Imports from China fall by 36.6pc, but KESPA says financial losses largely minimal

Imports from China fall by 36.6pc, but KESPA says financial losses largely minimal

March 11, 2020 0 By mykenyancareers
CAROLE KARUGA - Imports from China fall by 36.6pc, but KESPA says financial losses largely minimal
Karuga urged the business community to turn the challenge to an opportunity to Buy Kenya Build Kenya to promote local businesses to manufacture locally/COURTESY

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NAIROBI, Kenya, Mar 11 – Imports from China fell by 36.6 per cent in the first two months of 2020 owing to coronavirus with exports similarly becoming affected, a new report has revealed.

The report by Kenya Private Sector Association says the virus has increased business uncertainty in the country and caused disruption of logistics due to travel restrictions to China and other destinations.

According to the report, most import dependent investments are expected to suffer severe setbacks, as most raw materials are sourced from Asia.  

Kenya sources 21 percent of her imports from China, with electrical machinery, spare parts, railway and trainway locomotives, iron and steel, and vehicles taking lead.

Kenya’s exports to China include avocadoes, tea, and coffee.

Bilateral trade between Kenya and China was valued at approximately Sh382 billion in 2018; imports were valued at approximately Sh371 billion while exports to China were Sh11 billion, according to the 2019 Economic Survey.

Sectors likely to suffer

The survey, whose majority – 53 percent – of respondents operate large companies that employ more than 100 people, anticipates for the tourism and travel related sectors to suffer from the impact of the virus, both in Kenya and the East African region.

According to the survey, the region receives nearly 6 million visitors annually, but expects the number to drop significantly due to ongoing travel restrictions effected to contain spreading of the virus.

Transport and logistics are also expected to suffer, as will industries that rely on Chinese raw materials.

The whole sale and retail sector is also expected to experience shortage of essential consumer products.

“About 82 percent of business operators source their inputs or exports to China, thus they face direct risk of supply chain disruption,” the survey says.

“Of the 18 percent, neither source inputs from nor export to China, about 67 percent still face the risk of supply chain disruption since they nonetheless purchase their raw materials from suppliers who source from China.”

A total of 127 businesses participated in the survey drawn from 17 sectors of the economy.

No reason to panic

The Association’s Chief Executive Officer Carole Karuga however says the Association has been monitoring the business environment since the outbreak of the virus late last year, adding that financial losses in the country have largely been minimal.

According to the report, 82 percent of Kenyan businesses reported losses of less than Sh5 million, while 61 percent reported losses of less than 1 million in the last two months.  

Overall, 84 percent of businesses said they experienced very low to moderate impact of the virus on their activities.

Seize Opportunity

Karuga urged the business community to turn the challenge to an opportunity to Buy Kenya Build Kenya to promote local businesses to manufacture locally.

She said the virus can also be used to support Kenyan businesses to venture into local alternative markets for whatever that cannot be produced locally.

“This is gives us a very good opportunity to increase our local production, it means that we don’t have to lack just because the major countries that we were sourcing these products are not there. We can produce more locally become self-sufficient while also creating more jobs,” she said.

Information from World Health Organization shows that no East African country has been affected by the virus so far, but due to their reliance on imports they could be staring at decline in supplies of goods due to limited movement and travel.

The death toll reached 1,113 Tuesday in the epidemic of novel coronavirus — now dubbed COVID-19, while at least 115,000 infections have been reported worldwide.