Numbers behind Kenya's soaring Sh433 billion trade deficit

Kenya’s imports of fertilisers, oil and glassware products such as drinking glasses and bowls surged in the three months to September widening the trade deficit amid global supply challenges faced in 2022 and a weakening shilling.

The latest data shows that imports of chemical fertilisers recorded the sharpest jump, almost tripling in the three months to September to Sh20.47 billion from Sh7.95 billion in the same period last year.

This comes after the country started recovering from supply chain disruptions triggered by the Russia –Ukraine war and the weakening of the shilling against the dollar that led to rocketing of prices of fertilisers, wheat, crude oil, iron and steel.

The Kenya National Bureau of Statistics (KNBS) data also shows petroleum products more than doubled to Sh182.59 billion from Sh82.3 billion in a similar period following a jump in global oil prices amid market supply fears over the year.

Kenya imports iron and steel, wheat, fertilisers, paper and board, copper and oil from Russia.

It also imports fuel, wheat, animal and vegetable oils and fertilizer from Ukraine.

However, the war disrupted the supply of imported products from the countries at war, rising their prices and shipping costs.

Ukraine has over the last year imposed export restrictions on wheat to ensure domestic food supply highlighting a sharp decline in imports from the country to Sh475.4 million from Sh4.21 billion in the same period in 2021.

This has seen the value of imported wheat rise by 24.3 percent to Sh15.54 billion from Sh12.49 billion, while the cost of wheat crossed above the Sh200 mark for the two-kilogram pack for the first time in at least four years in the local market.

Raw maize imports have also recorded a 55.7 percent jump to Sh10.94 billion, and rice 33.3 percent to Sh11.06 billion.

The rising import bill has pushed the trade deficit – the gap between imports and exports –up to hit Sh433.4 billion up from the Sh365.7 billion booked in the corresponding quarter of 2021 despite the sustained reduction in prices of crude oil in the global markets during the preceding months.

During the same period, export earnings grew by 29.7 per cent to stand at Sh226.5 billion while the import bill surged 22.1 per cent to Sh659.8 billion.

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Note: The results are not exact but very close to the actual.