China closing in on India as Kenya’s top source of imports

The growing trade with Asian countries, reflects the decision by the Kenya to turn more to the East for economic growth. FILE/TEA Graphic 

By PETERSON THIONG’O The EastAfrican
 

 

In Summary

• Though China has been the more aggressive hunter of trade opportunities in the country’s infrastructure and natural resources sectors, on an annual basis, India remains Kenya’s largest source of imports.

China is closing in on India and opening up a lead against United Arab Emirates as the leading source of imports into Kenya.

Latest data by the Kenya National Bureau of Statistics show Beijing grew its trade with Nairobi by 21 per cent in February to Ksh17 billion ($200 million) from the previous month’s Ksh14 billion ($164 million).

During the period, India’s exports to Kenya dipped 16 per cent to Ksh21 billion ($247 million) from Ksh25 billion ($294 million) in January. This saw China cement its position as Kenya’s second biggest source of imports, way ahead of the UAE, whose sales to Kenya grew 10 per cent to Ksh11.6 billion ($136 million).

Though China has been the more aggressive hunter of trade opportunities in the country’s infrastructure and natural resources sectors, on an annual basis, India remains Kenya’s largest source of imports.

READ: India topples UAE as chief exporter of goods to Kenya

In the 12 months ended February, Kenya imported goods worth Ksh162 billion ($1.90 billion) from the UAE, while imports from India and China totalled Ksh230 ($2.9 billion) and Ksh185 billion ($2.2 billion) respectively.

As firms in Kenya dedicate millions of dollars to upgrading IT infrastructure, commercial banks, parastatals and industry regulators are turning to India for IT solutions, shunning local firms.

For example, Manam Infotech is providing the software and infrastructure for the agency banking model, which is being rolled out in the region by several banks. The Indian firm provided the software for KCB’s “mobibank,” the mobile banking service now in operation in Kenya and Rwanda.

READ: Indian firms bag lucrative Kenya IT setup deals, edge out Chinese

RMSI, an Indian firm specialising in integrated geographic information systems and software solutions for risk analysis and risk management, is keen on a contract to digitise Kenya’s land records. The project will make it easier to search for title deeds at the Ministry of Lands.

Lower deficit

Meanwhile, Kenya’s imports bill fell by Ksh14 billion ($164.7 million) in February, from Ksh Ksh130.7 billion ($1.5 billion) to Ksh116.4 billion ($1.36 billion). This helped cut the country’s trade deficit—the gap between imports and exports— to Ksh69.7 billion ($820 million) from Ksh83.7 billion ($990 million) in January. This is the lowest deficit since October.

The trade figures also showed Egypt was Kenya’s top export destination in January, toppling Uganda on the back of increased tea and fresh fruit exports. Cairo bought goods worth Ksh5.4 billion ($63.5 million) from Nairobi compared with Uganda’s Ksh5.1 billion ($60 million).

The third largest market was the United Kingdom. The growing trade between Kenya on one side, and Asia and the Middle East on the other, reflects the decision by the government to look more to the East for economic growth.

Kenya, under former president Mwai Kibaki, was keen on cutting its trade dependence on traditional partners like Britain, Germany and the US, with preference given to opening new markets in Asia while deepening trade with regional countries.

The major imports from Asia are machinery, motor vehicles and industrial chemicals. With support from their governments, Chinese and Indian firms are targeting the expected windfall from Kenya’s telecoms, mineral extraction, engineering and consumer goods markets, fields previously dominated by Western firms.

But even as the country looks East, the West remains its key export market. In the first two months of the 2013, Kenya exported goods worth more than Ksh7.7 billion ($90.5 million) to the UK compared with exports of Ksh4.9 billion ($57.6 million) to Dubai.

The US continues to run a favourable trade balance with Kenya, primarily due to technology imports and the aircraft orders Kenya Airways places with Boeing. Big US firms like General Electric and IBM are pumping in millions of dollars in new investments.

KNBS said the US sold goods worth Ksh4.8 billion ($56.4 million) to Kenya, down from Ksh6.2 billion ($72.9 million) the previous month, a 22.5 per cent drop.

Japan’s profile in Kenya has been gradually diminishing. It is Kenya’s fifth source of imports having exported goods worth Ksh 6.2 billion ($72.9 million) in January compared with Ksh4.5 billion ($52.9 million) in February— a 37.7 per cent decline.

In the past five years, trade with Kenya’s neighbours has soared largely as a result of the implementation of the EAC Common Market Protocol.

In the five years to December 2011, total trade with the Asian countries jumped from Ksh380 billion ($4.4 billion) to Ksh916 billion ($10.8 billion), while trade with Africa rose from Ksh 196 billion ($2.3 billion) to Ksh380 billion ($4.5 billion). In the same period, trade with Europe rose from Ksh221 billion ($2.6 billion) to Ksh390 billion ($4.6 billion).

In February, Egypt overthrew Uganda as Kenya’s largest export market, absorbing goods worth $63 million compared with $26 million the previous month.

Uganda took in goods worth $56.1 million in January and $60.3 million in February, while the UK took in $44.99 million worth of Kenyan goods in January and $46.1 million February. Tanzania bought $29.5 million and $34.3 million of goods worth in January and February respectively.

Whereas Africa as a whole enjoys a trade surplus with China and India, Kenya continues to run a deficit against the Asian dragon mainly due to its poor natural resource base
.

READ: Big Brother China pumps $11b into East Africa

Additional reporting by Scola Kamau