Special food imports increase trade deficit (Kenya)

By George Omondi | Business Daily, Kenya October 3, 2017

Kenya’s goods trade deficit increased in the quarter to June as exports fell, mirroring frenzied stock-up of key food items to cover for shortages caused by drought conditions in the first-half of the year.

Merchandise import bill between April and June stood at Sh401.9 billion compared to Sh150.2 billion from export revenues, statistics by the Kenya National Bureau of Statistics (KNBS).

“This resulted into widening of the merchandise trade deficit by 24.2 per cent to Sh260.8billion,” the bureau said in a statement, adding that food and petroleum products were the main import items.

Food Riots

Between March and May, the government scrapped duty on maize and sugar to encourage imports as shortage and high prices pushed the country on the brink of food riots.

At the time of scrapping duty, sugar was retailing at Sh200 per kilogramme while price of a two-kg packet of maize flour had risen to Sh180 in most retail outlets.

The duty-free imports have since driven sugar prices to Sh120 per kilogramme while flour is offered at subsidised price of Sh90 per two-kilogramme packet.

Similarly, crude oil price has been on the rebound for most part of the year, raising the value at which Kenya imports finished petroleum products.

The KNBS data shows maize import bill increased more than eight times to Sh9.3 billion during the quarter compared to the similar period last year while expenditure on rice imports more than tripled from Sh2.8 billion to Sh9.5 billion.

Shot Up

The money spent on shipping in petroleum products shot up in the three months by 15.7 per cent to Sh56 billion.

On the other hand, foreign earnings from tea, horticulture, unroasted coffee and titanium ores dominated the export revenues.

Unlike poor performance on merchandise trade, the export of services expanded by 20.1 per cent to Sh128.1 billion in the three months to June, driven mainly by earnings from travel.

Overall, Kenya registered a 6.4 per cent growth in service trade inflows having recorded a surplus of Sh38.9 billion in the second quarter compared to Sh36.5 billion a year earlier.

Related stories

AsokoNews Brief

Sign up for the Asoko newsletter, highlighting Africa's top business and investment developments each week