People viewing machinery on exhibition at the Kenya Wheat Expo 2023 organised by Nation Media Group, at Central Primary School ground in Eldoret town Uasin Gishu County on June 30, 2023.
Kenya’s import bill for the first quarter of the year has rebounded from last year’s drop on increased orders for machinery, fuel and industrial supplies, signalling growth in economic activities.
Traders spent Sh679.21 billion on goods from abroad in the three-month period through March, provisional data from the Kenya National Bureau of Statistics shows, a 15.85 percent growth over Sh586.27 billion in a similar period last year.
The double-digit jump in value of imports represents a recovery from marginal 0.9 percent fall a year ago when economic activities in key economic sectors such as manufacturing, and construction were largely subdued.
The KNBS data shows increased expenditure on imports was largely driven by orders of machinery, transport equipment, fuel and non-food industrial supplies.
These goods are primary drivers of production in Kenya, pointing to increased economic activity in the quarter under review.
The value of transport equipment shipped into the country increased 51.34 percent to Sh57.71 billion.
It was followed by machinery and other capital equipment whose value rebounded from a 23.85 percent fall in the first quarter of last year to grow 25.53 percent to Sh75.49 billion, while expenditure on fuel, a key enabler of production, rose 18.58 percent to Sh169.59 billion.
Orders for non-food industrial supplies such as iron and steel, paper and paper board as well as textile yarn also recovered from 6.80 percent drop previously to rise 6.18 percent to Sh234.63 billion, the KNBS data shows.
These are largely semi-processed goods used by factories to make finished goods and are a key indicator for activities in the manufacturing sector–the largest driver of jobs in Kenya.
Manufacturers last year complained of a “harsh” business environment characterised by rising prices of raw materials, power and taxes amid eroded consumer purchasing power, which lowered demand and cut their cash flow positions.
This was reflected in the full-year output for the manufacturing sector whose growth decelerated to 2.0 percent from 2.6 percent the year before.
Central Bank of Kenya governor Kamau Thugge, citing trade data for the first few months of the year, expects the manufacturing sector’s growth to rebound this year.
“We expect manufacturing to start contributing to overall growth of GDP (gross of domestic product). We expect its growth to increase to three percent,” Dr Thugge said on April 4.
“Although we still believe this [growth rate] is low, this can be improved and indeed we expect manufacturing to be a driver of GDP growth and to increase by more than three percent.”
The recovery in imports resulted in Kenya’s goods trade deficit for the quarter under review to widen 7.67 percent to Sh382.18 billion.
This is despite the import bill growing slower than export earnings which climbed 28.41 percent to Sh297.03 billion in the three-month period.
Kenya has over the years struggled to narrow its goods trade deficit – the gap between merchandise exports and imports – partly due to relying heavily on traditional farm produce exports such as tea, horticulture and coffee which are largely sold raw, fetching relatively lower earnings.
Exports income during the January-March 2024 period was largely lifted by tea whose earnings jumped a third (33.66 percent) to Sh57.77 billion. Coffee exports, on the other hand, were flat, falling a measly 0.55 percent to Sh7.60 billion.
