Earnings from exports continued to grow increasing by 19.9 per cent to Sh270 billion in the first quarter of the current financial year, or quarter three of 2023, up from 225.2 billion same period the previous year.
Latest data by the Kenya National Bureau of Statistics (KNBS) shows the total value of imports slightly went down to Sh648.6 billion from Sh659 billion the previous year, even as the Far East led, by China, remained the top source, with the country spending at least Sh267.1 billion from that market.
The government statistician has attributed the lower spending on imports mainly to a decline in the value of imported petroleum products, which decreased from Sh180.1 billion in the third quarter of 2022, to Sh147.8 billion, pointing to gains from the government-to-government deal.
Similarly, expenditure on imported iron and steel, and chemical fertilizers reduced by 32.2 per cent and 72.4 per cent, respectively, over the review period.
Other commodities that registered declines were medicinal and pharmaceutical products (4.8%), textile yarn, fabric, and related products (13.2%), paper and paperboard (17.9%), structures and parts of structures of iron, steel or aluminium (45.1%) and liquefied propane and butane (17.1%).
“ In contrast, expenditure on imported sugars, molasses and honey more than doubled to Sh15.2 billion in the third quarter of 2023, while that of imported industrial machinery rose from Sh60.1 billion in the third quarter of 2022 to Sh 70.8 billion during the review period,” KNBS noted.
Additionally, there was an increase in the value of imported unmilled wheat; and animal and vegetable oils and fats of 42.5 per cent and 19.3 per cent, respectively, in the same review period.
Analysis by Broad Economic Category (BEC) classification showed that in the third quarter of 2023, the bulk of import expenditure was on non-food industrial supplies, and fuel and lubricants, jointly accounting for 57.5 per cent.
The expenditure on commodities under food beverages category went up by 43.1 per cent from Sh65.8 billion in the third quarter of 2022.
The overall reduction in imports against an increase in exports however helped reduce the country’s trade deficit as the African market remained the leading export destination, mainly the COMESA and East Africa Community neighbours.
Trade deficit improved from Sh433.8 billion to Sh379.3, depicting an improvement in the balance of trade.
“The rise in earnings from exports was largely boosted by increased domestic exports of tea and horticulture,” KNBS said.
The current account balance improved to a deficit of Sh122.5 billion compared to a deficit of 211.6 billion in a similar period of 2022.
Similarly, merchandise trade deficit narrowed from Sh373.1 billion to Sh326.2 billion in the same quarter of 2023, and mainly supported the improved current account balance.
During the period, there was an increase in earnings from exports to Uganda (27.7%), Tanzania (32.1%), South Sudan (64.4%) and Democratic Republic of Congo (78.6%).
Specifically, there were increased domestic exports of cement clinkers to Uganda; lubricants and food preparations to South Sudan; wheat flour, food preparations, and preparations of organic-surface active agents to DRC and re-exports of kerosene type jet fuel to Tanzania.
The value of exports to COMESA was the highest at Sh87.6 billion followed by EAC (Sh77.9 billion), Far East (Sh41.6 billion), and European Union (Sh38.8billion), while the rest of the world accounted for Sh81.5 billion.
The government is keen to expand exports and reduce reliance on imports, with the EU, China and the US among target markets.
It is banking on among others, the Economic Partnership Agreement with the European Union signed in Nairobi last month, to grow its exports and cut the huge trade deficit, even as it taps Foreign Direct Investments.
“It assures us of an expanded, lucrative and sustainable market, enhancing trade and investment opportunities,” said President William Ruto during the signing at State House.
The country is also keen to seal a Strategic Trade and Investment Partnership (STIP) with the US, whose negotiations are ongoing.
It has also been pushing for bilateral trade ties with other individual countries including China, South Korea, Japan and India, among others, as it seeks markets mainly for agricultural produces, with local value addition before exporting a key focus area.
