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Economy

State imports double despite order on local goods quota

Mombasa port cargo
Containers at the Port of Mombasa. FILE PHOTO | NMG 

The value of goods ordered from abroad by State departments and parastatals more than doubled in the first four months of the year, pointing to rising appetite for foreign goods in public offices.

Import orders placed by the government hit Sh22.33 billion in the January-April period, a 133.17 per cent surge compared to a bill of Sh9.58 billion paid in the same period in 2017, data collated by the Central Bank of Kenya shows.

That is the largest four-month import order since President Uhuru Kenyatta took the reins of power in April 2013 with a directive to ministries and parastatals to stop importing goods which are manufactured locally.

The CBK data does not give particulars of the imports but the items commonly ordered by state departments and agencies include furniture, textiles, paper products, food, arms, machinery, fuel and lubricants.

Mr Kenyatta said on December 9, 2014 that ministries and parastatals had been given clear instructions to increase the quota of locally produced goods in support of the “Buy Kenyan and Build Kenya” initiative.

He went ahead to increase the local content quota in supplies to government from 30 per cent to 40 per cent on June 1, 2015 to stimulate factory orders.

The presidential directive was aimed at ensuring that at least 40 per cent of supplies to State ministries and parastatals, including direct orders by the government organs, are sourced locally.

Latest statistics show that government imports jumped more than eight times in the four months to last April compared with Sh2.35 billion in 2013.

Annual data further show direct government imports more than tripled to nearly Sh41.72 billion from Sh10.09 billion in 2013 and Sh18.15 billion in 2014.

Kenya remains a net import country with import orders – both government and commercial – rising 6.86 per cent to Sh589.62 billion in the January-April period compared with Sh211.71 billion in exports, a growth of 8.21 per cent.

This resulted in a trade deficit of Sh377.91 billion compared with Sh356.11 billion in the same period of 2017.A wider deficit exerts pressure on the shilling as it means higher demand for the dollars.

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