Kenya’s goods trade deficit widened at a double-digit rate in the first three months of 2026 on increased imports of industrial materials, food and fuel that outpaced record export earnings, highlighting growing reliance on foreign supplies and increasing pressure on foreign exchange earnings.
A goods trade deficit occurs when a country’s total imports of physical products surpass its total exports over a specific period. This means the nation spends more on imported goods than it earns from selling its own products abroad.
Data from the Kenya National Bureau of Statistics (KNBS) shows that the deficit in merchandise trade grew 17.4 percent to Sh437.03 billion in the January-March period from Sh372.12 billion in the corresponding quarter last year.
The widening gap means Kenya spent Sh437 billion more on imported goods than it earned from merchandise exports, underscoring a longstanding challenge of generating sufficient export revenues to match the country’s import needs.
Imports rose 14.4 percent to Sh740.8 billion during the quarter from Sh647.6 billion a year earlier, while exports increased by a slower 10.3 percent to a record Sh303.8 billion.
Kenyan exporters have historically cited tariff structures in key export markets as a major obstacle to value addition. Many traders prefer exporting raw produce because semi-processed and processed products can attract higher duties in destination markets, particularly in Europe, making value-added exports less competitive.
President William Ruto has previously argued that exporting raw commodities deprives the country of jobs, industrial growth and higher export earnings.
“For decades, we have exported our tea, our coffee, our livestock, our minerals, our cotton, our hides and skins, and even our fish in raw form only to import them back at a premium as finished products,” he said earlier.
He stressed that value addition is critical to increasing incomes across supply chains and helping Kenya capture a larger share of the value generated from its exports.
The country’s import bill in the opening quarter of the year was driven largely by a sharp increase in food purchases from international markets.
Food and beverage imports jumped 40.9 percent to Sh81.6 billion from Sh57.9 billion in the first quarter of 2025, representing an additional Sh23.7 billion spent on imported food products.
The increase made food and beverages one of the largest contributors to the widening trade deficit during the review period.
Industrial supplies remained Kenya’s biggest import category, rising by 10 percent to Sh277.5 billion from Sh252.2 billion in the corresponding quarter last year and exerting pressure on the trade balance.
Fuel and lubricant imports increased 15.8 percent to Sh158.8 billion from Sh137.2 billion, reflecting the country’s continued dependence on imported petroleum products.
Transport equipment imports increased 26.9 percent to Sh68.7 billion from Sh54.1 billion, while machinery and other capital equipment imports climbed 8.5 percent to Sh97.2 billion, pointing to continued investment in productive sectors of the economy.
Consumer goods imports rose 7.8 percent to Sh53.7 billion from Sh49.8 billion in the first quarter of 2025.
Despite the widening deficit, Kenya posted its highest first-quarter export earnings on record.
Food and beverage exports, the country’s largest export category, increased 5.2 percent to Sh109.2 billion from Sh103.8 billion.
Consumer goods exports rose 7.4 percent to Sh68.3 billion while transport equipment exports increased 32.5 percent to Sh3.3 billion.
Exports of machinery and capital equipment more than doubled to Sh11.2 billion from Sh5.2 billion a year earlier, representing the fastest growth among major export categories.
The gains were, however, partly offset by a decline in industrial supplies exports, which fell 14.6 percent to Sh50.1 billion from Sh58.7 billion.
The trade figures highlight Kenya’s long-running struggle to sustainably narrow its goods trade deficit despite steady growth in exports.
Economists have often linked the imbalance to the country’s reliance on traditional agricultural exports such as tea, coffee and horticultural produce, much of which is shipped abroad in raw or minimally processed form.
This limits the value Kenya captures from its exports, compared with finished products that typically command significantly higher prices in international markets.
Tea, one of Kenya’s largest foreign exchange earners, continued to face headwinds during the quarter.
Tea export earnings declined to Sh45.3 billion from Sh46.1 billion a year earlier as export volumes fell to 151,562 tonnes from 157,515 tonnes.
Coffee provided a bright spot, with export earnings rising to Sh16.8 billion from Sh15.7 billion despite export volumes dropping to 15,848 tonnes from 16,894 tonnes.
The higher coffee earnings suggest exporters benefited from stronger international prices rather than increased volumes.
