Imports decline defying a weak shilling, KNBS data now shows

An arerial view of Mombasa Port. The Port has been expanded to handle more containers. [Omondi Onyango, Standard] The value of goods that Kenyans imported over the quarter to September 2023 dropped as activity among local industries slowed down as they grappled with the high cost of production. The reduced cost of imports during the quarter was against expectations that the weak shilling would see the import bill go up. Official data shows a decline in the value of petroleum products imported over the quarter. Additionally, there was a decline in the value of key imports used by local industries in the production of different products including steel and fertiliser. This is even as exports, which while generally on the rise, suffered major reductions as exports of titanium and apparel clothing dropped significantly. The value of imports to Kenya over the three months reduced by 1.6 per cent, according to official government data, to Sh648.6 billion from Sh659 billion over a similar quarter in 2022. The imports during the quarter defied a weak shilling, which has resulted in a higher cost of imported goods with other research showing that the local private sector has been on a decline hit by the high cost of raw materials and reducing consumer demand. Petroleum products The Kenya National Bureau of Statistics (KNBS) said the lower value of imports was partly due to the lower cost of petroleum products imported into the country. Kenya's petroleum import bill dropped 18 per cent to Sh147.8 billion over the quarter to September from Sh180.1 billion during a similar quarter in 2022. "Expenditure on imports in the quarter under review amounted to Sh648.6 billion, indicating a decrease of 1.6 per cent from the third quarter of 2022," said KNBS in the Quarterly Balance of Payments (BOP) report last week. "This decline was mainly attributed to a decline in the value of petroleum products, which decreased from Sh180.1 billion in the third quarter of 2022 to Sh147.8 billion in the third quarter of 2023." Other than the declining cost of oil in the global markets, the value of imported petroleum products has also dropped as pump prices stayed high, resulting in declining consumption. In its GDP numbers for the same quarter, KNBS noted that consumption of light diesel, a key input to land transportation, decreased by 2.3 per cent over the quarter. KNBS added that there was a reduction in other key imports including steel, fertiliser, pharmaceuticals and paper and paperboard. These are key inputs for local industries and a drop in imports could be a pointer to a possible reduction in activity among Kenyan manufacturers. "Similarly, expenditure on imported iron and steel, and chemical fertilisers reduced by 32.2 per cent and 72.4 per cent, respectively, over the review period. Other commodities that registered declines were medicinal and pharmaceutical products (4.8 per cent); textile yarn, fabric, and related products(13.2 per cent); paper and paperboard (17.9 per cent); structures and parts of structures of iron, steel or aluminium (45.1 per cent); and liquefied propane and butane (17.1 per cent)." Over the nine months to September last year, total imports stood at Sh1.88 trillion, a drop from Sh1.91 trillion which was the value of imports over a similar period in 2022. Reports show that private sector activity has been on a decline, affected by the high cost of doing business including the high cost of inputs as well as softening consumer demand. Stanbic Bank's Purchasing Managers' Index (PMI) for November showed that companies exhibited a sizable fall in output and new orders. Rapid inflation, the PMI noted, suppressed demand and created cash flow challenges, leading to further cuts in activity by the private sector, staffing, and purchasing. The KNBS BOP report also shows that despite a general growth in exports, there was a sharp decline in some of the local products. While agricultural exports posted growth, key exports including titanium ores and apparel dropped by huge margins. The drop in the export of titanium ores is primarily due to a decline in production at the Kwale County mines that are nearing end of life, where mining is expected to end in December this year.

Imports decline defying a weak shilling, KNBS data now shows

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