Kenya’s trade deficit widened to a record Sh946.8 billion in the 10 months to October driven by the doubling of food imports and purchase of machinery from abroad.
The deficit, the gap between imports and exports, widened by Sh265.36 billion compared to the similar period last year, fresh data from the Central Bank of Kenya shows, underlining the country’s continued reliance on imports amid a near flat growth in exports.
This is the first time in three years the deficit has widened and it shows the impact of the increased food imports due to drought that posed a major risk to people, livestock and wildlife.
Imports grew 23 per cent to Sh1.45 trillion in the 10 months while exports grew a measly 2.4 per cent to Sh498.3 billion.
Analysts say the widening deficit is putting pressure on the shilling against global currencies like the dollar and denying Kenya an opportunity to create more jobs because domestic market is getting lost to foreign manufacturers.
A big deficit usually increases demand for the dollar which piles pressure on the shilling, forcing the central bank to intervene, thus depleting foreign exchange reserves.
Forex reserves, statistics show, fell from a high of $8.31 billion (Sh856.85 billion) in early May to $7.10 billion (Sh753.73 billion) at the end of November.
A flat growth in exports suggests a difficult operating environment for enterprises, further hurting income and employment opportunities.
Kenya’s main exports are mainly agro-based like coffee, tea and horticulture that was equally affected by the biting drought.
Around 2.7 million people relied on food aid after low rainfall in October and November last year and rainy season in the April-June season.