Kenya’s trade deficit in the 11 months to last November widened by 20.4 percent amid a surge in fuel and cooking oil imports and a weakening shilling.
Data from the Central Bank of Kenya (CBK) show the gap between imports and exports widened to Sh1.49 trillion from Sh1.23 trillion in the corresponding period in 2021.
The county’s total import bill — both public and private sector — rose by 20 percent to Sh2.29 trillion in the country, led by goods such as fuel and lubricants, vehicles, industrial inputs and edible oils.
The higher cost of imported goods has pushed inflation to five-year highs, straining businesses and household budgets amid stagnant income.
Fuel and lubricant import costs rose by 78.6 percent to Sh606.46 billion, while cooking oil purchases jumped by 25.1 percent to 133.95 billion due to higher prices of palm and sunflower oil globally.
Imports of food and live animals also increased by 16.7 percent to 221.14 billion while chemicals increased by 16.9 percent to Sh358.65 billion.
The Russia-Ukraine war led to knock-on effects across the world as supplies struggled to keep up with demand, causing global prices of imports to soar.
A widening trade deficit diminishes Kenya’s foreign currency reserves, which are useful in cushioning the shilling in the forex market.
The CBK data show shilling was exchanging at an average of 122.45 units to the dollar at the end of November, having depreciated by 8.2 percent from 113.14 at the start of the year, pushed by increased demand of forex by importers than the supply.
It has since then depreciated further, exchanging at 124.17 units to the dollar on Tuesday.
Export receipts grew by 19.4 percent to Sh804.45 billion up from Sh673.96 billion in the same period last year, driven by traditional export products including coffee, tea and horticulture, cement, petroleum products, fish and chemicals.