Kenyan traders struggle as exports to key African markets decline first time in six years
Despite the challenges, Uganda remained Kenya’s largest export destination, buying goods worth Sh125.30 billion in 2024.
Kenyan traders have suffered a setback as earnings from goods exported to key African markets fell for the first time in six years, raising concerns over the competitiveness of local manufacturers.
Data from the Central Bank of Kenya (CBK) reveals that in 2024, earnings from exports to African countries dropped to Sh421.34 billion from Sh429.69 billion in the previous year.
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This marks a 1.94 per cent decline, reversing the steady growth recorded since 2019.
The fall comes amid a stronger Kenyan shilling, which gained approximately 17 per cent against the US dollar in 2024.
While a strong currency is often viewed as a sign of economic stability, it has made Kenyan goods more expensive for buyers in other African nations, reducing demand.
Kenya primarily exports processed and semi-processed goods to African markets, with cement clinkers, lubricants, wheat flour, and animal food preparations among the key products.
The country also benefits from re-exporting kerosene-type jet fuel due to its status as a regional aviation hub. However, in 2024, exports to some of the largest markets, including Egypt and Tanzania, recorded sharp declines.
Earnings from exports to Egypt, which mostly comprise tea, dropped by 13.51 per cent to Sh27.63 billion.
This marked the first decline since 2019, halting years of double-digit growth. Similarly, sales to Tanzania fell by 5.56 per cent to Sh65.51 billion, the first drop since 2020.
Largest export destination
Despite the challenges, Uganda remained Kenya’s largest export destination, buying goods worth Sh125.30 billion in 2024.
However, growth in exports to the landlocked country was nearly flat, rising by only 0.11 per cent compared to Sh125.15 billion in 2023. This was the slowest growth rate since 2018.
Industry players attribute the declining export earnings to policy challenges that have affected competitiveness.
A major concern for manufacturers is the export and investment promotion levy introduced by the government.
The levy, which applies to imported clinker, steel, and paper at rates of between 10 and 17.5 per cent, was meant to protect local industries.
However, industry leaders argue that the policy has backfired by making raw materials more expensive, leading to higher production costs. This, in turn, has reduced the competitiveness of Kenyan-made goods in the region.
With African markets accounting for a significant share of Kenya’s exports, traders are now worried about the long-term implications of declining sales.
Many are calling for a review of policies that have made it harder to compete with manufacturers from other countries.
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