Why Kenya lost Sh7 billion in exports to EAC

Trucks ferrying goods to Uganda await clearance at the Malaba border. [File, Standard] Stronger economic growth in other East African Community (EAC) countries is slowly edging out Kenya as the gateway of goods to the rest of the region, the latest report by the government statistician shows. An analysis of the 2025 Economic Survey Report by the Kenya National Bureau of Statistics (KNBS) shows that Kenya exported almost Sh7 billion fewer goods to the rest of the EAC countries in 2024 when compared to 2023. Only the Democratic Republic of Congo (DRC) saw Kenya increase the value of exports by Sh5.3 billion. Exports to DRC increased from Sh26.4 billion to Sh31.7 billion in the period. Kenya exported Sh17.4 billion worth of goods to Somalia, which is a new entrant into the EAC, hence no comparable values with 2023. However, goods to Uganda, which is Kenya's leading global trading partner, dropped from Sh126.3 billion in 2023 to Sh125.9 billion in 2024. Exports to Tanzania went down by Sh2.1 billion - from Sh69.3 billion in 2023 to Sh67.2 billion in 2024 while the value of goods to Burundi also dropped by a similar figure, recording Sh7.5 billion in 2024 compared to Sh9.3 billion in 2023. Goods to South Sudan, which is the only EAC country that recorded a negative gross domestic product (GDP) growth in 2024, also went down from Sh32 billion to Sh29.7 billion in 2024. In total, Kenya exported goods valued at Sh7.3 billion less to EAC countries in 2024 compared to 2023. And during the period, other EAC nations recorded better GDP growth compared to Kenya. Rwanda recorded the highest GDP expansion in 2024 of seven per cent, even though this was a decelerated growth compared to 8.2 per cent in 2023. It was followed by Uganda's 5.9 per cent, Tanzania's 5.4 per cent with Kenya and the DRC coming third with 4.7 per cent, which were both decelerated growth from 5.7 per cent and 8.4 per cent, respectively, compared to 2023. Burundi had GDP growth of 2.2 per cent in 2024 with South Sudan, that has been in the middle of civil unrest contracting its GDP by 26.4 per cent in 2024 compared to a positive growth of 2.5 per cent in 2023. The KNBS report explains that exports to Uganda decreased due to a decline in cement clinker and palm oil destined for this market. "Similarly, exports to Tanzania dropped from Sh69.3 billion in 2023 to Sh67.2 billion, partly resulting from decreased domestic exports of medicaments and soap in 2024," reads the Economic Survey Report. But the increase in exports to the DRC was not during the period. "The growth was primarily contributed by increased domestic exports of palm oil and medicaments, and re-exports of kerosene type jet to this destination," says the KNBS report. The increase of exports to the DRC and a surge in imports from Tanzania softened the numbers a little even contributing to the overall reduced trade imbalance from a deficit of Sh1.6 trillion in 2023 to Sh1.5 trillion in 2024 which the KNBS report also links to a higher growth in the value of total exports that went up 10.4 per cent in the year under review compared to 3.6 per cent growth in imports. "Conversely, there was a notable increase in imports from Tanzania, which moderated the overall decline. The growth was largely occasioned by increased imports of rice, coal, chemical fertilisers, mosquito nets, flat glass, and oilseed meals from this source," the report says. These figures come on the backdrop of concerns raised by the private sector, led by their lobby bodies Kenya Association of Manufacturers (KAM) and the Kenya Private Sector Alliance (Kepsa), who noted that a difficult business environment risks turning Kenya into a supermarket for goods produced in other countries. The taxation regime, blamed on miscellaneous levies and charges and fees by regulatory bodies has been singled out by businesses as pain points. Additionally, pending bills and VAT refunds, which the government seeks top resolve through moving some goods from zero rated to exempt, have also been mentioned by players. "We are losing our competitive edge not only globally but also to our neighbours, and it is about time we start saying: What are those things that we must do together," said Kepsa Chief Executive Carole Kariuki during a sit-down with the principal secretaries of National Treasury Dr Chris Kiptoo and Investments Abubakar Hassan. She said there is a need to look at those areas that are impacting business, and what must be done in collaboration with the government, especially around taxation. "There is a Finance Bill that is coming up, and for all who were here last year, we know how that went. We do not want to go through that journey again," said Ms Kariuki. Bidco Africa Chair Vimal Shah, who was part of the meeting, said the country's exporting ability is being weakened by levies and fees. "For exports, believe you me, export competitiveness is being eroded in this country. Why? Your excise duty is going up. You are putting excise on everything and levies on anything, and therefore, when you export the product, you cannot get a VAT refund," said Mr Shah, who has a stake in the edible oil business that contributes largely to the country's exports. "If we cannot take advantage of EAC, the Common Market for Eastern and Southern Africa (Comesa) and the African Continental Free Trade Area (AfCFTA), we are actually saying all industries, manufacturing and production, move to Uganda, Tanzania or other countries, and we will still be a supermarket. Kenyans will not stop consuming." The Afcfta brings together a market base of 1.4 billion people, which Kenya seeks to tap into. Kenya is part of a tripartite agreement that brings together the EAC, Comesa and the Southern African Development Community (SADC) in anticipation of getting its goods access to other markets belonging to different regional economic blocs. The KNBS report shows that the total volume of trade with African countries declined by 2.2 per cent from Sh712 billion in 2023 to Sh696.3 billion in 2024. "Earnings from exports to the African region decreased by 2.2 per cent from Sh435.0 billion in 2023 to Sh425.6 billion in 2024. The decline was mainly occasioned by a decrease in exports to all countries in the EAC region except the DRC and Somalia," the KNBS report says. "Despite this decline, the EAC region continued to dominate as the main destination for Kenya's exports, accounting for 75.5 per cent of total export earnings from the continent." The question of Kenya's competitiveness in the region was posed to President William Ruto during his recent visit to China when he met a section of Kenyan businesses based in the Asian country. He argued that Kenya's categorisation as a middle-income country puts it at a disadvantage since the least developed nations in the region have preferential access to markets by virtue of their economies not being as large. He said trade agreements like the one he went to discuss with his Chinese counterpart Xi Jinping, should bring Kenya and her neighbours at the same level when it comes to exports. "We are categorised higher than them, so while they export duty-free, Kenya exports with duty," he explained.

Why Kenya lost Sh7 billion in exports to EAC

Get Full Access for Ksh299/Week.

Related Topics

Similar Articles

Latest Stories

The Standard Insider

Digger Classified

GET OUR NEWSLETTER

CONNECT WITH US

FOR THE LATEST JOB ADVERTS

Similar Articles

Fuel prices remain unchanged despite Middle East tensions

Full-in tray for reappointed nuclear agency chair

End of an era as Kirubi family exits Sidian Bank in multi-billion deal

Naivasha businesses light up as firms rush to showcase Safari Rally-style services

DIGGER JOBS

Digger Motors

Digger Real Estate

Why Kenya lost Sh7 billion in exports to EAC

Get Full Access for Ksh299/Week.

Related Topics

Similar Articles

Latest Stories

The Standard Insider

Digger Classified

GET OUR NEWSLETTER

CONNECT WITH US

FOR THE LATEST JOB ADVERTS