Kenyan imports decreased by about 14% in the first eight months of the year, underscoring the effect of the local currency’s declining purchasing power.
Since imports are typically financed with dollars acquired on the local market, the shilling has lost 17 percent of its value against the dollar. The rising inflation this year has also been partially attributed to this.
Kenya’s imports decreased by 13.8% over time, from $13.28 billion (Sh1.97 trillion) in the same period of 2022 to $11.45 billion (Sh1.7 trillion), according to trade data provided by the Central Bank of Kenya (CBK) on Wednesday.
According to CBK data, imports declined across all major product categories, with the exception of food and live animals, where spending increased by 28.3% to $1.71 billion (Sh254 billion).
The biggest drop in imports was in manufactured products, down 27.3 percent to $1.81 billion (Sh269 billion), from $2.49 billion (Sh370 billion) the previous year.
In a briefing for the Monetary Policy Committee, CBK governor Kamau Thugge stated that “normally the depreciation works to incentivize exports and make imports more expensive so that you slow down imports and thus reduce foreign exchange demand and pressure on the exchange rate to depreciate.”
This is a contributing factor. Other reasons, including those in machinery and equipment, partly reflect the fact that the government has completed some of its projects and is no longer importing machinery as much as it once was.
Mineral fuels and lubricants (19.9%), animal and vegetable oils (20.9%), machinery and transport equipment (18.9%), and chemicals (14.3%) were other sectors that saw a fall in imports.
The motor vehicle industry has been negatively impacted by the cost of dollars, forcing dealers and assemblers to boost prices in order to meet their increased costs and preserve profits.
The impact of shilling is being felt in the pricing of locally created items since manufacturers who import their raw materials have also had to modify their prices to protect their margins from the increasing costs.
The cheaper shilling was expected to help exporters, but the effect has not been as strong. Over the past eight months, total export revenues have decreased by 2.2 percent to $4.92 billion (Sh731 billion).
Tea, coffee, horticulture, beverages and tobacco, cooking oils, and clothing all saw a fall in earnings.
