Crisis in Middle East Hits Kenya Hard as Exports Stall and Costs Surge

Kenya warned that current events in the Middle East continue to pose severe challenges to Kenyan exports, as well as increased production and employment costs, in the aftermath of ongoing disturbances along major trade routes.

The Ministry of Investments, Trade and Industry, Kenya, estimates that this crisis now puts around Ksh 164.6 billion worth of Kenya’s exports to the Middle East at risk.

Kenya achieved export values worth a robust Ksh 1.1 trillion in 2024, largely from horticulture, tea, apparel and manufacturing.

According to ministry officials, significant delays have been experienced along the Red Sea and Gulf corridors, which have tremendously reduced goods movement.

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Impact of Crisis on Shipping, Production, and Key Export Sectors

This has increased shipping transit time by between 10 and 20 days and cargo transit by air by up to 48 hours, directly impacting perishable goods such as flowers and fresh produce.

Meanwhile, increased global oil prices are also leading to heightened production and freight costs; fuel makes up as much as 50 percent of all logistics costs.

Some of the most affected sectors include meat exports, which are down to below five percent in some instances, dairy exports and tea exports, where up to 35 percent of the market is in the Middle East, with rising prices and dwindling demand for the commodity.

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Remittance Flows and Government Mitigation Strategies

Furthermore, remittance flows from more than 400,000 Kenyans working in the Gulf region could also be impacted due to the current economic uncertainties in the region.

To mitigate some of the economic burdens, the government has lowered the VAT on petroleum products from 16 percent to eight percent.

Kenya Airways is tasked with finding new cargo routes for Mombasa and Lamu ports.

Kenya said it is now time to boost market diversification strategies.

They are also working to deepen trade on a regional basis to enhance its long-term sustainability.

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A Press release statement from the Ministry of trade and industry Nairobi, Kenya.