4 December 2017

East Africa: Kenya's Exports to EAC Countries Decline

Kenya's exports to the East African region dropped in the first eight months of this year, with the largest decline being registered exports to Tanzania.

New data shows that Tanzania cut imports from Kenya by more than $40.5 million to $134.2 million from $174.7 million, as a trade war simmered between the two countries.

Kenya has complained about products like cement, edible oils, textiles, lubricants and products manufactured by industries outside the Export Processing Zones that have been denied preferential market access to Tanzania, because of issues related to the rules of origin.

Nairobi has protested Tanzania's decision to impose a higher local content requirement of 75 per cent of total input in export tobacco, contrary to the EAC agreement.

Data from the Kenya National Bureau of Statistics shows that exports to Uganda, which has been the largest market for Kenya's goods, declined marginally in the eight months to August to $323 million, from $327.9 million, whereas Rwanda imports from Kenya increased to $93.64 million from $92.96 million.

Pakistan overtook Uganda as the largest buyer of Kenyan goods, importing goods worth $394 million, as Kenya's High Commissioner to Pakistan, Julius Bitok, said there are huge business and trade opportunities that need to be explored between the two countries.

A Kenyan delegation has already attended four trade fairs in the Pakistani cities of Karachi, Peshawar, Lahore and Islamabad, organised by Kenya's High Commission in Pakistan in association with the Pakistani Business Association.

Decreased exports

The report by KNBS also shows that Kenya's exports to major destinations like the UK and Egypt decreased whereas those to the United Arab Emirates, Pakistan and Netherlands increased.

Kenya's main exports to these countries are raw tea, coffee, pyrethrum, horticultural products and fruits and flowers.

This comes even as the ratification of the Economic Partnership Agreement with the EU has stalled with countries like Tanzania saying the deal is skewed as it favours Europeans, threatening the local manufacturing base.

US market

Buoyed by the Africa Growth and Opportunity Act (Agoa), and driven by a rise in clothing and apparels exports, earnings by Kenya from the US grew to $313 million from $268.7 million.

The KNBS figures show that imports from China rose to $2.6 billion in the eight months to August, from $2.12 billion over the same period last year, making it the leading source of imports in the Asian region.

Analysts have attributed the trade down turn in East Africa to encroachment in key market segments by Chinese products, local factors like taxation, new competing industries in export markets and instability in South Sudan.

Even as Kenya relies on Africa to absorb more than 40 per cent of its manufactured exports, goods from China have flooded the regional market, making the Asian giant the biggest exporter to the region.

Kenya exports edible oil, fabric, food, animal products, tobacco and cement to the region, but the growing push by local firms to set up subsidiaries in East Africa has also seen a decline in the supply of these goods.

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