Market News

Maize and SGR imports raise trade deficit by Sh216 billion


Cargo at the port of Mombasa. FILE PHOTO | NMG

Kenya’s trade deficit widened by Sh215.6 billion in the first eight months of the year as the cost of maize and rail imports soared amidst flat export earnings.

Latest data from the Kenya National Bureau of Statistics (KNBS) shows the cost of imports rose by 23 per cent or Sh216.3 billion to hit Sh1.156 trillion in the eight months to August, while export earnings only rose by Sh701 million or 0.2 per cent to Sh394.4 billion.

Imports rose when the government was importing rolling stock for the standard gauge railway and, in the second quarter, when the effects of drought pushed up food imports.

READ: Mombasa port defies poll jitters to post 10pc rise in cargo traffic

According to Central Bank of Kenya, the worsening of the trade deficit has also had an effect on the current account, widening it by 5.4 per cent in the second quarter of the year to Sh135 billion from Sh128 billion at the end of quarter one.

“Food imports rose on account of increased importation of cereals and sugar during the first half of 2017 resulting from dry weather conditions.

The increase in oil imports in the second quarter of 2017 reflected relatively higher oil prices on the international market,” said CBK in its quarterly economic review for the three months to June.

READ: Domestic debt near Sh2.2trn amid gaping budget deficit

The KNBS data shows that in the eight months to August, food and beverage imports accounted on average for 14.1 per cent of the total import bill, compared to just 7.8 per cent in a similar period in 2016.

Exports on the other hand were flat, with the manufacturing sector in particular suffering due to the slowdown in the economy, also hit by a heated political climate.

Drought also affected volumes of tea and coffee exports, offsetting the benefit of higher prices of the commodities in the global market. Industrial output has this year also been affected by lack of access to credit by the private sector.