Kenya's Inflation Eases in March, US Launches Africa Trade Desk

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Kenyan Wall Street
April 02, 2024

The Weekly Brief, by The Kenyan Wall Street, is a newsletter that goes out to 25k+ subscribers every Monday morning at 9.00am (EAT).

Welcome to Q2.

The shilling closed Q1 on a rolling high, exchanging at KSh 131.80 to the USD, in a consistent run that shows no signs of abating. Analysts are concerned about a likely price correction, but for now the shilling is the world’s best performing currency.

Q2 is bound to be busy. This is that part of the year when governments table budgets for the next fiscal year, and for businesses, it is the final push to close H1 on a high. Then, there are all the events. This month, the 11th annual East Africa Property Investment Summit is back at The Radisson in Nairobi. You can register for tickets here with our discount code TKWSD.

In this week’s issue, Kenya’s inflation rate dropped in March, VC activity muted in Africa in 2023, and the US sets up an Africa Trade Desk with big ambitions.

Kenya’s Monthly Inflation Rate Drops Below 6%

Kenya’s monthly inflation, as measured by the Consumer Price Index(CPI) fell to 5.7% in March compared to 6.3% in February, the first time it has fallen below 6% in two years, and a year after it peaked at 9.2%.

  • According to the Kenya National Bureau of Statistics (KNBS), inflation dropped due to price drops of everyday items such as fuel and maize flour.

  • Kenyan households also saw a fall in the prices of kerosene by 2.3 per cent.

  • The prices of 200 kWh and 50 kWh of electricity dropped by 0.3 percent and 0.4 percent.

But Kenyans paid more for LPG/Gas with a 13Kg cylinder selling at KSh 3231.84 in March from KSh 3, 187.10 in February.  This 1.4% increase pushed the Housing, Water, Electricity, Gas, and Other Fuels Index up by 0.2 percent.

The Transport Index decreased by 0.6 percent between February 2024 and March 2024 due to a drop in prices of petrol and diesel by 3.5 percent and 2.6 percent, respectively.

Food Prices

On the list of food items, Kenyans paid less for carrots from an average of KSh 107.69 per kilogram in February to an average of KSh 104.67 per kilogram in March 2024, a drop of 2.8%. White Wheat flour prices declined on average from KSh 200.41 per kilo in February to KSh 190.72 per kilo in March 2024.

  • The average price of maize grains declined by 4.9% from KSh 68.67 per kilo in February to KSh 65.31 per kilo in March.

  • Sugar prices also dropped in March to KSh 189.45 per kilo in March from KSh 200.1 per kilo in February, a decline of 5.3%.

  • The price of a 2 kg packet of shifted maize flour declined by 5.8% from KSh 154.54 in February to KSh 145.57 in March.

The highest price increase in the food basket was onions whose price increased from KSh 150.63 per kilo in February to KSh 167.28 per kilo in March. Other food items that have recorded price increases include Mangoes, Potatoes, Oranges, Cabbages, Tomatoes, and Beef.

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The US Sets Up An Africa Trade Desk

Prosper Africa, a US government national security initiative, has announced the launch of Africa Trade Desk, a platform to link African agricultural producers and suppliers with large US food retailers.

  • According to Prosper Africa, the Africa Trade Desk will initially focus on speciality food products such as citrous, seafood, herbs and vegetables.

  • In addition to overseas marketing and securing supply orders, it will also provide financing for bulk orders.

  • The Africa Trade Desk is part of a broader strategy to boost trade between the US and African countries with the looming expiry of the AGOA trade initiative.

“The Africa Trade Desk, a public-private partnership between Prosper Africa and Afritex Ventures, is set to facilitate at least $300 million in export sales between Africa and the United States within the next 18 months,” Prosper Africa said in a statement.

The platform will create a supply chain between suppliers on the African continent and buyers in the US, consolidating among other aspects, logistics, insurance and traceability.

“We’ve found that African producers are eager to sell to the U.S. market, but often lack access to networks of U.S. buyers,” Isobel Coleman, Deputy Administrator of USAID, said in a speech, “And U.S. retailers like Shopify, Sam’s Club, Walmart, and Whole Foods are eager to carry a diverse supply of products from across Africa, but similarly lack established connections. The Africa Trade Desk addresses this problem.”

The signature African Growth and Opportunity Act (AGOA), which was created in 2000 and renewed in 2015, will expire in 2025. It allows for tariff-free, preferential access of up to 6,900 products from 35 countries to the American market. It has been up for discussions about amendments and renewal, with African states pushing for a ten-year extension.

The Africa Trade Desk is also part of a broader strategy by Washington to counter China’s influence through investments on the African continent. In 2022, the US committed $55bn to the continent over three years. By December 2023, it had delivered more than 40% of the commitment and signed 547 trade and investment deals worth $14bn, according to Judd Devermont, the US National Security Council senior director for African Affairs.

Upcoming Events

Nairobi Global Business Expo and Conference: 11 April, Nairobi

AmCham Business Summit 2024: 24 April, Nairobi

Gitex Africa 2024: 29-31 May, Marrakech

Interview of the Week

Choosing the right capital in 2024: African Pre-seed Podcast Live in Nairobi.

Have a great week!