Referendum, 2022 polls tipped to hurt exports

The country’s export sector could experience recurring turns of weak demand this year due to anticipated slowdown in foreign investment and political uncertainty ahead of an expected constitutional referendum and the 2022 General Elections.

Export earnings have been resilient despite the Covid-19 pandemic, largely buoyed by agriculture sales.

Total exports in the 10 month period to October grew by 6.4 per cent to Sh532.91 billion from Sh500.79 billion in the corresponding period last year, according to data by the Central Bank of Kenya.

A report by Egypt-based investment bank, EFG Hermes looking at the year ahead states that the Kenyan market could find it hard to completely break out of cyclical downturns.

“We expect all markets in our coverage to see a drop in volumes in 2020 and a recovery in 2021. What is more important for the long-run is sustained growth in exports,’’ EFG Hermes said.

“We believe the market is already reflecting more uncertainty about Kenya’s political path than it did two years before the 2017 elections.”

According to Genghis Capital, significant investments may take a back seat as political temperatures rise with the impending constitutional referendum this year.

“Exports will also come under pressure in the face of renewed aggressive containment measures to curb the second wave of Covid-19 infections in pockets of developed markets,’’ Genghis said in their 2021 outlook report.

The country has had an average export growth of three percent over the last 10 years, ranking low among peer markets.

The low growth has been blamed majorly on poor competitiveness of Kenyan manufactured goods in the global market and lack of diversification.