The value of trade between Kenya and its key business partners dropped to Sh2.3 trillion in 2020 from Sh2.4 trillion in 2019 following a higher decline in imports coupled with a moderate growth in total exports.

However, despite the decline, the balance of trade deficit narrowed from Sh1.2 trillion in 2019 to Sh999.9 billion in 2020, leveraging a 7.9 per cent rise in total domestic earnings of Sh643.7 billion from sales of tea, horticulture, coffee, titanium ores and concentrates,  latest government data shows.

Declaration of Covid-19 a pandemic by World Health Organisation (WHO) in March 2020 led to serious disruptions to normal world trade that affected both the supply and demand sides of the global economy. 

In Kenya, the government  ordered temporary closure of international boundaries, imposed curfews and restricted movements, affecting both international and domestic trade, tourism and international travel.

 “As a result, the country registered reduced international trade with the sharpest drop occurring in the second quarter of 2020,” the just released Economic Survey 2021 shows. 

According to the report, while export earnings of horticultural products, tea and titanium ores and concentrates contributed to the increase in domestic exports by 10.6, 14.8 and 20.5 per cent, respectively, total imports, on cost, insurance and freight (c.i.f) valuation exhibited a decline of 9 per cent from Sh1.8 trillion in 2019 to Sh1.6 trillion in 2020.

The survey released by National Treasury Cabinet Secretary Ukur Yatani last week attributes the drop in total imports to decreases in import value of petroleum products, industrial machinery and road motor vehicles. 

“These developments led to an improvement in trade balance from a deficit of Sh1,209.7 billion in 2019 to a deficit of Sh999.9 billion in 2020.

Similarly, the export to import cover ratio improved from 33 per cent in 2019 to 39.2 per cent in 2020,” it indicates.

Peter Otieno, chairman of the Car Importers Association of Kenya (CIAK), told Xinhua early this year that Kenya’s car imports declined by an estimated 50 per cent to 65,000 in 2020 compared to 2019 due to the Covid-19 pandemic disruption.

Scarcity of ships

“Between March and November 2020 there was a scarcity of ships to ferry vehicles into Kenya and this led to a drastic reduction of car imports last year,” he said.

During the review period, the current account deficit improved to Sh512.5 billion from Sh536.8 billion recorded in 2019 on account of a 7.6 per cent increase in exports and 8.7 per cent decrease in imports valued on free on board (f.o.b) basis.

Net inflows of international trade in services decreased by 79 per cent from a surplus of Sh178 billion in 2019 to a surplus of Sh37.5 billion in 2020, in view of travel restrictions imposed during the review period to contain the spread of Covid-19 both locally and the rest of the world.

However, despite the economic hardships abroad, diaspora remittances remained robust, with Kenyans leaving and working abroad remitting Sh330.8 billion in 2020 from Sh289.5 billion in 2019.

Net financial inflows declined by 43.0 per cent from Sh607.6 billion in 2019 to Sh346.5 billion in 2020.

Other investment inflows registered a surplus of Sh396.6 billion in net inflows in the review period, reflecting an increase of 4.1 per cent.

Net foreign direct investment inflows declined by 11.9 per cent from a surplus of Sh87.5 billion in 2019 to a surplus of Sh77.1 billion in 2020.