Kenya’s export revenues to the US dip to a 20-year low amidst shilling depreciation
Kenya’s export revenue to the United States decreased at the fastest rate in more than 20 years during the six-month period that ended in June, preventing merchants from profiting from the shilling’s depreciation against the dollar.
According to preliminary official statistics compiled by the Central Bank of Kenya, the nation exported commodities worth Ksh32.21 billion ($224.54 million) to the largest economy in the world, down from Ksh40.36 billion ($281.35 million) in the same time the previous year.
Since a 20.64% decrease in 2002, when the Africa Growth and Opportunity Act (Agoa), which permits thousands of items duty- and quota-free entry, first took effect, the profits decline of 20.19 percent was the biggest. Under the Agoa deal, Kenya mostly exports clothing while purchasing pharmaceuticals and airplanes from the greatest economy in the world.
The board chairman of Kenya Export Promotion & Branding Agency, Jaswinder Bedi, a seasoned textiles maker, and technologist, attributed the decline in the value of exports to an overabundance of orders from Kenya.
In the US last year, when the country, like most of its counterparts in the developed world, saw four-decade high inflation that affected sales, the orders surpassed the demand.
“The drop is largely because the inventory levels in the USA are high following excess purchase post-Covid-19,” Mr. Bedi told the Business Daily, a Kenyan news publication.
According to statistics, Kenya’s exports to the US increased in value by almost 50% in the first half of the year, rising 48.12% to a record Ksh40.36 billion for the review period. The biggest economy in the world’s orders fell, and for the first half of 2022, Pakistan and the Netherlands overtook it to occupy third place as Kenya’s top international destinations.
Kenyan cut flowers are most frequently purchased by the Netherlands, whereas tea is most frequently purchased by Pakistan. Beyond clothing, fruits, and minerals, Kenya has struggled to increase exports to the US, with firms blaming the high cost of manufacturing.
“Even with the duty-free access to the US markets, we are still 15 to 20 percent more expensive than our competitors in the Far East or Central Asia. Why? Power, water and labour in Kenya are very expensive,” Antony Mwangi, the CEO of the Kenya Association of Manufacturers said in a past interview.
