The Government last week announced that it has reduced its maize importation projections from 300,000 bags (Estimated to cost KES 1 billion) to 100,000 bags. This will significantly reduce government expenditure for the next couple of months, plus ease maize prices.

We have compiled some potential impacts, of the reduction in maize importation to the economy.

The Shilling has in the recent past weakened against the dollar, standing at an average of KES 85.4 to the dollar. This means imported maize costs more than locally produced maize. A reduction in maize importation will subsequently save the government a significant portion of its already highly constrained budget.

Reduction in maize importation will also ease maize prices, subsequently reducing the cost of maize flour. As earlier noted, current forex rates are relatively high, translating to higher imported maize prices. Availability of more locally produced maize will ease maize prices. The national stocks levels are estimated to be at a surplus of about 408,150 bags, meaning we are safe.

During the maize deficit spell, demand of maize shifted to other staple foods, resulting to higher prices for these food alternatives. Abundance in maize will ease demand for other staple food, hopefully resulting to a reduction in their price.

Lastly, having less imported maize can contribute to reduction in inflation. As earlier noted, imported maize costs more than locally produced maize, meaning have more locally produced maize will lower food prices subsequently resulting in reduction in Consumer Price index (CPI). Reduction in CPI will result in reduction of inflation rate.