Kenya trade deficit narrows

Saturday December 30 2023

Trucks with transit goods from the Mombasa Port in Kenya queue as they approach the Mariakani Weigh Bridge on April 18, 2023. PHOTO | WACHIRA MWANGI | NMG


Kenya’s trade deficit narrowed by 12.5 percent in Quarter 3, 2023, compared with the same period in 2022, after the country’s earnings from exports grew sharply.

Data by the Kenya National Bureau of Statistics (KNBS) shows that the deficit declined to Ksh379.2 billion ($2.4 billion) during the quarter, down from Ksh433.8 billion ($2.8 billion) in 2022.

It is also a significant drop from a negative trade balance of Ksh397.8 billion ($2.5 billion) recorded during the second quarter.

A narrowing trade deficit indicates that the country’s capacity to create jobs locally and support its currency has increased. The narrower trade deficit comes after total exports grew by 19.6 percent while imports declined by 1.6 percent compared with the same quarter in 2022.

Read: Kenya import bill falls for first time since Covid

“The rise in earnings from exports in the third quarter of 2023 was largely boosted by increased domestic exports of tea and horticulture,” said KNBS.


“Conversely, the decline in import expenditure in the same period was majorly occasioned by significant decreases in imports of petroleum products; iron and steel; and chemical fertilisers.”

The quarter saw the value of imports decline to Ksh648.5 billion ($4.1 billion), compared with Ksh659 billion ($4.2 billion) a year earlier, while exports went up to Ksh269.3 billion ($1.7 billion) from Ksh225.2 billion ($1.4 billion).

Earnings from domestic exports of horticultural products, namely fresh fruits, vegetables and cut flowers recorded the highest rise in the quarter, rising from Ksh34.6 billion in the third quarter of 2022 to Ksh48.8 billion.

Similarly, revenue from domestic exports of tea grew from Ksh40.2 billion in the third quarter of 2022 to Ksh50.1 billion in the third quarter of 2023, majorly due to increase in the quantity of tea exported.

However, a 46.3 percent decline in the value of titanium ores and concentrates exports as well as a 23.2 percent drop in the value of exports of apparel and clothing inhibited export earnings from being even higher during the period.

Read: Kenya titanium miner exit risks 870 jobs

High inflation –which averaged 6.93 percent in the quarter– affected consumption and led to a decline in imports.

This decline was mainly seen in the value of imported petroleum products, which fell from Ksh180.1 billion in the third quarter of 2022 to Ksh147.8 billion in the third quarter of 2023.

Similarly, expenditure on imported iron and steel, and chemical fertilizers reduced by 32.2 percent and 72.4 percent, respectively, over the review period.

The value of imported pharmaceutical products, textile yarn, paper and cooking gas also declined during the period.

“Analysis by Broad Economic Category (BEC) classification showed that in the third quarter of 2023, the bulk of import expenditure was on non-food industrial supplies, and fuel and lubricants, jointly accounting for 57.5 percent,” said KNBS.

The increase in exports has helped ease pressure on the country’s foreign exchange reserves, which have been under assault from a significant increase in the global prices of key imports such as fuel as well as rising external debt repayment obligations.