Impact of Supply Side Shocks on Kenyan Exports to COMESA

Abstract

The study sought to determine the impact of supply-side shocks on Kenyan exports to COMESA region. This was motivated by the increasing number of shocks that have hit the country, the region and the global economy in the recent past. Using secondary data covering the period from 1990 to 2021, the study applied the Vector Auto Regression model and estimated impulse response functions to show the effect of shocks on each of Kenya's exports to the region. The study established that Kenya's exports to COMESA as a region are impacted by oil price shocks, variations in investment level in Kenya and exchange rate. Erratic weather patterns characterized by droughts do not affect the country's exports to the region. Therefore, the paper recommends that for Kenya to boost its exports to the region and subsequently boost Intra-COMESA trade, the government of Kenya should promote investment and ensure that the country gets enough crude oil supplies even when global prices are rising as this will boost the country's exports to the region.