SA, Egyptian goods push Kenya to first Africa trade deficit

Kenya’s high appetite for imported goods has seen it sink into a trade deficit with Africa for the first time in more than two decades, official data shows.

The country’s import bill from other African countries rose to Sh234 billion last year, an 11 percent increase from the Sh210 billion spent in 2018.

Export receipts rose by a paltry three percent to Sh224 billion in the year.

The increased consumption of foreign goods pushed the balance of trade to a deficit position of Sh9 billion.

“Imports from Africa rose by 11.4 percent to account for 13 percent of the total import bill, attributed to increased imports from South Africa,” states the Economic Survey 2020

Expenditure on South African products hit an all-time high of Sh74 billion in the year accounting for 32 percent of total imports, followed by Egyptian goods with an import bill of Sh42 billion.

South Africa exports iron and steel to Kenya worth more than Sh24 billion annually, according to trading economics followed by vehicles worth Sh7 billion.

Paper and paper products from Egypt is estimated to be costing Kenya up to Sh5 billion annually, soaps lubricants candles and beauty products from the northern Africa country amount to Sh4 billion annually, data shows.

Exports to other African countries hit an all high of Sh250.5 billion in 2012 as Kenya enjoyed a Sh109.8 billion trade surplus.

Uganda and Tanzania remained the leading destinations of Kenyan goods shipping in goods worth Sh64 billion and Sh33 billion respectively.

The slowdown of export revenue to both Africa and the rest of the world has been largely blamed on the reduced output of the manufacturing industry which holds the key and has more potential compared to other sectors as most African countries produce similar agricultural produce hindering trade.

Manufacturing output grew by 3.2 percent in the year its contribution to Kenya’s output now at 7.5 percent, fourth behind agriculture, transport and storage, wholesale and retail sectors.

With the Africa Continental Free Trade Area (AfCTA) expected to take effect this year, the balance of trade dynamics are expected to change as trade restrictions will ease to encourage more trade in the African continent.

The journey towards AfCTA gained momentum in March 2018, when 44 nations signed up during the African Union Extra-Ordinary Session in Kigali, Rwanda.