India has regained its position as Kenya's second largest source market, replacing the United Arab Emirates, whose shipments fell by double digits due to relative stability in petroleum product prices.
An analysis of official trade figures for the first three months of the year shows that traders spent Sh72.01 billion buying goods from the South Asian giant, a modest growth of 9.89 per cent compared to the same period last year.
This growth, the world's fifth-largest economy, has helped push the UAE to reoccupy its long-standing position as Kenya's second-largest source of imports by value.
The outbreak of Russia's brutal war in Ukraine in February 2022 disrupted global supply chains for petroleum products, sending oil prices to record highs, with the UAE among the biggest beneficiaries.
The resulting record oil prices have seen the UAE overtake India in export revenues to Kenya since 2022.
However, provisional figures released by the Kenya National Bureau of Statistics (KNBS) show that spending on imports from the UAE, which more than doubled last year compared to 2021, fell by 19.90 percent in the first quarter.
This is after traders ordered goods worth Sh67.03 billion from the Middle East economy in the three months to March compared to Sh83.69 billion in the corresponding period last year.
On the other hand, import growth from India was boosted partly by higher rice orders after President William Ruto's administration reduced import duty on rice to 35 percent from 75 percent for the year ending June 2024, following a lower 2024 crop. Cropped .
Traders turned to India and Pakistan to buy rice after Tanzania restricted exports of the grain.
The tariff reduction helped increase rice stocks imported into the country from producing countries, including India, by 38.30 percent to 937,099 metric tons last year, with the value rising by 59.17 percent to Sh54.77 billion.
Traditionally, Kenya largely buys medicines, steel products, machinery and yarn from India, the world's most populous country.
India and China traditionally control the largest share of exports to Kenya, accounting for about a third of purchases.
China remained in the lead as imports rose by more than a third (38.76 per cent) in the review quarter to Sh126.08 billion.
Kenya largely purchases refined petroleum products from the UAE.
This came as the average cost of diesel, which is largely used by Kenya's transportation and agricultural sectors, fell by 3.21 percent year-on-year to $724.34 per cubic meter when it arrived at the Port of Mombasa during the quarter under review. This means dealers spent less to ship diesel than the previous year before paying taxes and other costs.
The same volume of super gasoline cost $702.45 on average during the period under review, a relatively lower growth of 6.21 percent compared to the previous year.
Kenya is looking to narrow the huge trade imbalance with the United Arab Emirates, as imports last year amounted to 407.4 billion shillings, compared to export revenues of 44.02 billion shillings.
The UAE – which has successfully parlayed its oil wealth into other sectors from tourism to real estate – has been keen to double non-oil trade and investments with Kenya. Non-oil imports from the UAE, especially Dubai, include electrical and electronic equipment as well as plastics.
Last year, negotiating teams from Nairobi and Abu Dhabi held three rounds of technical negotiations within the framework of the Comprehensive Economic Partnership Agreement between Kenya and the United Arab Emirates, which seeks to deepen trade and investment relations with a focus on non-oil commodities.
He added: “Through the Comprehensive Economic Partnership Agreement, the UAE and Kenya aim to remove trade barriers to a wide range of goods and services, create new opportunities for importers and exporters in both countries, and enable Kenyan companies to benefit from the geographical and logistical location of the UAE.” KNBS wrote in the 2024 Economic Survey.
