The Star (Nairobi)

2 May 2014

Kenya: Exports to Uganda Shrink for Second Year in a Row

Kenya's export to Uganda, its biggest exports destination, have reduced for the second year in a row in line with a general decline in the country's out-bound trade.

Data in the Economic Survey 2014 shows Kenya exported goods worth Sh65.36 billion to Uganda last year, which was 3.1 per cent or Sh2.09 billion lower than the previous year's Sh67.45 billion.

Exports to the neighbouring country were highest in 2011 when they peaked at Sh75.95 billion, which was 13.9 per cent higher than last year's. "Uganda was the largest destination of exports in the region among partner states with lime, cement and fabricated construction materials (other than glass and clay) being its major imports from Kenya," the Kenya National Bureau of Statistics says in the report.

Tanzania, the second largest export destination for Kenya, also took up fewer goods in the year at Sh40.5 billion, which was Sh5.54 billion lower than in 2012. "Soap, cleansing and polishing preparations were the leading exports to Tanzania during the review period," KNBS said.

Kenya's total exports decreased for the first time in five years to Sh502.29 billion, widening the country's trade deficit further as exports increased faster to Sh1.41 trillion. "The developments in the merchandise account led to the widening of the current account deficit," KNBS said.

The country's balance of payments worsened as a result, decreasing to a surplus of Sh73.92 billion compared to Sh122.92 billion in 2012. Kenya's exports are largely to other African countries which collectively took up 46.1 per cent of its exports in the year under review, according to the Economic Survey 2014. Food and beverages contributed the most in export earnings.

At Sh231 billion however, Kenya's exports to African countries dropped for the first time since 2009 after a steady growth in the previous four years. Uganda, Tanzania, Egypt, Rwanda, Burundi and South Africa were the country's top export destination in that order.

Only Burundi and South Africa recorded growth in Kenyan imports over last year to Sh5.6 billion and Sh3.28 billion respectively. Kenya's exports to India increased by 25.9 per cent in the year to Sh9.48 billion, but this dwarf significantly when compared to worth of goods it imported from the Asian sub-continent at Sh258.23 billion. India is Kenya's largest source market for imports.

An increase in earnings from the telecommunications sector helped push the surplus in international services trade by 10 per cent to Sh228.83 billion from Sh207.98 billion in the previous year.

The Economic Survey report says net portfolio investment inflows moved from a deficit of Sh1.15 trillion in 2012 to a surplus of Sh20.12 billion last year. "This was a reflection of continued and increased participation by foreign investors at the Nairobi Securities Exchange market," it states. Foreign direct investment surplus more than doubled to Sh43.82 billion in 2013, according to the report.

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