Kenya-China trade deficit widens despite campaign
Tuesday July 05 2022
Kenya’s goods trade deficit with China has continued to widen despite Nairobi making the world’s most populous nation a priority in its new export strategy in July 2018.
Latest official trade data from the Kenya National Bureau of Statistics (KNBS) shows the deficit — the gap between exports and imports — widened to Sh425.17 billion in the year through March 2022 from Sh370.58 billion a year ago, a 15 percent jump .
The deficit has continued on an upward trajectory despite the launch of the Integrated National Exports Development and Promotion Strategy in July 2018 aimed at diversifying and expanding the market for produce.
Kenya made China its top target destination under the strategy to diversify the market for its farm produce such as tea, coffee, cut flowers, fruits and vegetables.
Nairobi then embarked on a diplomatic charm offensive in a bid to smoothen access and grow its market share in China.
That resulted in the signing of the Sanitary and Phytosanitary (SPS) Protocol with Beijing in November 2018, setting stringent agricultural health standards that Kenyan produce has to meet to access the world’s second-largest economy.
Nairobi further announced it had posted five envoys in the Far East Asian region with clear instructions to scout for new markets for Kenya’s largely raw agricultural exports in the expansive Chinese market.
This was targeted at narrowing the gaping goods trade deficit with China which has for years accounted for about a fifth third of Kenya’s total imports, with the bulk of containers going back “empty” from the Port of Mombasa.
The KNBS data, for example, indicate that China accounted for 20.27 percent, or Sh446.65 billion, of Kenya’s Sh2.2 trillion import bill in the review period.
This was a 15.23 percent growth over Sh387.61 billion in the prior year.
The KNBS data, however, shows earnings from exports to China grew at a faster rate of 26.09 percent to Sh21.48 billion—the highest level in the review period.
“China has an internal supply capacity that has enabled supply of diverse products and an internal market that has inbuilt capacity to create the supply for basic commodities and relevant demand for products produced in China,” the Kenya Export Promotion and Branding Agency said in an earlier email to Business Daily.
“It is imperative to understand the Chinese culture for a beneficial trade relation and interfaces with products.”
Before Covid-19 struck, Nairobi was conducting aggressive trade promotion and marketing campaigns in China, aimed primarily at growing and expanding the market for Kenyan farm produce.