Kenya’s revenue from goods sold to African countries in the half-year ending June 2024 grew at the slowest pace in five years, partly reflecting the prolonged demand in Uganda and Tanzania, which control almost half of the country’s total exports to markets on the continent.
Traders earned Sh213.08 billion from goods exported to Africa through official borders, an increase of 4.20 per cent lower than Sh204.50 billion in the same period last year.
This marked the softest growth in the six-month review period since 2019, when exports were largely flat, rising 0.06 percent to Sh109.15 billion, an analysis of data collected by the Kenya National Bureau of Statistics (KNBS) showed.
Earlier this year, the value of Kenyan exports to African countries increased at a double rate for three consecutive years from 2021.
But this year, the growth in earnings from goods sold in the continent has shown signs of softening. However, overall, the value of half-yearly goods exports to Africa almost doubled in five years, increasing by 95.21 percent between 2019 and 2024.
Growth in recent years has been driven by demand for cement clinker, lubricants, wheat flour, animal feed preparations and re-exports of kerosene-type jet fuel from other African countries.
KNBS data shows that Uganda remains the biggest destination market for Kenya, buying goods worth Sh66.20 billion between January and June. Orders from landlocked countries, however, grew at a slow pace of 6.26 percent compared to last year when the increase was 38.87 percent to Sh62.30 billion.
Nairobi and Kampala have this year been involved in trade spats.
Kenya, for example, blocks goods such as eggs, sugar, milk powder, and grains in a protectionist policy aimed at protecting local producers from competition, while Uganda also imposes barriers to confectionary imports from Kenya.
Exports to Tanzania also rose at a single-digit rate for the first time in four years. KNBS data shows that traders earned Sh32.01 billion from goods transported to Tanzania in the six months to June, up 7.61 per cent from Sh29.75 billion a year ago.
Kenyan traders also took a hit after earnings from exports to Somalia, mostly miraa (khat), dropped 24.82 percent to Sh8.62 billion from Sh11.46 billion last year.
The slowdown of key regional destinations will be a highlight of Kenya’s long-term export strategy, which lists deepening access to African markets as a priority.
President William Ruto, who takes power in September 2022, has implemented the trade policies of his predecessor Uhuru Kenyatta, which made access to African countries key to growth and diversifying markets for farmers and manufacturers.
Since becoming President, Dr Ruto has taken a leading role in championing the removal of trade barriers among African countries to facilitate the movement of goods, services and labor through the integration of regional trading blocs.
The integration aims to create the world’s largest single market of about 1.4 billion people with an estimated economic output of over $3 trillion (about Sh387 trillion at current exchange rates) under the ambitious African Continental Free Trade Agreement (AfCFTA).
In particular, Dr. Ruto has aggressively lobbied his partners on the continent to use a payment system that facilitates the settlement of intra-African trade transactions in national currencies as a first step to reduce dependence on the US dollar in intra-African trade.
“Technology will play a big role, making sure that our businessmen do not have to be burdened by looking at this currency and this currency in order to trade. We will try and see if we can remove the equation so that we can concentrate on improving trade between our countries,” said the President in the past.
Kenyan leaders have also championed talks with Uganda, the Democratic Republic of Congo, and the Republic of Congo to build a modern railway line linking the Indian Ocean at Mombasa to the Atlantic Ocean, with funding proposed from China.
Securing funds to extend nearly 700km of the standard gauge railway line between Mombasa and Suswa near Naivasha, built by the Chinese at a cost of about $3.75 billion (Sh484 billion at current rates), was the culmination of pitches to Beijing during the Forum in China. – African Cooperation (Focac) in early September.
“As a country, we are ready to work together. That way, we can do our part in Kenya (while) Uganda has done its part,” Dr Ruto said at a recent forum on the AfCFTA in Nairobi.
“We are (also) discussing with the DRC government to see how, together, we can get the resources to get 1,000km in the DRC, connect to the Congo River, and transport our goods and products in the interior of Africa.”
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