Business

Kenya’s exports decline by 2.2 percent in 2023

One the container ships owned by Korea Marine Transport Container (KMTC) Shipping Line.

By Ibrahim Omar | Sunday, February 11, 2024

This is the first time that Kenya’s exports have declined in four years.

Kenya’s exports declined by 2.2 percent in 2023 due to a weaker shilling which increased the earnings of exporters when they convert their income into local currency.

According to the Central Bank of Kenya (CBK), the country exported goods worth Sh779.6 billion in 2022, indicating that last year’s export earnings reduced to about Sh762. 4 billion.

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CBK data shows that exports across most categories went down during the year, reversing the 9.3 per cent increase in export earnings recorded in 2022.

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 data from the Kenya National Bureau of Statistics (KNBS).

Tea is Kenya’s largest export, fetching the country Sh163.27 billion in 2022 followed by exports of cut flowers and fresh fruits and vegetables, which fetched Sh152.26 billion.

Other top exports include apparel and clothing, coffee, iron and steel, essential oils and animal and vegetable oils.

Foreign exchange

The decline in exports was also a major blow to foreign exchange, with exports the largest source of forex only behind diaspora remittances which are the country’s largest forex source.

With the rapid depreciation of the Kenyan shilling against the US dollar, especially over the past year, importers have been struggling to source dollars to make payments for their imports.

Kenya’s exports have also suffered from diminished demand from source key destination markets especially in Africa which are also struggling with high inflationary pressures of their own.

One of the key export products that took a hit from reduced demand was cut flowers, whose earnings went down sharply to Sh73.45 billion in 2023 compared to Sh104.25 billion in 2022, according to the Horticultural Crops Directorate (HCD).

However, the CBK has projected the economy to stabilize in 2024 in an outlook that bets on the global economy to recover during the year and stimulate demand for Kenya’s exports.

“The economy is expected to remain strong in 2024, supported by the resilient services sector, the improved performance in agriculture, implementation of measures to boost economic activity in priority sectors by the government, and the improved global growth outlook which is expected to benefit exports,” said the CBK.