Kenya’s import bill outpaces exports as oil costs widen economic vulnerability

Kenya's increasing import bill has outpaced its exports, putting pressure on the country's external position due to rising oil prices and lower remittance inflows. The Central Bank of Kenya's report reveals that goods imports grew by 15.8% in the year ending August 2026, while exports increased by 11.8% over the same period. This imbalance highlights the economic vulnerability faced by Kenya, which is spending more on imported goods and becoming increasingly exposed to international prices and global trade disruptions.

The current account deficit is expected to widen to 3.2% of gross domestic product in 2026, up from 2.1% in 2025, primarily due to increased imports of mineral fuels and lower remittances. Fuel prices play a significant role in determining Kenya's ability to finance its international trade, as higher oil prices increase the cost of importing petroleum products, potentially raising expenses for transporters, manufacturers, and businesses that rely on fuel for operations.

These costs can eventually be passed on to households, increasing the price burden on consumers. The CBK also notes that international uncertainties, such as geopolitical tensions, volatile oil prices, weakening global economic activity, and adverse weather events, pose additional risks to Kenya's external position. While higher imports include food, mineral fuels, and intermediate and capital goods, the composition of trade is crucial.

Kenya imports fuel, food, industrial inputs, and equipment, while its exports depend mainly on agricultural products and manufactured goods. Expanding local manufacturing and processing could help businesses generate more value from domestic resources and increase their export range. Remittances from Kenyans working abroad are another vital source of foreign exchange.

Lower remittances will contribute to the widening current account deficit, especially when the cost of imported goods is rising. Despite the projected widening of the current account deficit, Kenya maintains substantial foreign exchange reserves, equivalent to 5.9 months of import cover. The shilling's stability, supported by diversified foreign exchange reserves, provides a buffer against short-term shocks.