- The East African region and the Common Market for Eastern and Southern Africa (COMESA) were the single biggest trade blocs that consumed Kenya’s exports.
- According to the Kenya National Bureau of Statistics (KNBS), the value of Kenya’s exports to the EAC totaled $496.7 million (Ksh77.9 billion) up from $431 million (Ksh67.7 billion).
- There was an increase in earnings from exports to Uganda (27.7%), Tanzania (32.1%), South Sudan (64.4%) and the Democratic Republic of Congo (78.6%).
Kenya’s exports to her East African Community (EAC) neighbours increased in the third quarter of 2023, as the country continued to push volumes amid efforts to cut the high import bill.
This comes as Africa increasingly remained Kenya’s biggest export market, even as economies edge closer to operationalizing the African Continental Free Trade Area (AfCFTA).
The East African region and the Common Market for Eastern and Southern Africa (COMESA) were the single biggest trade blocs that consumed Kenya’s exports during the period under review (July-September) 2023, official government data indicates.
According to the Kenya National Bureau of Statistics (KNBS), the value of Kenya’s exports to the EAC totaled $496.7 million (Ksh77.9 billion) up from $431 million (Ksh67.7 billion) in the corresponding period in 2022.
Comesa, EAC big markets for Kenya’s exports in Africa
There was an increase in earnings from exports to Uganda (27.7 per cent), Tanzania (32.1 per cent), South Sudan (64.4 per cent) and Democratic Republic of Congo (78.6 per cent).
“Specifically, there was 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 Democratic Republic of Congo; and re-exports of kerosene type jet fuel to Tanzania,” KNBS said in its latest balance of payment and international trade report.
The value of exports to the COMESA market totaled $558.5 million (Ksh87.6 billion) during the quarter, up from $454.6 million (Ksh71.7 billion). At the same time however, imports from the two blocs dropped to $173.4 million and $221.8 million, from $179.2 million and $212.3 million, respectively.
During the third quarter of 2023, total exports reached $1.72 billion, translating to a growth of 19.6 per cent compared to the same quarter of 2022.
The largest share was export revenues from the African continent valued at KSh119.7 billion ($763.1 million), constituting 44.4 per cent of Kenya’s overall export earnings in the third quarter of 2023.
The high exports to the EAC region have been buoyed by among others, ease of movement supported by the EAC common market and integration, with Uganda and Tanzania remaining Kenya’s biggest trading partners in the region.
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China remains biggest import source
During the period, expenditure on imports amounted to US$4.1 billion (Ksh648.6 billion), indicating a decrease of 1.6 per cent from the third quarter of 2022.
“This decline was mainly attributable to a decline in the value of imported petroleum products, which decreased from Ksh180.1 billion ($1.1 billion) in the third quarter of 2022 to KSh147.8 billion ($942.3 million) in the third quarter of 2023,” KNBS explained.
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 per cent); textile yarn, fabric, and related products (13.2 per cent); paper and paperboard (17.9 per cent); structures and parts of structures of iron, steel or aluminum (45.1 per cent); and liquefied propane and butane (17.1 per cent).
In contrast, expenditure on imported sugars, molasses and honey more than doubled to $96.9 million (KSh15.2 billion) in the third quarter of 2023, while that of imported industrial machinery rose from $383.3 million (KSh60.1 billion) to $451.4 million (Ksh70.8 billion) during the review period.
Additionally, there was an increase in the value of imported unmilled wheat and animal and vegetable oils and fats by 42.5 percent and 19.3 percent, 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 percent.
Notably, in the period under review, the expenditure on commodities under the food and beverages category went up by 43.1 percent from Ksh65.8 billion ($419.5 million) in the third quarter of 2022.
China remained Kenya’s biggest import source, leading the Far East markets, including India.
Kenya’s total imports from the Far East were valued at $1.7 billion, a slight drop from $1.8 billion in the same period the previous year. Imports from other parts of the world were valued at $1.79 billion.
Imports from the European Union, a key trading partner with Kenya, were valued at $334 million, compared to $337.4 million the previous year.
Kenya’s exports – key goods and products
The value of exports to Asia increased by 30.3 per cent, rising from $343.6 million (Ksh53.9 billion) in the third quarter of 2022 to $447.6 million (Ksh70.2 billion) in a similar quarter of 2023.
This growth can be attributed largely to the increase in domestic exports of tea to Pakistan, goat meat to the United Arab Emirates, and re-exports of kerosene-type jet fuel to Saudi Arabia.
However, despite the overall growth in exports to this region, exports to China and Singapore declined by 26.2 per cent and 84.2 per cent, respectively.
Revenue from exports to the European Union (EU) increased by 21.9 per cent in the third quarter of 2023 compared to the corresponding quarter of 2022, primarily boosted by an increase in domestic exports of cut-flowers and avocados to the Netherlands.
Conversely, over the same period, earnings from exports to America dropped by 26.8 percent, mainly due to decreased domestic exports of titanium ores and concentrates and macadamia nuts to the United States of America,” KNBS said.
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The import bill by market source
The highest proportion of total import expenditure in the quarter under review was from the Asian region, accounting for 67.1 per cent.
The import bill to the Middle East increased marginally despite a downward surge in the value of imports from Oman. This decrease was counteracted by an increase in the value of imports from both the United Arab Emirates and Saudi Arabia.
On the other hand, import expenditure to the Far East Asia declined by 6.4 per cent in the quarter under review, largely due to a decline in imports from South Korea (74.9 per cent), Taiwan (75.7 per cent), and Malaysia (18.5 per cent).
Total imports from the EU dropped to $334.1 million (KSh52.4 billion) during the third quarter of 2023 from $397.2 million (KSh62.3 billion) in the same quarter of 2022. This decline was predominantly caused by a decrease in imports of base oils from the Netherlands.
The import bill to the Russian Federation rose by $42.7 million in the review period, mainly driven by increased importation of wheat from this source.
In the quarter under review, import expenditure to the African continent reduced from $490.3 million in the third quarter of 2022 to $470.5 million, translating to a decrease of 3.9 per cent. This reduction was partly contributed to by a decrease in imports of maize from Tanzania and sugar from Swaziland.
Conversely, there was an increase in imports from the American continent, mainly driven by an increase in imports of wheat, soya-bean oils, and its fractions from the US and sugar from Brazil.
Balance of Payments
In the three-month period, Kenya’s current account balance improved to a deficit of $781 million, compared to a deficit of $1.3 billion in a similar period of 2022.
Similarly, the merchandise trade deficit narrowed from $2.4 billion to $2.1 billion in the same quarter of 2023 and mainly supported the improved current account balance.
Earnings from exports continued to grow, increasing by 19.7 percent amid increased export earnings from tea and horticulture.
During the quarter under review, receipts from international trade in services declined by 5.1 percent to $1.2 billion, while service payments reduced by five percent to $956.3 million.
These developments resulted in a surplus of $230.7 million in the services account balance, reflecting a reduction of 5.8 per cent.
Remittance flows from Kenyans living in the diaspora grew from $728.7 million in 2022 to $993.9 million in the corresponding quarter of 2023, resulting in a 35.2 per cent growth in the surplus of the secondary income account.
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