The value of Kenya’s exports to neighbouring countries fell by Sh4.62 billion in eight months through August compared to the same period last year, pulled down by a thinning order book from Tanzania.
Central Bank of Kenya (CBK) data shows the country’s exports to the East African region fell to Sh89.25 billion in the eight months, down from Sh93.86 billion in a similar period a year earlier.
The value of exports contracted in four of the five major regional trade partners except for Somalia, the data shows.
The war-torn country overtook Rwanda to become Kenya’s third largest export market in the region after the value of exports increased by Sh3.053 billion to Sh13.929 billion in the January-August period.
Exports to Tanzania, whose long-standing trade spat with Kenya remains unresolved, posted the largest drop in value at Sh5.66 billion in the first eight months of the year to Sh18.12 billion.
Among the products that have been restricted from the Tanzanian market are milk and dairy products and cigarettes.
Demand from landlocked Uganda, Kenya’s largest trading partner, was muted with exports’ value at Sh41.127 billion, a drop of Sh717 million year-on-year.
The value of exports to Rwanda reduced by the smallest margin of Sh267 million between January and August to Sh11.394 billion.
Exports to Ethiopia, the most populous country in eastern Africa with more than 102 million people, plunged by Sh1.016 billion in value to Sh4.675 billion.
Reduced demand from neighbouring countries comes as private sector activity in Kenya dropped to a record low in October as prolonged political instability exerted a heavy toll on the economy.
The Markit Stanbic Bank Kenya Purchasing Managers’ Index for manufacturing and services slumped to 34.4 from 40.9 in September, its lowest since the series began in January 2014.
“Alongside reduced domestic demand, there was evidence that demand in foreign markets had faltered, as new export orders declined at the fastest pace in the survey’s history,” said Stanbic in the October report released on November 3.
The report blamed elevated political uncertainty against the backdrop of credit squeeze because of the rate cap for the contraction in private sector activities.
The Kenya Association of Manufacturers said local companies exporting mainly food, cosmetics, wooden pallets and cigarettes to Tanzania are required register, re-label and retest certified Kenyan products.