Kenya’s trade deficit narrowed by Sh14 billion as local firms reduced their appetite for industrial supplies in the three months to March, official data shows.

Data from the Kenya National Bureau of Statistics indicates that imports dropped to Sh345.2 billion in quarter one, down from Sh356 billion in a similar period last year.

This narrowed the gap between goods bought from foreign countries and exports, which grew by two per cent in the period under review to Sh134.5 billion.

Capital equipment for industrial and infrastructure development has been a major contributing factor to the widening trade deficit and balance of payment.

“Industrial supplies (non-food) were the main import items followed by fuel and lubricants, machinery and other capital equipment including transport equipment,” KNBS data states.

Industrial supplies account for about a third of Kenya’s imports and their value dropped to Sh77.1 billion in the first two months of the year, from Sh82.1 billion in the same period last year.

The value of fuel products, which averagely account for a quarter of Kenya’s imports, dropped to Sh53.3 billion in January and February, from Sh56.2 billion in the two months last year.

This is due to cheaper oil since Kenya consumed 965,000 metric tonnes of fuel products, from 917,000 in quarter one of last year.

The reduction in the orders of industrial goods could point to a slowdown in certain critical sectors of the economy like manufacturing.

The contribution of manufacturing to Kenya’s gross domestic product dropped to an all-time low last year, reflecting an ongoing shift in the economy’s structure towards the services industry.

Industries accounted for 8.9 per cent of GDP last year compared to 9.5 per cent in 2012, marking a new low in a steady slide that has been afoot for a decade.

Kenya’s Vision 2030 economic blueprint has identified the manufacturing sector as one of the main factors expected to drive down the import bill.

China and India remain Kenya’s dominant sources of imports, accounting for more than half of goods bought by locals from foreign nations.

However, exports to these countries form a fraction of the trade.

Source: Business Daily

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