Middle East conflict puts Kenyan exporters at risk

Kenya is facing growing economic pressure from the ongoing Middle East conflict, with goods worth an estimated $1.27 billion in annual exports now under threat as shipping disruptions, higher freight charges and rising oil prices hit trade flows.

The Ministry of Investments, Trade and Industry noted that the worsening geopolitical tensions have increased transit times for cargo by 10 to 20 days, while airfreight delays of up to 48 hours are affecting perishable goods such as flowers, fruits and vegetables.

Emerging instability in the Gulf region poses a threat to one of Kenya's fastest-growing export markets, which hit a record $8.51 billion in 2024, fueled by horticulture, tea, apparel and manufacturing.

In a statement released on Tuesday, Cabinet Secretary Lee Kinyanjui raised concern that the prolonged conflict triggered by the United States-Israel war with Iran has disrupted Red Sea and Gulf corridors, affecting not only exports to Gulf markets but also Kenya's access to Europe, Asia and North America.

Analysts say the closure of major maritime routes has forced vessels to reroute around Africa, increasing travel distances, insurance costs and delivery timelines.

"The effect is especially severe for products with tight margins or urgent delivery requirements," Kinyanjui said.

For Kenya, he noted, the crisis has translated into longer shipping times, higher transportation bills and growing uncertainty for exporters already operating on thin margins.

The Middle East has become a critical market for Kenyan produce and manufactured goods, with Gulf nations serving as major buyers of flowers, tea, meat, dairy products and fresh produce.

Cut flowers, avocados, green beans and other fresh produce depend on precise delivery schedules to supermarkets and auctions overseas and any delays can lead to spoilage, rejected consignments and discounted prices.

The ministry noted that floriculture exporters are already reporting weekly losses linked to spoilage and missed delivery windows while meat exports to some Middle Eastern markets have reportedly fallen to less than 5 percent of normal volumes in certain cases.

This sharp contraction is likely to hit pastoral economies in northern and eastern Kenya, where livestock sales are a major source of income.

"Dairy exporters are also facing interruptions, while tea traders are grappling with price weakness and uncertain market access," he said.

Kinyanjui noted that the Middle East accounts for as much as 35 percent of tea export volumes in some channels, making the region too important for Kenya's tea industry to ignore.

The conflict has also added another layer of pressure on Kenyan businesses and households following the surge in global oil prices, which feeds directly into transport, electricity and manufacturing costs, raising the cost of producing and shipping exports.

According to the ministry, fuel can account for up to 50 percent of logistics costs.

Kenya is also watching the labor market implications of the crisis in Gulf countries, where more than 400,000 Kenyans are employed in sectors such as hospitality, construction and domestic work.

Kinyanjui stated that job losses could reduce remittance inflows, which are among Kenya's largest sources of foreign exchange.

"That would further pressure the shilling and narrow the country's external earnings at a time when export receipts are already under threat," he said.

victor@chinadailyafrica.com