The Ministry of Investments, Trade and Industry has warned that the ongoing Middle East crisis is threatening Kenya’s export sector, putting at risk billions in trade revenue.
Trade CS, Lee Kinynjui say disruptions in logistics, rising fuel costs, and delayed shipments are affecting key industries, as the government rolls out measures to cushion exporters and sustain trade flows.
In a statement issued on Tuesday, the ministry said the geopolitical tensions are threatening a key pillar of Kenya’s economy, which relies heavily on exports for foreign exchange earnings and overall economic stability.
“Kenya's exports reached a record Sh1.1 trillion in 2024, supported by strong performance in horticulture, tea, apparel and emerging manufacturing sectors,” the statement said.
However, it cautioned that the current crisis now places at risk approximately Sh164.6 billion worth of annual exports to the Middle East, which has become one of Kenya’s most strategic and fastest-growing markets.
Beyond direct trade, the ministry noted that the Middle East plays a central role as a global logistics and transshipment hub, meaning disruptions in the region have far-reaching effects on Kenya’s access to international markets.
“Disruptions in this region are therefore affecting not only exports to Gulf markets, but also Kenya's access to Europe, Asia and North America,” the statement added.
The ministry highlighted significant disruptions to both maritime and air cargo routes, particularly through the Red Sea and Gulf corridors, which are key channels for Kenyan exports.
“The crisis has led to the suspension and restriction of key maritime and air cargo routes,” it said.
As a result, transit times have increased by between 10 and 20 days, while freight costs have risen sharply. Air cargo delays of up to 48 hours are also being reported, affecting time-sensitive goods.
These challenges are particularly severe for perishable and high-value exports, including flowers, fresh produce, meat, dairy products, and specialty coffee.
“Air cargo delays of up to 48 hours are impacting perishable exports such as flowers and fresh produce,” the ministry said.
The statement also pointed to rising global oil prices as another major factor, noting that increased fuel costs are driving up production and logistics expenses across multiple sectors.
“Fuel alone accounts for up to 50 percent of logistics costs,” it said, adding that this is significantly affecting exporters’ competitiveness.
Across various value chains, the impact is already being felt. The floriculture industry is incurring weekly losses due to spoilage and shipment delays, while meat exports in some cases have dropped to less than 5 percent of normal volumes.
Dairy producers and other sectors are also experiencing disruptions, while tea exports, where the Middle East accounts for up to 35 percent of volumes, are facing declining prices and market access risks.
The ministry further warned that disruptions in labour markets and logistics could affect diaspora remittances, adding pressure to the country’s foreign exchange position.
“Over 400,000 Kenyans work in the Gulf in sectors like hospitality, construction, and domestic services,” the statement said.
In response to the challenges, the government has introduced a series of immediate and medium-term measures aimed at cushioning the economy and protecting key export sectors.
Among the interventions is a temporary reduction of VAT on petroleum products from 16 percent to 8 percent, intended to ease cost pressures resulting from rising global oil prices.
“A multi-agency framework has been activated to monitor fuel pricing, freight costs and supply chain stability,” the ministry said.
Efforts are also underway to sustain export flows by securing alternative cargo routes in collaboration with Kenya Airways, international carriers, and logistics partners.
At the same time, efficiency improvements are being implemented at major entry and exit points, including Port of Mombasa and Lamu Port, to reduce delays and enhance cargo handling capacity.
The government is also engaging with shipping lines to address rising freight and insurance costs, while exploring long-term strategies to reduce reliance on single transit corridors.
“The current situation reaffirms the need to reduce reliance on single transit corridors,” the statement said.
As part of its broader strategy, Kenya is accelerating efforts to diversify export markets, particularly in Asia, Europe, and emerging markets in Latin America, while strengthening intra-African trade.
Regional and continental trade frameworks, including the East African Community, COMESA, Tripartite Free Trade Area, and African Continental Free Trade Area, were highlighted as critical in expanding market access and building long-term resilience.
The ministry reaffirmed the government’s commitment to safeguarding the country’s economic interests amid the evolving global crisis.
“The Government remains firmly committed to protecting Kenyan farmers, manufacturers and exporters, while ensuring continuity of trade and positioning the country for sustained growth in an increasingly complex global environment,” the statement said.
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