Kenya low exports to US denies traders dollar windfall
Thursday August 10 2023
Kenya’s earnings from exports to the United States for the half-year period ended June slid at the sharpest pace in more than two decades. PHOTO | SHUTTERSTOCK
Kenya’s earnings from exports to the United States for the half-year period ended June slid at the sharpest pace in more than two decades, denying traders gains from a weakening shilling against the dollar.
The country sold goods worth Ksh32.21 billion ($224.54 million) to the world’s largest economy, according to provisional official data collated by the Central Bank of Kenya compared with Ksh40.36 billion ($281.35 million) in a similar period last year.
The 20.19 percent decline in earnings was the largest since the 20.64 percent drop in 2002 during the early years of the Africa Growth and Opportunity Act (Agoa) that allows duty- and quota-free access for thousands of products.
Read: Agoa jobs in Kenya hit 66,000
Kenya largely exports articles of apparel under the Agoa pact, while largely importing pharmaceutical products and aircraft from the world’s largest economy.
Jaswinder Bedi, a veteran textiles technologist and manufacturer who chairs the board of Kenya Export Promotion & Branding Agency, attributed the plunge in the value of exports to excess orders from Kenya.
The orders exceeded demand in the US last year when the country, just like most of its peers in the developed world, endured a four-decade high inflation which hurt sales.
“The drop is largely because the inventory levels in the USA are high following excess purchase post-Covid-19,” Mr Bedi told the Business Daily.
Statistics show the value of Kenya’s exports to the US jumped by nearly half in the first six months of last year, climbing 48.12 percent to a record Ksh40.36 billion for the review period.
Read: Kenya expects trade deal with US in a year
The drop in orders from the world’s topmost economy saw it move from being Kenya’s largest global destination for the half year period in 2022 to third position after being overtaken by the Netherlands and Pakistan.
The Netherlands is the largest buyer of Kenya’s cut flowers, while Pakistan is the biggest for tea. Kenya has struggled to expand exports to the US beyond apparel, vegetables and minerals with manufacturers blaming the high cost of production.
“Even with the duty-free access to the US markets, we are still 15 to 20 percent more expensive than our competitors in the Far East or Central Asia. Why? Power, water and labour in Kenya are very expensive,” Antony Mwangi, the CEO of the Kenya Association of Manufacturers said in a past interview.