Export earnings from tea grew by Sh2 billion last year, helped by a weaker shilling, increased volumes and higher prices of the beverage.
The earnings defied global economic shocks caused by the Russia-Ukraine war last year to stand at Sh138 billion from Sh136 a year earlier, according to the Tea Board of Kenya (TBK).
A weaker shilling against the dollar played a significant role in improved earnings as it depreciated 11.58 percent in the 12 months to December 2022, closing at Sh123.4 to the US dollar.
This was a larger depreciation than the prior year when it lost 7.24 percent to stand at Sh109.1 to the greenback. A weaker shilling boosts the earnings of exporters who sell their produce in hard currencies led by the dollar and Euro.
“Export volumes in 2022 stood at 410.2 million kilogrammes of made tea against 388 million kgs in 2021,” says the TBK. A good price and a strong dollar pushed up the returns for Kenyan tea to Pakistan --the country’s top buyer, which despite recording a 14 percent decline in volumes, the value of purchases increased to Sh58 billion in the review period from Sh55 billion a year earlier.
On the other hand, Egypt, which witnessed a sharp decline in volumes at 34 percent, saw the value of tea sold to the North African State drop from Sh23 billion in 2021 to Sh20 billion last year.
The United Kingdom, Kenya’s third top buyer of the beverage recorded a 21 percent decline in volumes, with the value of the commodity that they paid dropping marginally from Sh10.6 billion to Sh10.8 billion last year.
Pakistan and Egypt account for 55 percent of the total tea exports that Kenya sells to the world market.
In Egypt, where the country is grappling with a foreign currency crisis, the Pound has slumped 36 percent against the US dollar since October last year after the authorities moved to a flexible currency regime as part of the International Monetary Fund deal in exchange for a $3 billion bailout to ease the financial woes.
The weakening Pound in Egypt has impacted negatively on consumers purchasing power as it fueled inflationary pressure in an economy where 60 percent of the population lives below the poverty line.
Pakistan is facing a serious shortage of foreign currency, forcing the country to restrict banks from releasing dollars for items that are considered as non-essential.
