This was an increase from Sh43.5 billion when compared to the same period in 2024, according to new data released by the Kenya National Bureau of Statistics (KNBS).
The widening deficit means that the country is spending more foreign currency than it is earning or rather importing more goods, services, income and transferes, than it is exporting.
The deterioration was driven largely by a growing merchandise trade deficit, a shrinking surplus in services and rising debt-servicing obligations by the government, pointing to a persistent structural pressure on the country’s balance of payments.
In the review period, KNBS data shows that the merchandise trade deficit expanded to Sh355.8 billion in the quarter ending September 2025, from Sh321.1 billion a year earlier. This reflected a sharper increase in imports relative to export earnings.
While exports rose by Sh48.0 billion, imports surged by a much larger Sh82.7 billion, pushing the trade gap wider.
“The higher import bill was mainly attributed to increased imports of industrial machinery, iron and steel, and road motor vehicles. Imports of industrial machinery jumped by nearly 95 per cent, while iron and steel imports rose 41 per cent, and road motor vehicles by 29.1 per cent during the quarter,” KNBS said in its quarterly report.
In contrast, Kenya recorded lower import expenditure on petroleum products, medicinal and pharmaceutical products, wheat and chemical fertilisers, offering some relief but not enough to offset the overall surge in imports.
On the export front, total export earnings rose modestly to Sh289.4 billion, representing a 2.5 per cent increase compared to the third quarter of 2024.
Growth was largely supported by stronger performance in animal and vegetable oils, whose export value jumped 24.3 per cent and cut flowers, which recorded an 11.6 per cent increase.
“Earnings from domestic exports increased by 1.2 per cent in the third quarter of 2025 compared with the same quarter of 2024. This was primarily contributed by higher export values of animal and vegetable oils and cut flowers, which rose by 24.3 per cent and 11.6 per cent, respectively,” the report reads in part.
“Articles of apparel and clothing accessories as well as edible products and preparations, also recorded notable increases in their values during the review period.”
Regionally, Africa remained Kenya’s largest export destination, accounting for 44.6 per cent of total export earnings, supported by strong growth in exports to the Democratic Republic of Congo, Uganda, Egypt and Rwanda.
Exports to Europe also rose, driven by higher shipments of cut flowers and macadamia nuts, particularly to the Netherlands.
However, exports to Asia contracted by 14.2 per cent, with notable declines recorded in shipments to the United Arab Emirates, India, Pakistan and Yemen, while earnings from the Americas fell due to reduced coffee exports to the United States.
Beyond trade in goods, Kenya’s services account surplus shrank significantly, declining from Sh100.6 billion in the third quarter of 2024 to Sh57.2 billion in 2025.
The drop was attributed to reduced net inflows from travel, transport, and government goods and services.
Although tourism receipts remained substantial, higher outbound travel and service payments narrowed the net surplus.
The primary income deficit narrowed slightly to Sh76.5 billion, supported by higher income receipts, but continued outflows in the form of interest payments and profit repatriation kept the account in negative territory.
Meanwhile, the secondary income surplus, which includes diaspora remittances, declined to Sh239.8 billion, despite remittances inching up marginally to Sh165.5 billion during the quarter.
Kenya’s external financing position also weakened, with net external financing falling by 57.8 per cent to Sh25.7 billion, as debt servicing costs rose and inflows declined.
This prompted a Sh63.7 billion drawdown in foreign exchange reserves, compared to a reserve build-up in the same period last year, signalling increased pressure from external obligations.
At the same time, the stock of external debt liabilities of the general government rose to Sh5.62 trillion by the end of September 2025, up from Sh5.43 trillion a year earlier.
The increase was driven mainly by a 19.9 per cent rise in international sovereign bonds, following new issuances in March and June 2025.
Multilateral loans continued to dominate Kenya’s external debt portfolio, accounting for 76.4 per cent of total external liabilities, while debt owed to bilateral lenders and commercial banks declined following a restructuring exercise in July 2025.
Non-resident holdings of Treasury bonds also fell, reflecting reduced foreign appetite for domestic debt securities.
by JACKTONE LAWI
