China imports hurt Kenya-Africa trade

Thursday, October 3rd, 2019 12:00 |
A ship is loaded with cargo containers ready for export at the Port of Mombasa. Photo/PD/Bernard MAlonza

Kenya will only be able to significantly increase trade with other African countries in 2021 when the African Continental Free Trade Area (AfCTA) kicks in.

Currently, increasing imports from china have stifled growth of intra-African trade.

This is compounded by the trade imbalance favouring China, which in 2017 saw the value of imports to Kenya reach Sh390 billion, a 20 per cent jump from Sh337 billion in 2016, against imports worth Sh1.7 trillion during the same year.

In its second quarter statistics released on Wednesday, Kenya National Bureau of Statistics (KNBS) said the country’s imports from Africa increased slightly by Sh4.5 billion to stand at Sh55.8 billion, compared to Sh50.8 billion registered in a similar period in 2018.

Protecting space

A senior research analyst with Ghengis Capital, Churchill Ogutu believes there will be a change in 2021, when AfCTA kicks in.

“From Africa, there is a shift in imports coming from China. We believe when the AfCTA comes into fruition there will be more intra-African trade,” he says.

But China is doing more to protect its space in Kenya.

The partnership announced by SBM, a leading Chinese bank, with a leading global payment network, UnionPay International to roll out the latter’s UnionPay Prepaid Card in Kenya, will in the near future, enable traders to make direct purchases from China using the Yuan.

In the period under review, Kenya’s maize imports from Tanzania more than doubled, a matter Ogutu attributes to the prolonged drought that was experienced in the country between March and May last year.

“The rains had a profound impact on the staple cereals,” says Ogutu.

The KNBS report shows that whereas imports from Uganda dropped by 45.8 per cent as a result of declines in imports of maize and dried leguminous vegetables, those from South Africa rose by 21 per cent on the back of importations of iron or non-alloy steel products.

Relations with US

According to the quarterly balance of payment report, imports from the US increased to Sh17.6 billion consisting mainly of medicaments and parts and accessories of aircraft, which saw a 69 per cent rise from Sh10.4 billion in second quarter of 2018. 

The increase, Ogutu says, was due to the direct flights between Nairobi and New York through Kenya Airways. 

Argues that the direct flights also saw a decrease in trade between Kenya and EU, especially the Netherlands, which buys most of Kenya’s cut flowers. 

The EU block accounted for 10.7 per cent of the total imports in the second quarter of the year valued at Sh48.4 billion, a decline from Sh58.2 billion in the corresponding quarter of 2018 occasioned by reductions in imports from Italy (39.4 per cent), Belgium (28.7 per cent), Germany (15.7 per cent) and Netherlands (12.3 per cent).  

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