Global Rice News

India Reclaims Position as Kenya’s Second Largest Source Market, Overtaking UAE

India has regained its position as Kenya’s second-largest source market, surpassing the United Arab Emirates (UAE) due to stabilizing petroleum prices. According to official trade numbers, Kenyan traders spent Sh72.01 billion on goods from India in the first quarter of this year, representing a 9.89 percent growth compared to the same period last year.

This growth has helped India, the world’s fifth-largest economy, reclaim its long-held position as the second-largest source of imports for Kenya. The UAE had previously overtaken India in earnings from exports to Kenya in 2022, benefiting from the disruption in global supply chains for petroleum products caused by Russia’s war in Ukraine.

However, provisional data from the Kenya National Bureau of Statistics (KNBS) shows that imports from the UAE fell by 19.90 percent in the first quarter of this year. Traders imported goods worth Sh67.03 billion from the Middle East economy, compared to Sh83.69 billion in the same period last year.

On the other hand, the increase in imports from India can be attributed to higher orders of rice. The Kenyan government reduced the import duty on rice from 75 percent to 35 percent for the year ending June 2024, following a poor harvest. As a result, traders turned to India and Pakistan for rice after Tanzania restricted exports of grains.

In addition to rice, Kenya traditionally imports pharmaceuticals, steel products, machinery, and yarn from India. China remains the top exporter to Kenya, with its imports increasing by 38.76 percent in the first quarter of this year.

Kenya mainly imports refined petroleum products from the UAE. The average cost of diesel, which powers Kenya’s transportation and agricultural sectors, decreased by 3.21 percent to $724.34 per cubic meter during the review quarter. Similarly, the cost of super petrol had a relatively lower growth of 6.21 percent, averaging $702.45 during the same period.

Kenya has been aiming to reduce its trade imbalance with the UAE, as imports from the UAE reached Sh407.4 billion last year, while export earnings were only Sh44.02 billion. The UAE has been actively diversifying its economy beyond oil, focusing on sectors such as tourism and real estate.

To deepen trade and investment ties, Kenya and the UAE have been engaged in technical negotiations under the Kenya-UAE Comprehensive Economic Partnership Agreement, which emphasizes non-oil goods. UAE imports to Kenya include electrical and electronic equipment, as well as plastics.

Overall, India’s resurgence as Kenya’s second-largest source market is a positive development for both countries, strengthening their trade relationship and diversifying Kenya’s import sources.