Kenya’s monthly import bill hit an all-time high in May, mainly on Chinese shipments, further piling pressure on the country’s shaky current account deficit.
The country imported a record Sh171 billion worth of goods in May, representing a 13.47 per cent increase from the Sh151 billion recorded the previous month, latest data by the Kenya National Bureau of Statistics(KNBS) showed.
China was the largest exporter to Kenya in May, shipping in goods valued at Sh48 billion or 29 per cent of the total imports. This is the highest ever monthly import bill by a single nation. Chinese exports to Kenya have increased in the past decade, lifted by demand for cheap Chinese-made products.
Expenditure on non-food industrial supplies was also at its peak at Sh56.638 billion in May representing 33 per cent of the total expenditure on imports. Kenya, a net importer of fuel, lubricants, machinery and other capital equipment spent Sh66.79 billion on the commodities.
But in what may bring some relief for the country, receipts from overall exports showed marginal growth in May, improving to Sh55.3 billion from Sh49 billion in April supported by commodity exports, which accounted for more than half of the earnings.
Food exports earned Kenya Sh24billion in May, followed by other consumer goods exports valued at Sh11.95 billion. The share of food items in Kenya’s total export income has risen lately.
The current account deficit — which measures the flow of goods, services and investments into and out of the country — narrowed down in the first quarter to Sh107.9 billion from Sh 129.7 billion in the corresponding quarter of 2017 but is likely to worsen in the second quarter mainly as a result of expenditure on imports growing faster than receipts from exports.
Merchandise exports grew by 7.1 per cent to Sh 162.9 billion in the first quarter of 2018, while merchandise imports valued on free on board basis grew by 6.5 per cent to Sh 432.1 billion, in the same quarter. Merchandise trade balance worsened by 6.1 per cent from a deficit of Sh 253.7 billion in the first quarter of 2017 to a deficit of Sh 269.3 billion in the quarter under review, the KNBS said.
During the first quarter, international trade in services registered a surplus of Sh 49.3 billion from Sh38.5 billion in the first quarter of 2017. Receipts from international services increased by 10.8 per cent to Sh129.4 billion in the quarter under review partly due to improved tourism earnings.
Remittances from the diaspora increased substantially in the first quarter, boosting the secondary income to record a surplus of Sh129.3 billion. During the first quarter of 2018, financial net inflows increased by 51.8 per cent to a surplus of Sh323.8 billion mainly as a result of proceeds from the Eurobond.
Gross official reserves increased by 9.4 per cent to Sh944.1 billion as at end of March from Sh863 billion as at end of March 2017.
The overall balance of payments improved to a surplus of Sh206.9 billion in the quarter under review.
The Central Bank of Kenya in January projected that the current account deficit for 2018 would narrow to 5.4 per cent on lower food and standard gauge railway related imports.