Kenya’s balance of payments (BOP) position improved in the three months to September 30, 2018, as the country exported more goods and services, but the value was not big enough to plug a Ksh39.2 billion ($392 million) deficit.
The BOP tells whether the country is saving enough to pay for its imports.
A negative BOP is bad for an economy, because its means the government has to borrow to finance imports and domestic production, leading to accumulation of debt.
According to the latest data from the Kenya National Bureau of Statistics (KNBS), the country’s stock of forex reserves fell to $8.62 billion, from $9.04 billion, in the same period in 2017. A total of $413 million worth of forex reserves was used to service external debt.
According to the government statistics agency, the overall BOP recorded a deficit of Ksh39.2 billion ($392 million), from Ksh70.1 billion ($701 million) in the same period in 2017.
During the period under review, total exports grew by 3.9 per cent to Ksh150.6 billion ($1.5 billion) from Ksh145 billion ($1.45 billion) while the value of imports dropped by 4.3 per cent to Ksh432.3 billion ($4.32 billion).
This was attributed to increased exports of horticulture, coffee, apparel and titanium ore.
Receipts from the international trade in services increased by 10.1 per cent to Ksh136 billion ($1.36 billion) from Ksh123.6 billion ($1.23 billion), while travel net inflows went up by 23.4 per cent as visitor arrivals increased during the period.
According to the report, earnings from tea, the leading foreign exchange earner, declined by 10.1 per cent to $326 million.
This was as a result of the decline in the unit price of black tea in the international market from $3.18 per kilogramme to $2.64 per kilogramme in the review period.
The report notes that the government’s expenditure on imports fell by 4.3 per cent to Ksh432.3 billion ($4.32 billion) from Ksh451.7 billion ($4.51 billion), largely due to a decline in imports of sugar, maize, animal and vegetable oils and fertilisers.
However, the import bill for petroleum products increased by 35.3 per cent to Ksh76.7 billion ($767 million) during the review period.
Exports in Africa
Africa remained the leading destination of Kenya’s exports during the three months (July-September 2018), accounting for 35.9 per cent of the total exports.
Kenya’s exports to African countries however declined by 3.8 per cent due to a decrease in exports to the Common Market for Eastern and Southern Africa.
The value of exports to Comesa fell to Ksh39.3 billion ($393 million) from Ksh41.7 billion ($417 million).
However, there was a notable increase in total exports to South Africa, mainly on account of machinery re-exports.
Exports to the European Union accounted for 19.7 per cent of the total exports of Ksh29.6 billion ($296 million), with total exports to Netherlands, Germany and Spain recording increases of 14.4 per cent 7.7 per cent and 53.3 per cent.
According to the report, Kenya’s export earnings from the Far East rose by 6.1 per cent to Ksh28.2 billion ($282 million), driven by rising exports to China, India and Japan, which increased by 62.4 per cent, 73.6 per cent and 12.9 per cent, respectively.
Exports to Pakistan dropped from Ksh15.7 billion ($157 million) to Ksh13.8 billion ($138 million).