East Africa

Ukraine war: Kenya $87m exports to Russia derailed


Summary

  • The exclusion of Russian banks from SWIFT will make it riskier and more expensive for Kenyan exporters, halting exports like spices, nuts and vegetables to Russia.

  • Russia’s assault on its neighbour is the biggest state-to-state invasion in Europe since World War Two, prompting suctions from the US, Britain and EU.

  • The impact of the economic sanctions was felt on the Mombasa Tea Auction this week where buyers for the Russian market — the fifth-largest consumer of Kenya’s tea after Pakistan, Egypt, UK and UAE— kept off.

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By CONSTANT MUNDA


Kenya’s exports of tea, flowers, coffee and fruits to Russia have been derailed in the wake of sanctions imposed on Moscow by Western nations after its invasion of Ukraine, hurting local smallholder farmers.

The blockade of the exports, estimated at nearly Ksh10 billion ($87.5 million) annually, came after major container and shipping lines temporarily suspended cargo shipments to and from Russia in response to the sanctions.

Excluding Russian banks from SWIFT, the international payment system, and its central bank from international operations has made it harder for the country to pay for imports and receive cash for exports.

SWIFT [Society for Worldwide Interbank Financial Telecommunication] is a secure messaging system that facilitates rapid cross-border payments and its instructions are typically honoured without question, making international trade flow smoothly.

The exclusion of Russian banks from SWIFT will make it riskier and more expensive for Kenyan exporters, halting exports like spices, nuts and vegetables to Russia.

Russia’s assault on its neighbour is the biggest state-to-state invasion in Europe since World War Two, prompting suctions from the US, Britain and EU.

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The impact of the economic sanctions was felt on the Mombasa Tea Auction this week where buyers for the Russian market — the fifth-largest consumer of Kenya’s tea after Pakistan, Egypt, UK and UAE— kept off.

The unified international retaliation against Russia over its brutal military aggression against Ukraine has taken a toll on trade between Nairobi and Moscow, which topped Ksh45 billion ($394 million) in 2020, tilted in favour of the world’s largest country by area.

Russia is largely seen as a growth market for Kenya’s sluggishly growing exports. Tea is the leading export while Kenya’s coffee enters the country as re-exports from other countries.

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