Kenya’s export sector is facing fresh uncertainty following the ongoing crisis in the Middle East, with the government warning of significant risks to trade flows, logistics, and foreign exchange earnings.
According to the Ministry of Investments, Trade and Industry, Kenya exported goods worth a record Ksh 1.1 trillion in 2024. However, about Ksh 164.6 billion of that is tied to the Middle East, a key and fast-growing market now under strain due to geopolitical tensions.
The region is not only a destination for Kenyan exports but also a critical global logistics hub. Disruptions are therefore extending beyond Gulf markets, affecting trade routes linking Kenya to Europe, Asia, and North America.
Logistics Disruptions Hit Export Timelines
The crisis has caused significant disruptions in the marine and air transport networks, notably along the Red Sea and Gulf corridors. These channels are crucial to Kenya’s export supply chains.
Transit times have increased by 10 to 20 days, and freight charges have climbed dramatically. Air cargo delays of up to 48 hours have also been recorded, affecting time-sensitive exports including flowers and fresh vegetables.
The impact is being felt most acutely in sectors that rely on speed and efficiency. Horticulture, meat, dairy, and specialty coffee exporters are facing mounting losses as delays lead to spoilage and missed market windows.
Rising Costs Weigh on Competitiveness
Beyond logistics, the crisis has raised global oil prices, greatly raising production and shipping costs. Fuel contributes for up to 60% of logistical costs, increasing pressure across the export value chain.
Floriculture exporters have already reported weekly losses owing to delayed shipments. Meat exports have fallen to less than 5% of typical levels in certain situations, while dairy farmers are also seeing difficulties.
There are also broader economic concerns. With more than 400,000 Kenyans working in Gulf countries, disruptions in labour markets could reduce diaspora remittances, further straining the country’s foreign exchange position.
Government Steps In to Stabilise the Sector
In response, the government implemented a series of immediate and medium-term actions targeted at protecting exporters and preserving trade flows. A crucial intervention is the temporary decrease in VAT on petroleum goods from 16% to 8%, which aims to alleviate cost constraints caused by rising gasoline costs.
Authorities have also established a multi-agency structure to monitor fuel prices, freight costs, and supply chain stability. The emphasis is on safeguarding key industries such as horticulture, tea, coffee, cattle, and manufacturing.
Efforts are underway to secure alternative cargo routes in collaboration with airlines and logistics partners. At the same time, efficiency is being enhanced at major entry and exit points, including the Port of Mombasa and Lamu Port, to reduce delays.
The government is also engaging shipping lines to address rising freight and insurance costs.
Diversification Strategy Gains Urgency
The crisis has highlighted Kenya’s dependency on certain transportation routes and export markets. As a result, the government is stepping up attempts to diversify commerce.
New target areas include growing into Asian, European, and Latin American markets, as well as improving intra-African commerce.
Regional and continental frameworks such as the East African Community, COMESA, and the African Continental Free Trade Area are projected to play an important role in promoting long-term stability.
Despite the current challenges, the government maintains that it is committed to safeguarding exporters and positioning Kenya for sustained growth in an increasingly complex global trade environment.
