Just like I did last year, this morning I played around with data on imports and exports from the Kenya Bureau of Statistics. Understanding the trends of international trade in Kenya is extremely important – as I have said a hundred times in this blog, the imbalance between imports and exports is one of the major weaknesses of the Kenyan economy and one of the root causes for macroeconomic volatility. So, what is Kenya exporting to the outside world? What are the major export destinations?  How about imports?  Are they still growing faster than the exports?

Let me say in advance that here I am showing some basic figures. If you want to know more about imports and exports for specific commodities (tea, fruits, flowers, etc) in specific months you can find very detailed data here. So, let’s  take a look at imports first  (Click on the images to enlarge).

Kenya - Major origin of imports in 2011-2012

Kenya - Imports by broad economic category

The two graphs show two very interesting trends. First, India has officially outgrown China and the UAE as the major importer to Kenya. The value of imports from the UAE has decreased because the Kenyan Shilling has gained strength and therefore its oil bill has gone down significantly. When it comes to China and India, I would like to see an analysis of the political economy behind these trends.   Which African countries are “going Indian” and why? And is this trend relevant only for trade or also in terms of foreign direct investments? A recent article on The Star explained the trend in these terms:

Analysts say India has managed to clinch the lion’s share of Kenya’s import volumes because of, among others, the prevailing cordial foreign policy between the two countries since Kenya gained independence, relatively cheaper goods, quality, and proximity of its ports to Kenya.

The main imports from India include textiles, petroleum products obtained from bituminous minerals (other than crude), medical equipment and drugs, pharmaceuticals, flat-rolled iron and non-alloy steel products, electrical goods, food-processing machinery, special purpose motor vehicles and trucks among others.

“There are quite a number of factors why Kenya is importing more from India. For instance, you will realise that many products on sale in Kenyan retail stores – such as textiles (garments) – come from India. They are cheaper and as we know, Kenyan consumers are sensitive to price, making these a top choice,” said Tiberius Barasa, the executive director of the Centre for Policy Research, a governance and public policy analysis think-tank.

If you know of any paper on this issue please leave it in the comment section.

The second trend is that imports in the broad economic categories have gone up substantially between 2011 and 2012, but we cannot say the same about exports, which remained stagnant over the two-years period. What I find more worrying is that exports to the East African region have decreased (look at Uganda and Tanzania) or increased slightly (Rwanda).

The East African has an interesting analysis on the stagnation of Kenyan exports over the last decade. At the regional level, Kenya is growing as a major importer, but definitely not as an exporter:

Kenya’s standing as East Africa’s trade giant is under threat from neighbouring nations with fresh data showing the growth rate of its exports to the region has been declining over the past eight years.

…The study shows that Kenya’s contribution to total intra-EAC exports declined from 78.3 per cent in 2005 to 57.2 per cent in 2010, although its contribution to total intra-EAC trade increased from 7.5 per cent in 2005 to 16.7 per cent in 2010 on the back of increased imports.

Comparatively, Tanzania and Uganda’s contributions to total intra-EAC trade increased sharply from 6.6 and 4.2 per cent in 2005 to 20.67 and 19.2 per cent respectively in 2010, taking up the share that Kenya lost. On imports, however, Tanzania and Uganda have lost ground.

Tanzania’s contribution to intra-EAC imports declined from 22.4 per cent in 2005 to 18.9 in 2010 while Uganda’s dipped from 70.1 per cent in 2005 to 36.9 per cent in 2010.

Kenya - Exports by broad economic category in 2012

Kenya - major export destinations in 2011-2012