Kenya’s trade data published through May 2020 shows that the country experienced a significant improvement in exports in the first quarter of a very difficult year.
The East African investment hub also saw a moderation of imports which led to a marked decline in the trade deficit, according to Brookings. The paper notes that domestic exports performed “extraordinarily well under the circumstances”, with incremental growth since 2019.
As if to support the need for diversification of trade in the country, the Brookings paper notes that not all supply chains were disrupted by the covid-19 crisis.
Some Kenyan exports like tea and fruit surpassed levels of years past showing that imports were the hardest hit by the crisis leading to a decline estimated at a quarter over the three months since the crisis began in March.
Brookings notes that capital goods imports declined markedly with projections that if the trend continues, it could negatively impact long-term economic growth.
“However, the fall in imports of consumer goods could also set the scene for a revitalization of national and regional industry, as local producers step up to fill the void created by the sharp lull in imports,” adds the paper.
Among the worst hit were the Kenyan textile exports to the United States as well as flowers and shipments of vegetables to the European Union which were severely affected by the suspensions of international flights and the collapse of demand in target markets.
Kenya is the major exporter and importer of the East African Community (EAC) accounting for an estimated 46 per cent of exports and 41 per cent of imports in the region. With the curfews occasioned by the crisis, there was a notable sharp decline in intra-regional trade where Kenya’s exports fell dramatically. Uganda, Tanzania, and Rwanda are the countries which suffered the most due to the fall in Kenyan exports due to lockdowns and cross-border disputes linked to the crisis.
The paper notes that in April, Kenyan tea exports peaked at almost 58,000 tonnes which is a record high. Similarly, fruit exported within the period surpassed the volume levels reached during the 2019 season with Egypt, Pakistan, the United Arab Emirates (UAE), and the U.K. receiving most of these products.
For Uganda, data from the authorities reveal that informal trade collapsed in April 2020 since cross-border small-scale trading was prohibited.
“Border communities are highly dependent on this trade, and the closure of the frontiers has entailed additional hardship in these communities,” adds the paper.
To avoid such a drastic fall in trade in the EAC, the paper calls for a coordinated region-wide approach for intra-regional trade in challenging times to ensure that countries in the region are cushioned from the crises-occasioned fallouts.
Another option which has emerged as the panacea to the continent’s trade imbalances is the African Continental Free Trade Agreement (AfCFTA).
Brookings stresses the urgency of implementing the trade agreement since its rapid implementation with additional trade facilitation measures, could significantly mitigate covid-19’s negative impact on the continent’s economy.
Kenya and Rwanda retooled their passenger aircraft for cargo with Rwandair cargo seeing imports and exports increase from US$57 million in April to US$134 million by May 2020.
To show how much air cargo had grown in Rwanda, only 18 per cent of Rwandan exports were shipped by air in May 2019 while this figure had grown to 73 per cent in May 2020.
While the other EAC countries seem to be trailing Kenya, it is good to note that the country is also responsible for more than half of manufacturing value-added produced by the Community.
“This implies that it has some competitive advantages in merchandise goods (beyond primary exports). In sum, trends in monthly Kenyan trade data are likely to provide an excellent general picture about what is happening to trade within the regional block,” adds the paper.