Kenyan traders struggle as export sales to Africa drop

Kenyan exporters are grappling with a decline in earnings from African markets, marking the first drop in six years.

Data from the Central Bank of Kenya (CBK) shows that in 2024, export revenues from African countries fell to Sh421.34 billion, down from Sh429.69 billion in the previous year.

The 1.94 percent decline reverses the steady growth recorded since 2019.

The downturn comes as the Kenyan shilling strengthened by about 17 percent against the US dollar in 2024.

While a stronger currency is often associated with economic stability, it has made Kenyan goods more expensive for buyers in the region, leading to reduced demand.

Kenya exports a variety of processed and semi-processed goods to African markets, including cement clinkers, lubricants, wheat flour, and animal food preparations.

The country also benefits from re-exporting kerosene-type jet fuel due to its position as a regional aviation hub.

However, in 2024, exports to major markets such as Egypt and Tanzania saw sharp declines.

Earnings from exports to Egypt, primarily driven by tea sales, dropped by 13.51 percent to Sh27.63 billion.

This was the first decline since 2019, interrupting years of double-digit growth. Similarly, exports to Tanzania fell by 5.56 percent to Sh65.51 billion, marking the first drop since 2020.

Despite these challenges, Uganda remained Kenya’s top export destination, purchasing goods worth Sh125.30 billion in 2024.

However, growth in exports to Uganda was nearly stagnant, rising by only 0.11 percent from Sh125.15 billion in 2023. This was the slowest growth rate since 2018.

Industry players have linked the decline in export earnings to government policies that have affected the competitiveness of local manufacturers.

One of the biggest concerns is the export and investment promotion levy imposed on imported raw materials such as clinker, steel, and paper.

The levy, which ranges between 10 and 17.5 percent, was intended to protect local industries but has instead driven up production costs.

Manufacturers argue that higher costs have made Kenyan goods less competitive in regional markets, leading to a slowdown in demand.

With African markets accounting for a significant share of Kenya’s exports, traders are increasingly worried about the long-term impact of declining sales.

Many exporters are now calling for a policy review to ensure that local industries remain competitive and can sustain their presence in key African markets.