The United States of America has overtaken China to become Kenya’s second-largest source of imports, defying recent cooling diplomatic relations with East Africa’s largest economy and Nairobi’s decade-long policy of looking East.
The value of US exports to Kenya rose to Sh29.5 billion in May compared to China’s Sh21.1 billion, according to Kenya National Bureau of Statistics (KNBS) data.
America also rose to become the largest consumer of Kenyan exports during the same month, overtaking Uganda which has held the top spot in the past six years.
KNBS data shows that American consumers took in Sh3.6 billion worth of Kenyan goods in May ahead of Uganda’s Sh3.5 billion.
Kenyan trade experts see the shift in commercial interests in favour of the US as a positive development with high-value potential.
KenInvest chief executive Moses Ikiara said the best thing that could happen to Kenya is to grow its trade with the world’s largest economy.
“The US is a huge quality market with a high per capita income that puts very high premium on quality standards,” said Mr Ikiara.
The ongoing shift in Kenya’s trade interests is expected to raise fresh questions on President Uhuru Kenyatta’s policy of economic diplomacy which has mirrored that of his predecessor Mwai Kibaki of looking East even as he maintains low-level engagement with the West.
Mr Kenyatta has, through his diplomatic engagements since assuming office in April last year, spent millions of shillings on foreign trips meant to deepen relations with Middle East and Asian countries as well as strengthening Kenya’s economic ties with African states but that effort now appears greatly challenged by the latest data.
These realities appear to be behind the recent change of tune at the Ministry of Foreign Affairs and International Trade where officials now say the economic diplomacy policy is not targeted at a specific part of world.
Mr Kenyatta has in his first year in office visited China with a high powered delegation of businessmen as part of the quest to strengthen East Africa’s biggest economy with the Asian giant.
The Chinese government has reciprocated the gesture with the visit to Kenya in May of the Chinese Premier during which the two countries signed multi-billion-shilling economic deals.
Mr Kenyatta has made numerous trips to African countries but has made only one state visit to Europe (Russia) and is yet to set foot in the United States — a move that has been seen as meant to weaken Kenya’s deep economic linkages with the West in response to their opposition to his running for the presidency while facing charges at the International Criminal Court.
“Americans know how to smell money, and I am sure they want to ride on the looming oil economy,” said economist Dr X.N. Iraki, adding that there has been increased presence of US cars such as Ford and Chevrolet on Kenyan roads.
India remains Kenya’s largest source of imports a spot it has in the past competed for with China and UAE.
Kenya’s major imports from India include textile, three wheel tuk tuks vans, pharmaceuticals and motorcyles while the UAE is Kenya’s main source of petroleum products.
It was possible to get a breakdown of the key items that Kenya imported from the US but America’s stride to the second slot comes on the back of big-ticket investments in energy and transport sectors by local firms using sophisticated US services and goods.
The national bureau of statistics data show that the value of transport-related equipment jumped to Sh29.5 billion in May from Sh21.6 billion in April and Sh10.6 billion in March mainly driven by delivery to national carrier Kenya Airways of Dreamliner planes from US aviation giant Boeing.
KNBS data shows that Kenya imported a Sh15.6 billion plane from the US in May while another worth Sh10 billion was brought in in April.
One Dreamliner is estimated to cost about Sh11 billion and Kenya has so far received two such planes since the beginning of the year.
The airline is set to receive six more planes from the US based maker by the end of the year.
General Electric (GE), which has a regional hub in Kenya, holds yet another key to understanding the massive rise in the value of US exports to Kenya with its multi-billion-shilling investments in wind power in Kinangop and Kiserian.
The procurement of a large number of US-made wind mills and turbines is expected to help shore up the value of imports from US in the next 12 months.
GE has also signed multi-billion-shilling contracts to supply railway operator RVR with 20 locomotives before the end of the year. The first batch is expected in August.
RVR is spending Sh2.6 billion on the locomotives and has already received seven locomotive engines for local assembly at an estimated cost of Sh340 million.
Kenya’s exports to the US are largely textile products, which accounted for 73 per cent of the Sh30 billion worth of goods exported last year.
The US imported seven tonnes of titanium ores worth Sh500 million from Kenya, supporting its uptake of traditional goods such as garments valued at Sh1.3 billion and coffee Sh253 million.
The rise in imports from the US has, however, seen Kenya’s trade deficit grow to over Sh100 billion for the first time which could pressure the local currency.
In 2011 East Africa’s biggest economy was cleared to begin exporting fresh green beans, runner beans, baby carrots, baby corn and shelled beans into the US market opening up new avenues for of growth in trade volumes.
Chinese firms have, however, been the main beneficiaries of the Kenyatta government’s multi-billion shilling infrastructural projects, having only recently inked a Sh327 billion standard gauge railway line deal whose construction is expected to begin later in the year.
Top bureaucrats in Mr Kenyatta’s government have maintained that the preference for Chinese contractors is informed by pure economic considerations, including better bargains and fast execution of projects.
China has also emerged as a major supplier of consumer goods such as shoes, textiles, batteries, electronics and motor vehicle parts, gaining significant market share with its low pricing of mass market goods strategy that has caused disquiet among local traders dealing in rival merchandise.