India widens lead over China as top exporter to Kenya

India has widened its lead over China as the largest source of imports with the US, boosted by aircraft imports, moving into third place ahead of the United Arabs Emirates (UAE).

Official data for the first seven months of the year shows the gap widened by Sh4 billion to Sh37.54 billion.

The latest Kenya National Bureau of Statistics (KNBS) data shows the total imports from India in the seven months to July stood at Sh155.26 billion compared to China’s Sh117.72 billion.

In the corresponding period last year, Indian exports to Kenya outpaced China’s by Sh33.3 billion at Sh128.9 billion and Sh95.6 billion respectively.

Comparatively, Indian exports to Kenya grew at a faster rate of 20.5 per cent than China’s 18.8 per cent in the seven months to June.

The US has, however, seen the highest rate of growth at 132 per cent, with its exports to Kenya standing at Sh82.14 billion in the period compared to Sh35.42 billion over a similar period last year.

Indian exports to Kenya mainly include electrical machinery, steel products, hand and machine tools, vehicles, yarn, petroleum products, pharmaceuticals, and paper.

READ: India opens Sh70bn gap over China in trade with Kenya

Kenya Association of Manufacturers chairman Pradeep Paunrana said India was running on the inside lane in the race. For one, most of the manufacturers in Kenya are of Indian origin and have language and cultural affinity with the country.

Indian motor vehicles have at the same time gained a huge market share due to currency devaluation that has also driven imports of intermediate goods at a time industrialisation is taking shape in Kenya.

“With the rupee devaluation China has become expensive,” said the ARM Cement chief executive.

Kenya’s main import goods categories largely draw from the Indian export portfolio with Delhi also enjoying the advantage of proximity to Kenya through its western ports compared to China and the US.

Imports from China mainly comprise heavy machinery, electronics, vehicles, textiles and a wide range of household goods. India overtook China and the UAE as the leading source of Kenyan imports in 2012.

The growth in US exports has come on Kenya Airways buying new planes from US manufacturer Boeing, which has so far this year delivered four Boeing 787 Dreamliner aircraft and one Boeing 777-300 aircraft.

The airline expects deliveries of two more Dreamliners by the end of the year, as well as two smaller Boeing 737-800 planes, meaning that the US export numbers are likely to rise past the Sh100 billion mark this year.

UAE, whose main export to Kenya is oil, saw a decline in exports from Sh84.51 billion in seven months to June 2013 to Sh61.9 billion this year.

“Industrial supplies (non-food) were one of the main import category in July with a share of 26.3 per cent, while the values of fuel and lubricants, machinery and other capital equipment and transport equipment registered shares of 19.5, 14.9 and 25.4 per cent respectively,” said KNBS in the July Leading Economic Indicators report.

The growth in the import bill has widened Kenya’s trade deficit by Sh67.8 billion this year compared to July 2013, with the gap between imports and exports standing at Sh578.8 billion by July.

Kenya Institute of Public Policy Research and Analysis (Kippra) principal analyst Joseph Kieyah says the gap is only likely to widen as the country increases capital goods imports for the huge infrastructure projects that are planned in the next few years.

“Ultimately the capital expenditure will reduce the production costs of Kenyan goods, and this may serve as incentive to encourage those companies exporting to Kenya to instead relocate and produce the goods here,” said Prof Kieyah.