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Kenya’s exports to key African markets hit five-year low

Truck carrying goods crossing the border. AFP PHOTO
Truck carrying goods crossing the border. AFP PHOTO 
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Kenya’s total exports to key markets in Africa shrunk to a five-year low in 2017, new data showed, an indication of growing pain for local producers and the economy.

The country’s overall exports to Africa were recorded at Sh223.9 billion last year, marking a successive fall since 2015 and the lowest since 2013, according to the Economic Survey 2018.

“The trend in total exports to Africa was consistent with the performance of exports to the Comesa (Common Market for Eastern and Southern Africa) region which declined by 2.2 per cent to Sh166.4 billion in 2017,” the Kenya National Bureau of Statistics (KNBS) said.

Improved exports are an indication of more agricultural, factory and industrial output which translates to bigger employment numbers.

Further, proceeds from exports represent an inflow of funds, which stimulates consumer spending and contributes to economic growth.

Kenya’s total exports to Comesa accounted for 74.3 per cent of exports to Africa. Destinations that recorded reduced earnings from Kenya’s exports within the region included; Egypt (7.8 per cent), the Democratic Republic of Congo (5.8 per cent), Ethiopia (13.3 per cent), Zambia (25.2 per cent), Djibouti (40.9 per cent) and the Comoros (50.4 per cent).

“The decline in the value of domestic exports of key commodities to Egypt such as tea; tobacco and tobacco products; and paper and paperboard resulted to the decrease in the value of export earnings from this destination in 2017,” the KNBS said.

Kenya also registered a decline in the value of exports to Ethiopia, hit by a lower uptake of assorted commodities including insecticides, rubber tyres, sugar confectionery, prefabricated buildings, stoppers, caps and lids of containers.

The country’s export performance within the East African Community (EAC) was also negatively affected by regular trade spats with Uganda and Tanzania. Kenya’s total export earnings from the EAC decreased by 5.6 per cent in 2017 to Sh114.8 billion, according to the Economic Survey.

“This was partly as a result of reduction in the value of total exports to Uganda from Sh62.2 billion to Sh61.8 billion, Tanzania from Sh34.8 billion to Sh28.5 billion, and Rwanda from Sh17.5 billion to Sh17.1 billion in 2017,” the KNBS said.

Earnings from exports of cement to Uganda fell by 21.7 per cent in 2017. Other commodity exports to the country that showed a decline in earnings during the year included: alcohol; phenols and their derivatives (81.7 per cent); salt (10.2 per cent); pharmaceutical products (26.6 per cent); and products of iron and steel (13.4 per cent). Uganda and Tanzania have recently been embroiled in a number of trade disputes with Kenya over the region’s rule of origin (ROO).

The tax bodies of the two neighbouring countries have rejected several certificates of origin issued by the Kenya Revenue Authority (KRA).

A neighbouring country must accept the certificates — documents showing where a good has originated so as to determine the import duty chargeable — to guarantee goods tax-free entry into its market.

Throughout last year, Kenya accused the two nations of denying its manufacturers of products such as cement, edible oils, cigarettes, textiles and lubricants market access rights.

Besides the trade spats, the KNBS said last year was tough for Kenya’s economy as agriculture sector performance was affected by widespread drought which considerably affected crop and animal production.

This led to a slowdown in the manufacture of food as agro-processing was negatively affected by constrained supply of raw materials.

Electricity generation was also greatly affected by reduced rains, necessitating increased use of expensive thermal sources.

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