Increased exports narrow current account

By Mnaku Mbani

The current account narrowed substantially to a deficit of USD 1,912.0 million compared with a USD 4,910.7 million in the year ending August 2015.  The improvement was mostly driven by increase in exports and fall in imports.

The value of exports of goods and services went up by 7.1 percent to USD 9,477.2 million compared with the amount recorded in the corresponding period in 2015, owing to an increase in travel, manufactured goods and gold exports.

The value of traditional exports amounted to USD 822.6 million, 2.6 percent lower over the preceding year.

The decline was mainly driven by low value of cashewnuts export, which more than offset the increase in values of other traditional export crops, namely; tea, sisal, cloves and coffee.

The decline in the value of cashewnuts occurred in both export volume and prices. The value of tobacco remained broadly the same as in the year ending September 2015.

Strong growth of tea was on account of increase in price, while that of sisal and cotton was driven by both price and volume.

The value of coffee and cloves increased owing to volume increase despite recording lower prices, consistent with the general subdued prices of commodities in the world market.

The value of non-traditional export commodities amounted to USD 4,389.3 million compared with USD 4,010.7 million recorded in the corresponding period in 2015. Much of the increase was registered in manufactured goods, gold, horticultural products, re-export and category of “other exports” which include cereals, hides and skins; cocoa and wood products.

Export of manufactured goods increased by 5.0 percent to USD 1,330.9 million, with a notable increase recorded in edible oil, textile apparels, plastic goods, fertilizer and paper products.

Gold, on the other hand, increased by 5.9 percent to USD 1,307.7 million on account of a slight recovery in gold price in the world market and increase in volume.

Services receipts amounted to USD 3,744.1 million in the year ending September 2016 compared to USD 3,512.3 million recorded in the preceding year, primarily driven by the increase in receipts from travel and transportation services.

Travel receipts grew by 12.8 percent to USD 2,267.4 million following an increase in the number of tourist arrivals.

Meanwhile, transport receipts increased by 2.8 percent to USD 1,034.6 million owing to the increase in transit goods to and from neighbouring countries.

Travel and transportation remained dominant in the services receipts, accounting for 60.7 percent and 27.5 percent, respectively.

During the year ending September 2016, the value of imports of goods and services declined by 19.0 percent to USD 10,830.1 million compared to the amount recorded in the year ending September 2015. All categories of imports declined, except for industrial raw materials.

The decline in imports is partly attributed to exchange rate appreciation and completion of major projects, such as construction of cement factory, power plants and exploration activities.

Oil imports, which is the dominant item in goods import, declined by 3.4 percent to USD 2,901.4 million due to a fall in prices in the world market despite the increase in import volume.

Notwithstanding the decline in oil imports, its share in total value of goods import increased to 33.7 percent compared to 28.2 percent in the preceding year.