Business

Kenya imports drop 10.6 percent in 2023 amid tough economic times

A view of the Nairobi SGR Terminus Station on September 20, 2023. (Photo: Xinhua via AFP)

By Ibrahim Omar | Wednesday, February 7, 2024

The significant decrease in imports marks a major reversal from 2022 when imports went up by 7.3 percent which was driven by high demand.

Kenya’s imports dropped by 10.6 percent in 2023 driven by reduced demand for goods amid high inflation which reduced the spending power of consumers.

The Central Bank of Kenya (CBK) on Tuesday said imports of all categories went down during the period except food imports.

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The significant decrease in imports marks a major reversal from 2022 when imports went up by 7.3 percent which was driven by high demand.

“Imports declined by 10.6 per cent in 2023 compared to a growth of 7.3 per cent in 2022, reflecting lower imports across all categories, except food and crude materials,” said CBK in a statement.

Kenya is a net importer of goods, which means that it imports more than what it exports.

As a result, a decline in imports usually points to local economic challenges, especially in Kenya which does not produce most of the items it imports on scale.

At the same time, lower global prices of key imports could also lower the total import bill.

Kenya’s imports have been growing steadily in recent years driven by increased local demand for goods and services, a depreciating local currency as well as a sharp increase in the cost of key imports, especially fuel and electronics.

Steady growth

The country’s imports have grown steadily from Sh1.76 trillion in 2018 to Sh2.49 trillion in 2022, according to data from the Kenya National Bureau of Statistics (KNBS).

However, the trade deficit has widened further to Sh1.61 trillion.

“The slower growth of exports compared to imports, resulted in the continued widening of the trade imbalance in 2021 and 2022,” said KNBS.

At the same time, Kenya’s exports declined by 2.2 percent in 2023 despite a weaker shilling which increases the earnings of exporters when they convert their income into local currency.

Exports across most categories went down during the year, reversing the 9.3 per cent increase in export earnings recorded in 2022, CBK added.

The decline in exports in 2023 was across several categories, except food, chemicals and manufactured goods exports which increased by 0.8 per cent, 2.8 per cent, and 11.3 per cent respectively.

“The increase in manufactured export receipts reflects strong regional demand,” said the CBK.

This is the first time that Kenya’s exports have declined in four years. The last time the country’s exports dropped was in 2019 when the value reduced to Sh520.78 billion down from Sh542.85 billion in 2018.

Since then, exports have rallied year-on-year, growing from Sh567.37 billion in 2020 to Sh666.73 billion in 2021 and thereafter to Sh779.6 billion in 2022, according to KNBS.