Ugandan traders are reaping from the depreciating Kenya shilling, pushing the the value of Kenya’s exports to Uganda to Ksh100 billion mark ($614 million) for the first time.
Official data shows that Kenya exported goods valued at Ksh105 billion ($644 million) to Uganda in the year to November last year, a period that saw the Kenyan Shilling lose 17.45 percent of its value against the Ugandan shilling.
With a weak shilling, prices of Kenyan products dropped, a boon for the local producers of iron, steel and cement, which are the main commodities that Kenya exports to Uganda.
By the end of 2022, a Ugandan trader needed 30.18 units of their currency to get a Kenyan shilling, according to data from the Central Bank of Kenya (CBK). By the end of November 2023, the same trader needed Ush24.90, which means that they could buy more of the Kenyan products with the same amount of their currency
The value of goods exported to Uganda in the first 11 months of 2023 was more than the Ksh80 billion ($491 million) that Kenyans exported to the neighbouring country in the whole of 2022, according to data from the Kenya National Bureau of Statistics (KNBS).
The value of domestic exports — which does not include re-exports such as refined petroleum products — increased by 45 percent from Ksh73 billion ($448 million) in the year to November 2022.
Antony Mwangi, managing director of Kenya Association of Manufacturers (KAM), whose members are the major exporters to Uganda, said that the increase has little to do with increased production.
“Kenya’s currency has not only depreciated against the US dollar but also against Ugandan shilling. So, goods from Kenya are much cheaper," said Mr Mwangi. "So, it may not be because of the increase of products that we are exporting, it may be because our currency now is weaker.”
In the border town of Busia, for example, there have been reports of Ugandans crossing over to Kenya to buy Kenyan products at affordable prices such as cooking oil, wheat flour and other household products.
For a long time, it is Kenyans who have been crossing over to the Ugandan side to buy the “affordable goods.”
Kenya’s exports to Uganda, and Uganda’s imports to Kenya, do not attract any tariffs.
“It is still much cheaper for Uganda to import goods and services from Kenya. The cost of production of goods and services they are importing are high in Uganda also thus causing them to demand from outside,” said Kennedy Manyala, an economist.
For a while, Kenyan exports to Uganda, which include mostly manufactured iron and steel products, have faced stiff competition from similar products coming from China and India, despite the latter attracting a higher duty. This is a boon for local cement producers as well as iron and steel manufacturers as these comprise Kenya’s largest export commodities to Uganda.
Kenya also exports common salt; oil, perfumes, polishing and cleansing preparations; as well as palm oil to Uganda.