Kenya’s exports to the East African Community (EAC) hit a record Sh85.2 billion in the quarter ending September 2024, driven by increased shipments to Somalia. This marks a historic high for Kenyan exports to the regional bloc and underscores Somalia’s growing importance in the region’s trade ecosystem following its admission to the EAC in late 2023.
Somalia’s Significant Contribution
Somalia imported goods and services worth Sh5 billion from Kenya during the period, helping to counterbalance declines in exports to other EAC member states. Without Somalia’s contribution, Kenya’s exports to the EAC would have fallen by Sh4.2 billion—or five per cent—to Sh80.2 billion.
The inclusion of Somalia represents a vital boost for Kenya, providing an expanded market for goods and services and offering an alternative avenue for trade amidst declining exports to traditional partners in the region.
Trade Trends Across the EAC
While the overall trade value with the EAC increased, not all member states recorded growth:
- Rwanda: Imports from Kenya rose by Sh778 million (6.7 per cent) to Sh12.4 billion, marking consistent trade growth.
- Democratic Republic of Congo (DRC): Imports increased by Sh523 million, reaching Sh8.1 billion. The DRC has now surpassed South Sudan as the fourth-largest importer of Kenyan goods.
- Burundi: Saw the steepest decline, with imports dropping by 36.9 per cent, from Sh2.9 billion to Sh1.8 billion.
- South Sudan: Recorded a 27 per cent reduction in imports, highlighting ongoing trade challenges.
- Tanzania: Experienced a 10 per cent decline in imports.
- Uganda: Despite a slight 0.62 per cent drop, it remains Kenya’s largest export destination in the EAC.
Somalia’s Integration and Future Potential
While Somalia’s addition to the EAC has made an immediate impact, trade volumes with Kenya declined slightly compared to the previous year, from Sh5.3 billion in 2023 to Sh5 billion in 2024. Analysts attribute this to initial challenges in fully integrating Somalia into the EAC’s trade protocols.
However, optimism remains high for future growth. Somalia’s integration into the EAC’s common market and customs union is expected to facilitate freer movement of goods, services, and people, unlocking new trade opportunities for Kenya and the region.
Challenges in Regional Trade
Despite the positive contributions of Somalia and growing trade with some members, overall trade within the EAC declined by 0.2 per cent. Key challenges include:
- Recurring Trade Disputes: Persistent barriers among EAC countries have hindered intra-regional trade growth.
- Declining COMESA Trade: Kenya’s trade within the broader Common Market for Eastern and Southern Africa (COMESA) dropped by 1.1 per cent.
- Diversion to Global Markets: Kenya’s increasing focus on markets outside the EAC, such as East Asia, has reduced the EAC’s share of Kenya’s total trade.
Shifts in Global Trade
Kenya’s trade with East Asian countries, particularly China, South Korea, and Japan, has grown significantly. By September 2024, trade with East Asia accounted for 38.4 per cent of Kenya’s total exports and imports, up from 33.4 per cent the previous year. This trend reflects a diversification of trade partnerships beyond Africa.
Looking Ahead
Somalia’s full integration into the EAC offers significant potential to revitalize intra-regional trade. By leveraging the bloc’s customs union and addressing trade disputes, Kenya and its EAC partners can unlock greater economic growth. For Kenya, Somalia’s addition underscores the importance of expanding and deepening trade relationships to strengthen its position in regional and global markets.
