Drop in tea and coffee exports eat into Kenya's foreign earnings

Workers use tea-picking machine at a farm in Nandi Hills, Nandi County. [Photo: Kevin Tunoi/Standard]

Kenya’s export earnings dropped by 12.3 per cent in the third quarter of 2016 following reduced performance in the tea, coffee and horticulture sectors.

New data released by the Kenya National Bureau of Statistics (KNBS) on the country’s balance of payments for between June and September indicates that total domestic export earnings fell from Sh139 billion recorded in 2015 to Sh122 billion in 2016.

“Domestic export earnings fell by 12.3 per cent to Sh122.4 billion during the third quarter of 2016,” says the KNBS report.

Exports of both horticulture and tea declined by 16.3 per cent and 6.2 per cent respectively during the period under review compared to a similar period in 2015.

The country’s current account deficit further narrowed by 10.4 per cent to Sh100.6 billion, down from Sh112 billion recorded in the previous quarter.

Tea maintained the top foreign-earner spot, accounting for 23.8 per cent of the total export earnings during the third quarter of 2016, with horticulture coming in second at 21.4 per cent. Clothing, textiles and apparel took up the third spot at eight per cent. Recent data from the Kenya Tea Development Agency (KTDA) indicates total cumulative payments made out to its farmers since 2012 amount to Sh237 billion. The sector continued the pattern of growth recorded in the past five years, with green leaf production rising by 12 per cent from 1,039 million kilogrammes in 2015 to 1,233 million kilogrammes in 2016.

Foreign earnings from tea in 2016, however, reduced from Sh31 billion earned in the months between July and September to Sh29 billion in a similar period the previous year.

Foreign remittances and the country’s active conference tourism sub-sector helped boost earnings and narrow the current account deficit by 10 per cent from Sh112 billion in the third quarter of 2015 to Sh100 billion last year. According to a recent report from the World Economic Forum, Kenya ranks 78th in the global tourism market out of 141 countries, faring strongly in terms of natural resources (11th) and brand visibility online (10th).

High-profile conferences

The country also leads in Africa in the number of known species of mammals, birds and amphibians.

Kenya is further home to one of the largest diplomatic communities in Africa, hosting several regional and international agencies such as the United Nations Environment Programme (UNEP) and a host of foreign missions. In 2016, the country played host to the 14th edition of the United Nations Conference of Trade and Development (UNCTAD) that brought together 7,000 delegates from across the world led by UN Secretary General Ban Ki-Moon.

The feat followed similarly high-profile conferences held in the country recently, including the Global Entrepreneur Summit, which saw US president Barack Obama visit Kenya and Ethiopia for the first time and the World Trade Organisation (WTO) Ministerial Conference, among others. “Net earnings from international trade in services increased by 69.8 per cent to Sh34 billion,” says KNBS in its report.

The increase was on account of increased travel receipts boosted by conference tourism during the third quarter of 2016.

During the period, surplus in the travel account more than doubled from Sh12 billion in the third quarter of 2015 to Sh25 billion in the corresponding quarter of 2016.

Kenyans living abroad further helped boost foreign earnings with remittance inflows amounting to Sh43 billion in the third quarter of 2016 up from Sh40 billion in a similar period the previous year.