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How Emirati airlines distort Kenya, UAE trade balance
Ministry of Investments, Trade and Industry (MITI) Cabinet Secretary Lee Kinyanjui makes his remarks during the 2025 Quarter One (Q1 2025) State of the Oil Industry Briefing held on March 25, 2025 at Serena Hotel.
Trade balance between Kenya and the United Arab Emirates (UAE) faces the risk of being distorted by increased direct flights from Nairobi to the Middle-East country, which has cranked up re-exports of jet fuel, official statistics suggest.
Analysis of trade data shows more than half of Kenya’s total exports to the UAE are aviation oil bought by international airlines such as Emirates, flyDubai and Etihad from domestic oil marketing companies at the Jomo Kenyatta International Airport.
Data from the Kenya National Bureau of Statistics (KNBS) shows the value of re-export of petroleum oil, largely kerosene-type jet fuel, to the Middle-East economic powerhouse surged 787.18 percent last year to Sh56.10 billion from Sh6.32 billion in 2023.
The Energy and Petroleum Regulatory Authority (Epra) has maintained that jet fuel re-exports reflect the value of fuel consumed by “international airlines such as Emirates”, which the Kenya Revenue Authority captures as “re-exports”.
The ballooned re-exports of jet fuel accounted for 55.36 percent of Sh101.34 billion total exports to the Emirati, catapulting the oil-rich country to be second second-largest destination market for Kenya behind neighbouring Uganda.
The petroleum re-exports have helped UAE leapfrog top buyers of Kenyan goods such as Pakistan (tea), the Netherlands (tea) and the US (garment and apparel) when measured by total value of exports.
Experts, however, warn that increased re-exports in trade data have the potential of not only inflating the total value of trade but also distorting the trade balance (difference between imports and exports) between the two countries.
They argue that a large share of re-exports may lead to the total value of exports appearing larger than the real domestic orders from abroad, while imports will look larger than domestic consumption.
“Different customs agencies [which include KRA] may use varied valuation methods. Typically, import values include freight and insurance costs, while export values do not, contributing to discrepancies,” reads a blog published by the World Bank Group in January 2024 exploring trade discrepancies in international trade statistics.
“The re-routing of products through third countries often leads to a mismatch in the recorded country of origin.”
Kenyan traders largely source jet fuel from the Middle East, especially Oman and the UAE. The bulk of the imports are then re-exported when international airlines fuel at the JKIA hub.
“KNBS in their report capture it [aviation fuel] as a re-export because when OMCs [oil marketing companies] fuel international airlines such as Emirates, the value of fuel is considered by KRA as a re-export,” Daniel Kiptoo, director-general at Epra, told the Business Daily last October.
“I understand flights to and from the UAE have increased in the last year. For example, flyDubai has increased its flights to Mombasa to four times a week, which has translated to increased ‘re-exports’ of jet fuel to the UAE.”
UAE’s state-controlled carriers — Dubai-based Emirates and flyDubai as well as Abu Dhabi-based Etihad operate flights to more than 100 destinations across the world from Kenya.
Airlines that operate direct flights between Nairobi and Dubai from Kenya include national carrier Kenya Airways, Saudi Arabia’s Saudia, Oman’s SalamAir and Bahrain’s Gulf Air.
UAE, however, was the biggest buyer of the aviation oil from Kenya, according to official data collated by the KNBS and sourced from the KRA.
The KNBS data shows the aviation fuel re-exports helped bump up the official value of total goods sold to the Emirati economy by 81.20 percent in 2024 to Sh101.34 billion from Sh55.93 billion the year before.
With the value of imports from the UAE falling 6.18 percent year-on-year to Sh438.59 billion due to a drop in petroleum prices and strengthening of the shilling against major international currencies, the import-export gap between the two countries narrowed in favour of Kenya.
The data shows Kenya narrowed trade deficit with oil-rich UAE to Sh235.91 billion last year from Sh355.61 billion in 2023—a drop of Sh119.69 billion.
The Emirates, which has successfully ploughed oil wealth into other sectors from tourism to real estate, has been keen on growing non-oil trade and investments with Kenya, while Nairobi is seeking to increase exports of goat and sheep meat as well as tea.
Negotiating teams from Nairobi and Abu Dhabi in February 2024 concluded the technical negotiations for the Kenya-UAE Comprehensive Economic Partnership Agreement (CEPA), which seeks to deepen trade and investment ties with a key focus on non-oil goods.
“What they [UAE] have, we don’t have. They have [temperatures of] 40 degrees, so agriculturally, they are down, while we have that advantage where we can grow almost everything,” Trade Cabinet Secretary Lee Kinyanjui said on May 8.
“Flights take five hours [to Dubai], while sea travel is seven days.”
The UAE has been one of the most visited countries by President William Ruto since he took power in September 2022.
The blossoming relationship has seen Nairobi and Abu Dhabi reach a deal where Abu Dhabi is guaranteeing a $1.5 billion (about Sh195 billion) bond for budgetary support.
