External trade rebounds on easing global restrictions

Kenya’s expenditure on imports in July rose 14 per cent month-on-month to Sh138.76 billion, signalling increased trade activity in the economy as countries continue to ease measures put in place to reduce the spread of Covid-19.

Data from the Kenya National Bureau of Statistics (KNBS) also reveals a continuous increase in the country’s export earnings to Sh52 billion in July from a low of Sh43 billion April.

July’s consumption of imported goods was the second highest this year after January’s Sh155 billion. The country’s import bill fell to a low of Sh108 billion in May as a result of the pandemic.

Consequently, due to the lower imports in the April to June period, the trade deficit for the first seven months of 2020 narrowed by 19.5 per cent to Sh546 billion from Sh678.9 billion reported over a similar period last year.

At the onset of the pandemic global trade volumes were expected to fall, reversing gains made in inter-regional trade, which has been growing over the years.

“Shutdown in mass production and supply chain disruptions due to the rare twin supply-demand shock will cause further uncertainty in Africa, a continent already grappling with widespread geopolitical and economic instability,” said the World Bank in June.

In a bid to control the spread of the virus, Kenya in April instituted measures that included travel restrictions from countries that were hard hit by the virus, and a ban on importation of second-hand clothes, which was only lifted last month.

Non-food industrial suppliers accounted for 39 per cent (Sh54.5 billion) of the country’s July imports, indicating that businesses were coming back to activity.

They were followed by machinery and capital equipment imports, which took up Sh26.7 billion in the month.

On the export side, food and beverages remained Kenya’s biggest earner, bringing in Sh21 billion during the month and Sh153 billion in the first seven months of the year.

China remained Kenya’s top import source, accounting for Sh34 billion in July and Sh193 billion in the seven-month period, followed by India at Sh15 billion and Sh192 billion, respectively.

In the seven months to July, Pakistan which is the biggest consumer of Kenya’s tea, beat Uganda as the biggest destination of Kenyan goods, importing Kenyan goods worth Sh32.4 billion ahead of Uganda’s Sh30.2 billion.