By The Weekly Vision Business Desk
Kenya’s widening appetite for imported fuel has pushed the country’s merchandise trade deficit close to the KSh1 trillion mark, highlighting the growing pressure energy costs are placing on the economy. New trade data shows the gap between the value of goods imported into the country and its exports widened significantly in the first half of 2026, as import costs outpaced growth in export earnings. The trade deficit expanded by 27.3 per cent to KSh998.2 billion between January and June 2026, compared with KSh783.9 billion recorded over the same period the previous year.
Exports recorded strong growth, rising 14.1 per cent to a record KSh632.3 billion. However, the country’s import bill rose faster still, driven largely by the cost of fuel and other energy-related products, with total imports climbing to approximately KSh1.63 trillion, widening the gap between foreign exchange earnings and expenditure on imported goods.
Fuel and lubricants accounted for a significant share of the increase, with the value of petroleum imports rising by about 50 per cent to roughly KSh412–413 billion. The surge reflects elevated global energy prices, supply uncertainties and geopolitical tensions affecting international oil markets. Concerns over possible disruptions to global shipping routes, including earlier uncertainty around the Strait of Hormuz, contributed to increased caution among businesses, with some firms bringing forward purchases to secure supplies.
The rising fuel import bill underscores Kenya’s continued dependence on imported energy and the economy’s vulnerability to external shocks. Higher fuel costs have a direct impact on businesses, transport operators and households through increased production and living expenses.
The widening trade deficit also places pressure on the country’s current account position, as more foreign exchange is required to finance imports. The impact has, however, been partly contained by relative stability in the shilling, which has traded in the KSh129–130 range against the US dollar. Inflation has also remained within the Central Bank of Kenya’s target range, standing at about 6.5 per cent in July.
The latest figures present a mixed picture for Kenya’s economy. While export performance points to resilience in sectors generating foreign exchange, the continued rise in import costs, particularly energy, highlights structural challenges that policymakers have struggled to address. The Central Bank of Kenya has held its benchmark policy rate at 8.75 per cent as it balances inflation management with efforts to support economic activity. The banking sector, meanwhile, has continued to show resilience, with several lenders reporting stronger profits in the first half of the year despite pressure on interest margins.
The rising cost of imports, fuel prices and pressure on household incomes are expected to remain major economic issues as Kenya heads towards the 2027 General Election. The government’s ability to manage energy costs, improve export competitiveness and maintain fiscal stability will be closely watched as voters assess the economy’s performance.
With the trade deficit approaching a historic KSh1 trillion level, the figures are a fresh reminder of the challenge Kenya faces in reducing its dependence on imported goods while expanding its foreign exchange earnings.
