Kenya's trade deficit jumps to Sh715.7bn

The Chinese business community in Kenya during the launch of their association on July 24, at The Crowne Plaza Hotel, Nairobi. FILE PHOTO | NMG 

By JAMES KARIUKI

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Summary

• China remains the country's biggest source of goods, Pakistan took in the biggest share of exports
• Recently, China added fresh fish exports atop its multibillion-shilling exports to Kenya
• Kenya has since initiated talks with Beijing for preferential trade terms to increase its negligible exports

Kenya's reliance on the international market for most of its goods continued in the last 10 months of 2018, with the country shipping in nearly a trillion-shillings worth of products.

During the period, Sh997.1 billion goods were imported compared to Sh291.8 billion exports.

This was a rise from Sh989.8 billion in imports and Sh281.4 billion in exports during the same period in 2017.

This means the trade deficit rose by about percent from Sh708.4 billion in 2017 to Sh715.7 billion.

According to the just released Leading economic Indicators (LEI, October 2018), exports grew by five percent or Sh14.2 billion to stand at Sh295.6 billion compared to 2017’s Sh281.4 billion.

China remained Kenya’s largest source of imports for machinery and transport equipment, accounting for Sh291.8 billion followed by India at Sh161.2 billion, Saudi Arabia (Sh138.4 billion) and UAE (Sh126 billion).

Largest source

Japan sold to Kenya goods worth Sh78 billion, while South Africa brought in Sh54 billion worth of goods, US (46.3 billion), Germany (39.6 billion), UK (Sh26 billion) and the Netherlands, Sh16.6 billion.

The LEI October report showed that Pakistan remained Kenya’s biggest trading partner, buying fresh produce mainly tea, coffee and flowers worth Sh50.2 billion followed by Uganda (Sh42.2 billion), the US (Sh39.5 billion), the Netherlands (Sh38.9 billion) and United Kingdom at Sh37 billion.

Tanzania bought goods worth Sh22.5 billion, UAE (Sh19.5 billion), Egypt (Sh16.6 billion), Germany (Sh9.4 billion) while France settled for Sh6.7 billion.

While China remained a major infrastructural construction contractor, its imports dropped by 17.2 percent from last 2017’s first 10 months where imports, mainly machinery and transport equipment accounted for Sh341.9 billion.

Kenya has since initiated talks with Beijing for preferential trade terms to increase its negligible exports to the most populous country in the world by encouraging capital industrial investments by Chinese companies for China-bound Kenyan exports.

India brought in goods mainly drugs, machinery and electrical equipment worth 161.2 billion, being a 12.8 percent growth from Sh143 billion reported during a similar period in 2017.

A similar scenario abounds for Japan that increased its exports to Kenya, mainly motor vehicles, capital machinery and electronics by 15 percent to stand at Sh78 billion, up from Sh67.8 billion reported in 2017’s first 10 months.

US trade sanctions against Iran appear to have benefited Saudi Arabia, whose oil exports to Kenya grew by 46.5 percent from Sh94.5 billion in 2017’s first 10 months to last year’s similar period under review that recorded Sh138.4 billion.

Joint ventures

Last November, President Uhuru Kenyatta led a trade delegation to the inaugural China International Import Expo, where he invited Chinese companies to form joint ventures with Kenyan enterprises to create more manufacturing bases.

“China now ranks as the number one trading partner with Kenya, accounting for 17.2 percent of Kenya’s total trade with the world.

"I encourage Chinese firms to establish joint ventures in Kenya that will increase the content of locally produced goods and services in their projects and industries in China,” he said in Shanghai.

During the visit, Kenya’s Ministry of Agriculture and China’s Customs Department signed several pacts to facilitate Kenyan exports of avocados, mangoes, peas, beans, green grams, flowers, vegetables, herbs, meat, hides and skins, bixa, nuts, gum arabica, myrrh, tea, coffee and honey to China.

Currently, Kenya exports only black tea, coffee and leather to China and mainly in raw form that attracts low returns while exporting jobs to China.

This is contrast to China’s fully processed ready-to-use goods that rake in billions for the Asian country’s exchequer and businesses.

Recently, China added fresh fish exports atop its multibillion-shilling exports to Kenya, amid a furore over alleged unwholesomeness of some of its fish.