Exports to Uganda dip by 20pc as trade volume contracts

A heavy machinery loads one of the fourteen containers loaded with primary schools laptops at the Siginon yard in Miritini soon after they arrived at the port of Mombasa September 23, 2016. [PHOTO BY GIDEON MAUNDU/STANDARD]

Kenya’s exports to Uganda declined by 20 per cent in the first 10 months of 2016 in a worrying trend that has seen the country lose out in other key markets.

Latest data from the Kenya National Bureau of Statistics (KNBS), besides drop in exports to Rwanda and the United Kingdom, showed exports to Uganda dipped from Sh52.2 billion last year to Sh41.8 billion in the 10 months to October.

Uganda is Kenya’s biggest export market and a drop should worry policy makers at a time when the East African market has been flooded by cheaper imports from China.

The KNBS report, however, does not explain why there was this decline but previous reports by the World Bank and other agencies have suggested that Kenya could lose its Ugandan market to Chinese goods since they are similar in nature.

“Exports to Tanzania and Uganda are quite similar to China’s, compared to both countries’ exports to the United States or the UK. The greater overlap in East Africa suggests that Chinese goods will likely displace Kenyan exports,” a recent World Bank report read in part.

Kenya mostly exports food, beverages and small industrial products to Uganda. In addition the country is major route for Uganda’s fuel exports since it is landlocked.

But Kenya is fighting to keep its leadership as the preferred route for importation of petroleum products for other East African Community (EAC) members, due to concerns of adulteration. Rwanda prefers to use Tanzania, which it claims has cleaner fuel and has a bigger axle load limit, offering better economies of scale.

The KNBS data shows that exports to the United Kingdom recorded the second biggest decline, contracting by 7.8per cent to Sh30 billion in the period under review. This saw the UK, which was disrupted by the Brexit vote, slide from the second biggest export market last year to number four.

DEFIED FEARS

In 2015, Kenya exported goods worth Sh33.5billion to the UK. Kenya mainly exports horticultural products—flowers, fruits and vegetables to the United Kingdom. The country also banned Miraa, which was an important export for farmers in Meru County.

The third biggest drop is Rwanda, with exports shrinking by 7.5 per cent in the same period. This emerging trend is due to the nation picking the Tanzanian port to import its oil.

Exports to Tanzania remained steady, marginally increasing by 2.5 per cent in the ten months to October. This has defied fears that President John Magufuli’s reign was hurting Kenyan exports as his government championed local production.

But it is great news for exporters to the United States market after exports to the country seemed to be recovering. The US was the second biggest destination for Kenyan exports, increasing by 6.7 per cent in the period under review.

The biggest trade route for Kenya with the US remains through African Growth and Opportunity Act (AGOA), which allows the country to export textiles and apparels. AGOA allows African countries to export about 6,000 different kinds of goods to the US without paying taxes.

The other biggest improvement was in the United Arab Emirates (UAE) market where exports jumped 32 per cent to Sh21.6 billion. This was followed by Egypt and Pakistan.

Product wise, the quantity of coffee exported decreased from 3,172.8 MT in September 2016 to 3,116.1 MT in October 2016. The quantity of tea exported contracted from 33,528.5 MT in September 2016 to 29,655.6 MT in October 2016.

Volume of trade contracted from Sh170.6 billion in September 2016 to Sh157.2 billion in October 2016.

The total value of exports fell to Sh42.09 billion, while the value of imports decreased from Sh124.4 billion in September 2016 to Sh115.2 billion in October 2016,” the report adds.