A weaker Kenyan shilling has driven up Kenya’s import bill while widening the country’s trade balance referred to as the current account deficit.
In the quarter ended in September 2021, the current account deficit went up by 27.4 per cent to Ksh.184.6 billion in contrast to Ksh.145 billion in a similar quarter in 2020.
The local currency depreciation has made imports more expensive than the value of domestic exports.
The current account deficit (CAD) stood at a lower Ksh.110.1 billion in the quarter to June 2021 and was even narrower a year prior at Ksh.85.9 billion in June 2020.
During the quarter to September, imports on a free on board basis rose by 26.5 per cent to Ksh.498 billion while exports expanded by a mere 7.9 per cent to Ksh.176.2 billion.
The import surge has been primarily driven by greater imports of petroleum products which were up by 84.3 per cent year over year at Ksh.82.3 billion.
Other broad import categories to register jumps in the review period include iron & steel, motor vehicles, plastics, animal and vegetable oils.
Even so, some import categories registered declines in the period including medicinal & pharmaceutical products, cement clinkers and telecommunication equipment and parts.
On the exports front, horticulture, apparel & clothing accessories, edible products and titanium registered increased which helped offset declines in exported tea quantities.
The higher trade deficit means the Kenyan economy is more exposed as a debtor to the rest of the world in international trade.
During the quarter, the average exchange rate saw the Kenyan shilling change hands for the dollar at Ksh.109.18 compared to a lesser Ksh.107.94 a year prior.
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