Kenya’s earnings from goods sold to African countries for the half-year that ended June 2024 grew at the slowest pace in five years, partly reflecting slowing demand in Uganda and Tanzania, which control nearly half of the country’s total exports to markets within the continent.
Traders earned Sh213.08 billion from goods exported to Africa through official borders, a modest 4.20 percent rise over Sh204.50 billion in a similar period last year.
This marked the softest growth in the six-month review period since 2019, when exports were largely flat, rising a measly 0.06 percent to Sh109.15 billion, an analysis of data collated by the Kenya National Bureau of Statistics (KNBS) shows.
Before this year, the value of Kenya’s exports to African countries had been growing at double-digit rates for three consecutive years from 2021.
This year, however, the growth in earnings from goods sold on the continent has shown signs of softening. Overall, however, the value of half-year goods exports to Africa has nearly doubled in five years, jumping 95.21 percent between 2019 and 2024.
The growth has in recent years been largely driven by demand for cement clinkers, lubricants, wheat flour, food preparations for animals and re-exports of kerosene-type jet fuel from other African countries.
The KNBS data shows that Uganda remained the largest destination market for Kenya, buying goods worth Sh66.20 billion between January and June. Orders from the landlocked country, however, grew at a slower 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 embroiled in trade spats.
Kenya, for example, blocked goods such as eggs, sugar, milk powder, and grains in protectionist policies aimed at shielding local producers from competition, while Uganda also erected barriers against imports of confectionary goods from Kenya.
Exports to Tanzania also grew at a single-digit rate for the first time in four years. The KNBS data shows that traders earned Sh32.01 billion from goods trucked to Tanzania in the six months to June, up 7.61 percent from Sh29.75 billion a year ago.
Kenyan traders also took a hit after earnings from exports to Somalia, largely miraa (khat), dropped 24.82 percent to Sh8.62 billion from Sh11.46 billion a year ago.
The slowdown from key regional destinations will put a spotlight on Kenya’s long-term export strategy, which has listed deepening access to African markets as a priority.
President William Ruto, who took power in September 2022, has adopted the trade policy of his predecessor Uhuru Kenyatta, which made access to African countries as key to growing 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 ease the movement of goods, services, and labour through the integration of regional trading blocs.
The integration is aimed at creating the world’s largest single market of about 1.4 billion people with an estimated economic output of more than $3 trillion (about Sh387 trillion at current exchange rates) under the ambitious African Continental Free Trade Agreement (AfCFTA).
In particular, Dr Ruto has been aggressively lobbying his counterparts on the continent to adopt a payment system that facilitates settlement of intra-African trade deals in national currencies as a first step towards reducing reliance on the US dollar in intra-Africa trade.
“Technology is going to play a big role, making sure that our businesspeople are not unnecessarily encumbered by looking at that currency and this currency to be able to trade. We will try and see whether we can take that out of the equation so that they can concentrate on enhancing trade between our countries,” the President said in the past.
The Kenyan leader has also been championing talks with Uganda, the Democratic Republic of Congo, and the Republic of the Congo to build a modern railway linking the Indian Ocean at Mombasa to the Atlantic Ocean, with proposed financing from China.
Securing funds for extending the nearly 700km of standard gauge railway line between Mombasa and Suswa near Naivasha, built by the Chinese at an estimated cost of $3.75 billion (Sh484 billion at current rates), was top of his pitches to Beijing during the Forum on China–Africa Cooperation (Focac) in early September.
“As countries, we are prepared to work only together. That way, we can do our section in Kenya [while] Uganda are already working on their section,” Dr Ruto told a past forum on AfCFTA in Nairobi.
“We are [also] discussing with the government of DRC to see how, together, we can get the resources to get their 1,000km in DRC, connect it to the Congo River, and transport our goods and products across the hinterland of Africa.”
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