Dar turns tables on Kenya as trade deficit hits Sh180 billion

Kenya’s imports from Tanzania exceeded exports by nearly a third in nine months through September 2021, fresh official statistics show, signaling thawing trade ties.

Nairobi posted a goods trade deficit of KSh9.15 billion, or 29.97 percent, with Dar es Salaam — the first over the review period going by publicly available data— after traders doubled orders from the south-neighbouring country.

Imports from Tanzania jumped to KSh39.68 billion (TSh 800 billion) in January-September 2021 period from Sh19.67 billion (Tsh400 billion) a year earlier, provisional data from Kenya National Bureau of Statistics show.

Kenyan traders and factories largely source cereals, wood, edible vegetables, animal fodder, paper and paperboard from Tanzania.

The 101.76 percent surge in value of goods bought from Tanzania dwarfed 34.81 percent growth in exports to KSh30.53 billion, leading to the hitherto rare deficit in merchandise trade in the review period.

Kenya’s exports to its East African Community partner include pharmaceutical products, plastics, iron and steel.

“There are a lot of positive vibes within EAC that are developing and we want to ride on that as way of bringing back EAC that used to be. For example, relationship between Kenya and Tanzania is now significantly better,” Adan Mohamed, Cabinet secretary for EAC Affairs, told the Business Daily in an interview last September.

“Ultimately, as government, we try and make sure that the environment is suitable for the private sector to do business.”

The bump in trade flows between the two countries happened on the back of a pledge between President Uhuru Kenyatta and his counterpart Samia Suluhu early May to end on-and-off trade tiffs between EAC’s two largest economies.

Ms Suluhu made Nairobi her first stop as she sought to strengthen trade ties with EAC partners.

During her visit she made it clear that it was her priority to put an end to unresolved strained trade relations between the two countries, which have hindered smooth flow of goods and services over the years.

The KNBS data shows the gap between imports and exports has been widening since the beginning of the year in favour of Tanzania.

The deficit in merchandise trade stood at KSh1.24 billion in first quarter, Sh1.84 billion in the second and nearly KSh6.07 billion between July and September.

Tanzania is the only country in the six-nation EAC trading bloc that ran a surplus with Kenya in the review period, according to the provisional data.

Kenya had a trade surplus of KSh35.81 billion and KSh16.57 billion with Uganda and Rwanda, respectively.

A persistently widening trade deficit will mean Nairobi will be exporting jobs to Dar es Salaam.

The meeting in Nairobi touched off a series of joint trade meetings aimed at flattening barriers to flow of goods.

Trade minister Betty Maina and her Tanzanian Counterpart Prof Kitila Mkumbo led delegations to a four-day meeting in Arusha — the headquarters of the EAC secretariat — weeks after the two presidents met in Nairobi to address unresolved trade disputes.

This was followed by a three-day investment forum of manufacturers from both countries in Dar es Salaam from July 7 where the Kenya Association of Manufacturers and Confederation of Tanzania Industries resolved to jointly lobby authorities to end crippling non-tariff barriers.

“Kenya and Tanzania have the capability and capacity to add value to the wide array of resources that both countries have for export markets,” KAM chairperson Mucai Kunyiha told the forum in Dar es Salaam.

“However, achieving this is hindered every time the business community encounters impediments to trade, consequently impacting on the benefits of trade to the entire [EAC] region.”

Kenyan manufacturers had in recent years protested “discriminative” duties and non-tariff barriers such double inspection of goods for standards by Dar es Salaam which had made supplies such as meat, milk and their products to Tanzania uncompetitive.

The protectionist fees on animal and animal products, among other trade barriers, Kenyan factories had argued, was against EAC Common Market Protocol which requires member states to open up borders to facilitate free movement of goods, labour, services as well as capital.