023, released yesterday indicates.
Kenya’s expenditure on merchandise imports rose by 17.5 per cent to Sh2.5 trillion as the country’s trade deficit hit a new high last year, despite growing exports volume.
Earnings from exports of goods grew by 17.4 per cent to Sh873.1 billion in 2022, the Economic Survey 2023, released yesterday indicates.
The growth in total exports was however not sufficient to offset the growth in imports, resulting to the widening of the balance of trade deficit to Sh1.62 trillion.
This was up from Sh1.41 trillion in 2021, when the value of imports was at Sh2.15 trillion, which was a 30.9 per cent increase from Sh1.64 trillion in 2020.
The high imports equally offset gains made in exports earnings which had grown 15.5 per cent to Sh743.7 billion, up from Sh643.7 billion the previous year.
Last year, increase in import expenditure was largely on account of continued increase in imports of petroleum products, the government survey indicates, which amounted to Sh597.7 billion, accounting for nearly a quarter of the total import bill in 2022.
According to the Kenya National Bureau of Statistics, there was an increase in expenditure on imports especially due to increased international prices of petroleum products, amid the continued weakening of the Kenyan shilling against currencies of key trading partners.
“This resulted to a higher growth of imports as compared to total exports, widening the trade balance to a deficit of Sh1,617.6 billion in 2022,” KNBS says in the report.
During the year, Kenya spent Sh597.7 billion on petroleum products.
Other major spending was in machinery (Sh308.5 billion), iron and steel (Sh150.6 billion), fats and oils (Sh145.8 billion) and plastic articles (Sh101.3 billion).
Tea recorded the highest earnings of Sh163.3 billion “due to improved international tea prices and was the leading export commodity in 2022.”
Other top earners were horticulture (Sh152.3 billion), apparel and clothing (Sh47.3 billion), coffee (Sh37.1 billion) and Sh29.4 billion from titanium ores.
The total volume of international trade in goods grew by 17.5 per cent to Sh3.4 trillion from Sh2.8 trillion in 2021.
Africa remains the biggest export market for Kenya with goods worth Sh357.7 billion sold within the continent last year, as East African Community accounted for majority of the volumes.
It was followed by Asia, Europe, Middle East then the US.
China remained Kenya’s biggest import source with the country importing goods worth Sh452.6 billion last year, up from Sh441.4 billion in 2021.
UAE toppled India, which has been the second top source in recent years, mainly as a result of high petroleum imports.
Imports from the two countries were valued at Sh407.4 billion and Sh230.9 billion, respectively.
The new government is keen to increase exports in the short to medium term, mainly riding on trade deals currently under negotiation, and renewed bilateral ties with key allies.
For instance, the Strategic Trade and Investment Partnership with the US, is expected to help Kenya tap at least five per cent of the US market, which has the potential to earn the country more than Sh2 trillion in export revenues annually.
The US is the largest export destination of Kenya’s apparel, accounting for over 90 per cent of garment exports every year.
Kenya is also expecting to sign an Economic Partnership Agreement with the European Union in June, a post Brexit deal.
This is expected to liberalise trade in goods on a mutual basis, giving Kenya duty-free access to the EU market for all exports and partial and gradual opening of the Kenyan market, including agriculture and fishery products.