Imports drop by Sh34bn on reduced global petroleum prices

Kenya’s imports dropped by Sh34 billion in the year to March on lower petroleum prices and a cutback on food imports, narrowing the country’s trade deficit as exports grew.

Official data shows that the country imported Sh321.4 billion worth of goods in the first quarter of the year, down from Sh355.6 billion in a similar period of 2015, reflecting a 9.6 per cent drop or a Sh34.2 billion cutback.

The period saw the country grow its exports by Sh15.4 billion to Sh146.9 billion, representing a growth of 11.7 per cent.

This has helped improve the country’s current account (the difference between the value of exports and imports) deficit to Sh174 billion in the first quarter of this year compared to Sh224 billion last year.

The cutback on imports was due to a lower petroleum import bill which shrank by Sh12 billion to Sh39.5 billion in the review period on reduced global oil prices.

Kenya also cut food imports by Sh6 billion to Sh26 billion between January and March, helping to ease pressure on the shilling that has held steady against the US dollar at 101 since the beginning of the year.

READ: Lower oil prices set to ease Kenya's import bill in 2016

Sales in the external markets were powered by increased exports of food and beverages that hit Sh57.5 billion from Sh48 billion, the Kenya National Bureau of Statistics (KNBS) data shows.

Government officials have in recent years been keen to promote a bigger exports receipt and leaner import bill as hard currency outflows continue to exceed inflows, piling pressure on the shilling.

At Sh57.5 billion, food exports accounted for 39 per cent of total exports, emerging as the single largest commodity sales for the country.

Kenya is dependent on mainstay agriculture, which accounted for 30 per cent of the gross domestic product (GDP) last year.

The country is renowned for its fresh cut flowers, coffee, and tea, the country’s key foreign exchange earners, on the global market.

In the period to March, Uganda, which is Kenya’s largest source market, scaled back its imports from Nairobi by Sh4 billion to Sh8.5 billion.

Neighbouring Tanzania marginally cut its orders to Sh5.2 billion.

Countries that stepped up purchases from Nairobi in the first quarter of the year include Pakistan, United States, UK and United Arab Emirates.

The KNBS data shows that Kenya increased machinery imports by Sh1.5 billion to Sh66.5 billion in the period under review.