By CHARLES MWANIKI
Foreign exchange earnings from tourism and coffee rose the fastest among Kenya’s major inflow sources in the one year to September, going up by 15.6 and 13.7 per cent respectively.
Fresh data from the Central Bank of Kenya (CBK) shows inflows attributable to the travel account stood at $890 million (Sh92 billion) in the 12 months to September, up from $770 million (Sh79.6 billion) same period last year.
Coffee earnings rose to $240 million (Sh24.8 billion) from $211 million (Sh21.8 billion) a year earlier.
Diaspora remittances, which form the backbone of foreign inflows, also went up significantly by 8.9 per cent to $1.83 billion (Sh189 billion) in the period, while earnings from tea and horticulture also rose by two per cent and 0.7 per cent to $1.33 billion (Sh137.5 billion) and $812 million (Sh84 billion) respectively.
“Strong diaspora remittances, resilient inflows from tea and horticulture exports and continued recovery in tourism continue to support the current account and stability in the foreign exchange market,” said the CBK in a statement outlining the background information on monetary policy committee meeting.
Tea volumes were hit by drought in the first half of the year amid flat global prices. Coffee prices rose by 20 per cent in the year to September to an average of Sh23,999 for a 50 kilogramme bag, raising overall earnings in spite of an 11.3 per cent drop in supply to 34,092 tonnes.
CBK governor Patrick Njoroge said the rise in inflows coupled with lower food import costs and the absence of SGR-related imports in the last quarter of the year will see the current account deficit narrow by December.
At the end of September, the deficit stood at 6.5 per cent of GDP, but is now expected to come down to 6.2 per cent by the end of the year.
It will, however, be higher than the 5.2 per cent deficit recorded at the end of last year, attributed to the tougher economic climate this year which has affected productivity (and thus hurt exports). The import of SGR equipment including rolling stock and the drought which loaded extra food import costs on the exchequer contributed to the deficit.
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