Dollar spend on food imports hits 68-month high in March
Food purchases piled pressure on Kenya’s reserve of foreign currencies, taking close to 17.1 percent of the country’s total import bill. FILE PHOTO | SHUTTERSTOCK
Food purchases piled pressure on Kenya’s reserve of foreign currencies, taking close to 17.1 percent of the country’s total import bill in March, the latest from the national statistician shows.
The share of food imports was the highest in 68 months, pointing to inflationary pressures occasioned by a crippling drought that depressed local production.
This was the largest share of food and beverage imports since August 2017 when these items took up close to a third of the country’s import bill, the latest data from the Kenya National Bureau of Statistics shows.
Increased food imports such as maize, rice and beans, which can be grown locally, have put pressure on the dwindling dollar reserves.
Increased food imports—which have been aggravated by global shocks including the war in Ukraine and the hike in interest rates in advanced economies—have pushed up the cost of living in Kenya.
The share of spending on the import of food and beverages dropped to 11.96 percent in April before rising again to 14.19 percent, according to the national statistician.
Kenya spent Sh32.7 billion to import food in May, a drop from Sh37 billion in March.
Food takes up a huge component of ordinary Kenyan households’ spending, which means any uptick in their prices hurts their purchasing power.
Some of the items whose prices have risen include wheat, rice, maize, and cooking oil, with the administration of President William Ruto putting in place various policy measures to calm the market.
Timothy Njagi, a research fellow at the Tegemeo Institute of Agricultural Policy and Development, a think tank affiliated with Egerton University, noted that by March, Kenya still had shortages in key staples such as maize, rice and wheat.
“The global market made wheat available and since these were under the duty waiver, importers started increasing the volume of imports,” said Dr Njagi.
The government has been bullish that local food production will improve due to favourable weather which has also contributed to a drop in inflation to 7.3 percent in July, the lowest since April last year.
However, some analysts have not been as bullish as the Ministry of Agriculture on the potential production this year.
“Coming from a drought year, it is difficult to see how we can jump to record production when most farmers struggled to get inputs,” added Njagi.
The drop in inflation has been attributed to lower food prices of such commodities as tomatoes, potatoes, cowpeas and cabbages.
in a rush to use the duty-free importation window opened by the Kenya Kwanza administration, traders imported 701,743 tonnes of cheaper rice in the first half of this year, according to the official KNBS data.
The quantity of rice majorly imported from Pakistan and India, valued at Sh39.7 billion, is more than what the country imports in a year and points to possible flooding of the local market with a cereal that is grown in 23 counties.
