UAE topples China as top import source on costly fuel

An attendant fuels a car at a Rubis petrol station in Nairobi. FILE PHOTO | NMG

The United Arabs Emirates has for the first time overtaken China to become the largest import source market for Kenya by value, reflecting the impact of the runaway cost of petroleum products.

Traders spent $972 million (Sh118.58 billion based on the official average exchange rate of 122 units at the time) on imports from the oil-rich country in the fourth quarter of 2022, provisional official statistics show, nearly double the $502 million in a similar quarter a year earlier.

The 93.63 percent jump came at a time families and companies paid record prices for fuel amid volatile global oil markets due to persistent supply chain constraints, exacerbated by Russia’s invasion of Ukraine.

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Kenya’s imports from UAE are largely gasoline (petrol), consumed by private car motorists, and gas oil, which is used in running generators, and machinery as well as powering engines for agriculture, rail and marine transport, according to the Kenya National Bureau of Statistics.

The increased expenditure on shipping in the commodity helped lift the Middle-East country above India and China in the total cost of imports, the provisional data collated by the Central Bank of Kenya indicate.

The data shows the value of imports from China fell 16.71 percent to $912 million (Sh111.26 billion) in the October-December period, a rare drop if you exclude the pandemic year.

The world’s second-largest economy continued to impose on-and-off restrictions to curb Covid-19.

Imports from India, which traditionally has been the second largest source market, slid 30.66 percent to $389 million (Sh47.46 billion) — a multi-year low.

With a significantly smaller value of goods being exported to UAE’s capital, Abu Dhabi, and Dubai, the country’s commercial and trading hub, trade between the two countries is hugely tilted towards the Middle East’s economic powerhouse.

For example, Kenya exported goods — including coffee, tea, meat and nuts — worth $76 million (Sh9.27 billion) in the quarter under review.

This represents a yawning $896 million (Sh109.31 billion) trade deficit in the three-month period.

The cost of energy and transport has a significant weight in the basket of goods and services that is used to measure inflation in the country.

The data showed petrol cost 36.4 percent more in December, for example, compared with a year earlier.

Expenditure on fuel and lubricants from abroad shot up 72.13 percent to Sh656.62 billion last year, pointing to record high growth which prompted the previous administration to cushion consumers on purchase of petroleum products to stem inflationary pressures on key sectors such as transportation, manufacturing and agriculture.

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The fuel price stabilisation scheme cost taxpayers Sh81 billion in the financial year ended June 2022, for instance, highlighting the impact of State intervention on the country’s revenue.

The high cost of subsidy prompted President William Ruto’s administration to drop the subsidy on super petrol from September.

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