Kenya’s export sector reached a historic peak, surpassing the Sh1 trillion mark for the first time in 2023. This impressive 15.4% growth, as revealed in Nairobi during the 2024 Economic Survey, signifies a major boost for the Kenyan economy.
Traditional exports continue to be a driving force. Tea remains king, generating a whopping Sh188.7 billion, with horticulture following closely behind at Sh187.4 billion. These agricultural giants continue to be major revenue sources for the nation.
Diversification is also on the rise, with apparel and clothing at Sh45.5 billion, coffee at Sh34.6 billion, and iron and steel at Sh32.3 billion contributing significantly.
Uganda has emerged as Kenya’s top export destination, snapping up a remarkable Sh126.3 billion worth of goods. Notably, exports to Uganda crossed the Sh100 billion mark for the first time in November 2023, coinciding with the shilling’s depreciation.
Generally, a weak shilling makes Kenyan products more affordable, benefiting local producers of iron, steel, and cement, which are the primary commodities Kenya exports to the East African neighbor.
Looking beyond East Africa, Pakistan has become a leading market for Kenyan tea, importing a substantial Sh78.9 billion worth. This surge in demand from Pakistan surpasses the US and the Netherlands, solidifying its position as the largest non-EAC destination for Kenyan goods in the first eight months of 2023.
The Netherlands, Tanzania, and the USA remain crucial export partners, purchasing Sh76.3 billion, Sh69.3 billion, and Sh64.3 billion worth of goods respectively.
However, Kenya’s import bill also witnessed a rise, reaching Sh2.6 trillion, reflecting a 4.9% increase compared to the previous year. This resulted in a trade deficit of Sh1.6 trillion, although slightly narrower than before. Nevertheless, the export-import cover ratio improved from 35.1% to 38.6%, indicating progress towards President William Ruto’s goal of reducing reliance on imported goods.
Petroleum products topped the import list, with a staggering Sh606 billion spent on this essential resource. Industrial machinery at Sh289.8 billion and animal and vegetable oils at Sh139.1 billion followed closely.
Read Also : Everything You Need to Know About the Proposed Finance Bill 2024
China remains the top import source, with goods valued at Sh459 billion entering Kenya from the Asian giant. Interestingly, second-hand clothing, popularly known as “mitumba,” continues to be a significant import from China, particularly for low and middle-income earners due to its affordability. This trade, estimated to employ millions of individuals, remains a multi-billion shilling enterprise in Kenya.
South Africa also remains a major source of iron and steel, essential inputs for the Kenyan construction industry. In fact, imports from South Africa jumped a significant 28.3% in 2023, with iron and steel continuing to be the most imported commodity. This trend highlights Kenya’s dependence on certain external sources for critical materials needed to fuel its key sectors.
However, a beacon of hope exists on the horizon. With 24 new countries expected to join the African Continental Free Trade Area’s (AfCFTA) Guided Trade Initiative in 2024, Kenya has the potential to significantly diversify its trade partnerships and potentially source these materials from within the continent.
This increased intra-African trade, facilitated by AfCFTA, could lead to a more balanced trade picture for Kenya in the long run.
