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India imports hit seven-year high as China firms’ orders drop

11-Mar-2019
India imports hit seven-year high as China firms’ orders drop

Imports of goods from India hit a seven-year high in 2018 as the Asian country played catch-up with rival China, whose orders declined by 5.35 percent in the period.

Trade data released by the Central Bank of Kenya shows consignments worth nearly Sh185.15 billion were bought from India, a growth of 8.65 percent over Sh170.41 billion in 2017.

India’s exports to Kenya are largely pharmaceuticals, steel, machinery and automobiles.

New Delhi has been playing catch-up with China, which took the position of top seller to Kenya in 2015 and has not looked back since.

Orders from Beijing, however, appeared to have slowed in 2018 for the first time this decade following completion of the first phase of the standard gauge railway (SGR) and some of the major road projects around the country.

Kenya National Bureau of Statitics (KNBS) data shows goods worth Sh346.61 billion were ordered from China in 11 months through November 2018, being Sh19.6 billion lower than the Sh366.21 billion purchased in the same period in 2017.

CBK data shows the value of imports from India have been dipping since 2015 prior to last year, coinciding with a slowdown in the manufacturing sector.

Orders from India, the data shows, slipped from Sh264.54 billion in 2014 to Sh252.82 billion in 2015, Sh205.50 billion (2016) and Sh170.41 billion in 2017 – the lowest value since Sh148.77 billion in 2011.

Manufacturing activities over the period slid to a low of 0.2 per cent in 2017 from 2.7 per cent in 2016 and 3.6 per cent (2015). Activity in the manufacturing sector appeared to have picked up last year, with the sector growing 3.2 percent in the third quarter of 2018 compared with a contraction of 0.1 percent in the corresponding period in 2017.

Importation of industrial supplies such as manufactured materials rose to Sh304.61 billion from Sh261.06 billion in 2017, the data collated by CBK shows, while chemicals orders also increased to Sh254.53 billion from Sh237.96 billion.

“Key items imported from India which include chemicals…have recorded an increase due to the growth in demand for this products by local manufacturers,” Kenya Association of Manufacturers (KAM) chief executive Phyllis Wakiaga said via email.

“We expect an increase in imports of chemicals and machinery (going forward) due to the anticipated increase in production throughput in the chemical sector in line with the ‘Big Four Agenda’.”

Full-year imports are estimated to have fallen to about Sh378.12 billion – assuming a monthly average of Sh31.51 billion in the January-November 2018 period – from Sh390.63 billion in 2017.

Importation of Chinese goods sprinted from Sh182.36 billion in 2013 to a peak of Sh390.63 billion in 2013, reflecting increased shipment of machinery and transportation equipment into mega infrastructural projects that Beijing contractors bagged in the period.

These included deals to build first (Sh327 billion Mombasa-Nairobi) and second phase (Sh153 billion Nairobi-Naivasha) of the standard gauge railway (SGR) as well as mega road and bridge projects.

The value of Chinese imports shot up from Sh248.65 billion in 2014 to Sh320.82 billion in 2015, Sh337.45 billion (2016) and Sh390.63 billion (2017), KNBS data shows.

“With the implementation of the SGR by the Government and modal shift (from road to rail), we anticipate a relative decline in the importation of road transport equipment, especially trucks,” Ms Wakiaga said.

Orders from the two Far East countries are estimated at more than Sh550 billion, or nearly 32 percent of the Sh1.76 trillion of the total imports in 2018, while exports were less than Sh20 billion, or about 3.26 percent of Sh612.88 billion earnings from exports.

A persistently higher trade deficit, economists say, slows down creation of new job opportunities for the growing graduate youth as most revenue earned within Kenya is spent on buying goods from foreign factories, thereby raising production and job openings there.

Farm produce

Kenya has made penetration of value-added farm produce such as tea, coffee and fruits to China and India a priority under the ambitious Integrated National Exports Development and Promotion Strategy she unveiled last July.

The ambitious exports growth strategy targets an average annual growth in exports of 25 percent between 2018 and 2022, culminating in a trade surplus.

Jaswinder Bedi, chairman of state-run Export Promotion Council (EPC), said the country is banking on penetration of Chinese and Indian markets to run a trade surplus in less than four years.

Nairobi and Beijing last November signed a memorandum of understanding on the sidelines of the week-long China International Import Expo to establish a joint working group to reduce trade barriers between the two countries.

“Now that we have signed ... (an MoU) with China where we did not have market access (for agricultural produce), we are looking at doing the same with India and others like Malaysia and Thailand,” Mr Bedi said on phone. “We are looking east because the market there is huge. The opportunity is huge.”



Source :- Businessdailyafrica.com

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