Trade deficit up by Sh21bn in first half


Cargo at the Mombasa port. Kenya's imports rose to Sh756.7 billion in the first six months of the year. PHOTO | FILE

Kenya’s trade deficit widened by Sh21.3 billion in the first half of the year compared to a similar period in 2014, driven by a rising appetite for industrial inputs. 

The country’s imports rose to Sh756.7 billion in the first six months of the year, widening trade gap to Sh492.8 billion after exports for the period fell below last year’s level to Sh263.9 billion.

Kenya had a slightly lower deficit of Sh471.6 billion in June last year after it imported goods worth Sh748.6  billion against a six-month export performance of Sh277.1 billion.

The widening deficit is expected to pile pressure on the shilling as traders require more dollars to settle import bills than the rate at which exporters convert earnings into local currency.

READ: Kenya’s exports to key markets drop as deficit grows

The shilling has shed 11 units against the dollar since the start of this year, currently to exchanging at a mean of 102.9 units against the greenback compared to 91.55 in January.

Last month, Treasury secretary Henry Rotich warned that the weakening streak of shilling was likely to continue into 2017 as the country imports more capital goods for flagship projects like the standard gauge railway, roads, ports and crude oil pipelines.

Measured monthly, the Sh80.6 billion gap between import and export recorded in June this year falls far below the Sh98.1 billion registered in the month of May.

“Industrial supplies was the main import category in June 2015 with a share of 31.8 per cent, while the values of fuel and lubricants, machinery and other capital equipment and transport equipment registered shares of 16.2, 19.0 and 14.0 per cent respectively,” the Kenya National Bureau of Statistics says in its latest release.

“Food and beverages was the main export category in June 2015 accounting for 49.0 per cent of exports, while consumer goods registered 22.3 per cent.”

The hope of bridging the gap in the coming months has faded as data produced by the KNBS shows the performance of traditional foreign exchange earners – coffee, horticulture, tea and tourism – have largely fallen below levels recorded last year.

The quantity of coffee exported, for instance, contracted from 4,382.8 tonnes in May to 4,219.9 tonnes in June 2015 with its value decreasing from Sh2.2 billion to Sh2.06 billion over the same period.

Uganda remains Kenya’s top export destination while China leads as source of imports followed by India.