The ongoing conflict in the Middle East could wipe out a significant part of Kenya's KES164 billion annual earnings from horticulture and tea exports to the region, Trade Cabinet Secretary (CS) Lee Kinyanjui has warned.

In a status updated shared on Tuesday, CS Kinyanjui said the country's exports to the Gulf including meat, fruits, and vegetables are now at risk as the U.S.-Israel war in Iran drags into the second month, leaving markets hurting from high fuel prices.

The conflict has negatively impacted trade, he explained, with key maritime and air cargo routes through the Red Sea and access to the Gulf countries suffering closures and or inordinate delays.

CS Kinyanjui noted that disruption in logistics corridors has seen freighters charge higher for cargo, a shift that continues to steadily erode the competitiveness of the country's exports to global markets.

His warning comes after the country posted record KES 1.1 trillion earnings from exports in 2024 attributable to higher shipments of horticultural produce, tea, apparels and manufacturing products. The Gulf region has been evolving with an increasing number of country's emerging as key export destinations.

With no end in sight for the U.S.-Israel war on Iran that started on 28 February, the worsening geopolitical tensions in the oil-rich Arabian peninsula threatens to wipe out these gains.

At the moment, exporters are being forced to explore longer, and costlier shipment routes to key markets as the Red Sea, which is a vital vessel route to the Middle East and Europe remains constrained.

The CS observed that even longer access routes to markets in the European Union, Asia, U.S. and Canada are also facing delays. For instance, transit times via sea have increased to 20 days from 10 days earlier even as air cargo delays suffer delays of roughly 48 hours.

Additionally, players in the industry are now forced to shoulder higher fuel costs, which often times accounts for nearly half of the total logistics cost. 

“These disruptions are particularly severe for high-value and time-sensitive exports, including horticulture, meat, dairy and specialty coffee,” added CS Kinyanjui.

According to his ministry, floriculture is incurring losses due to spoilage. Meat exports to the Gulf region are reporting under 5 percent of their regular shipment volumes as disruptions in logistics hit hard.

Remittances at risk

Official statistics show that Iran and other countries in the Middle East account for 35 percent of Kenya's greenleaf shipments. At the moment, however, the ongoing conflict is driving down prices, the ministry revealed.

Beyond goods, Trade CS observed that ongoing disruptions in labour markets and air travel could reduce diaspora remittances, which is a vital a critical source of forex. 

Countries in the Gulf region, including the United Arab Emirates (UAE), Saudi Arabia, Qatar, Oman, Kuwait, as well as Iran collectively employ over 400,000 Kenyans across hospitality, construction, and domestic services.

“Disruptions in labour markets and logistics are expected to reduce diaspora remittances, further exerting pressure on the country’s foreign exchange position,” the CS noted.

To counter potential economic fallout, President William Ruto's administration recently cut VAT on fuel products by half to 8 percent.

Additionally, the CS revealed that a multi-agency unit has been set up to monitor emerging risks with a view to cushion horticulture, tea, coffee, livestock, and the manufacturing segments of the economy.

CS Kinyanjui stated that the current turmoil exposes Kenya’s vulnerability to over-reliance on single transit corridors and concentrated export markets.

“Kenya is accelerating efforts to diversify export markets, particularly in Asia, Europe, and emerging markets in Latin America, while deepening intra-African trade,” he said.

At the regional and continental level, the CS highlighted frameworks such as the East African Community, COMESA, the Tripartite Free Trade Area, and the African Continental Free Trade Area as key in expanding market access and building long-term resilience.

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