State agencies imports hit record Sh89 billion
The Central Bank of Kenya headquarters in Nairobi in this picture taken on March 31, 2024.
The value of import orders by government agencies rose at the fastest pace in at least eight years after they jumped 48.4 per cent during the 12 months to June 2024 to hit Sh89.04 billion, coinciding with the current administration’s first full year in office.
An analysis of official data from the Central Bank of Kenya (CBK) shows that the growth is the highest since the year to June 2017, when the apex bank started making full disclosures of the imports.
According to the latest statistics, the current jump reverses a trend observed in the year ended June 2023, when the value of State imports dipped 34.1 per cent to Sh60.02 billion, down from an all-time high of Sh91.01 billion the preceding year.
The data shows that the government’s import bill had largely been rising since July 2019 before falling immediately after the 2022 General Election.
Although the CBK does not expressly disclose particulars of the imports, items commonly ordered by State departments and agencies are furniture, stationery, machinery, motor vehicles, textiles, and arms, among others.
In February this year, the Treasury admitted that domestic suppliers were frustrating a government directive that public agencies procure at least 40 per cent of their consumable products locally, noting that the ‘Buy Kenya, Build Kenya’ initiative put in place nearly a decade ago had failed to hit the targeted levels.
“The challenge [to achieving 40 per cent local content quota in government procurement] is local merchants are providing imported products once given contracts to procure for the government,” the Treasury said in its 2024 Budget Policy Statement.
“State Department for MSME (Micro, Small, and Medium Enterprises) Development is tasked with the enforcement of the preferential treatment of the Buy Kenya, Build Kenya policy, where 40 per cent of procurement is preserved for goods manufactured locally.”
The policy, which arose from a presidential decree in June 2015, requires at least 40 per cent of supplies to State ministries, departments, and agencies be sourced from local companies.
Before the concession by the Treasury, manufacturers had cried foul, claiming that domestic suppliers are fond of presenting samples of local products during the tendering process, only to hop onto a flight to India or China to source for the same when they bag the lucrative State deals.
Kenya remains a net importer, with the merchandise trade deficit hitting $9.85 billion (Sh1.3 trillion at current conversion rates) in 2023, which was a thinning trend from $11.72 billion (Sh1.5 trillion) the previous year.
Successive governments have failed to adequately address the competitiveness of Kenya’s manufacturing sector, with the situation worsening in the aftermath of the World Bank and International Monetary Fund (IMF)-led market liberalisation policies of the 1990s presented through structural adjustment programmes.
The low competitiveness of local industries has been partly blamed for the proliferation of basic commodities such as toothpicks from other countries, taking away jobs that could be supporting local households.
