Kenya moves to solve trade tiff with Uganda
The government yesterday moved to forestall a simmering trade dispute with its western neighbour, Uganda, which is threatening its largest export market.
Trade and Industrialisation Cabinet Secretary Betty Maina told journalists the government planned to engage Ugandan authorities in a bid to end trade disputes which saw Kampala ban agricultural products from Kenya.
She said Kenya is yet to receive a formal communication from Uganda about the ban but assured the government was committed to ironing out differences between the neighbours.
“We are awaiting a formal communication from Uganda on that decision and we will respond because there is no intention to destabilise the bilateral trade relationship,” she said.
Maina, who spoke at the Associated Vehicle Assemblers Ltd assembling plant in Miritini, Mombasa, said there was no cause for alarm as the matter was being handled by relevant authorities.
On Monday, the Ugandan Cabinet agreed to suspend Kenyan exports until Nairobi lifts a ban imposed on some Ugandan products.
Domestic market
A statement from Ugandan officials said Kampala would restrict from its domestic market certain raw and processed agricultural products from Kenya in a reciprocal move to her eastern neighbour’s ban on some of her farm products.
Uganda’s minister for East African Affairs Rebecca Kadaga said the Ugandan Cabinet had directed the Agriculture ministry to identify and list particular Kenyan products that would be banned by the Uganda “in a short time”.
“We have been too patient. In the past, we have not reciprocated, but now we are going to. This has gone on for too long and within a short time they, too, will understand what we are going through,” Kadaga warned.
But yesterday, Maina emphasised the need to have the dispute resolved expeditiously and amicably, noting that Uganda was an important trade partner.
“We want to urge our traders not to panic as the matter will be addressed diplomatically,” said the CS.
Separately, the East African Business Council (EABC) called for a convening of bilateral public-private dialogue between the two countries to find a “win-win lasting solution” on the elimination of Non-Tariff Barriers.
EABC executive director John Bosco Kalisa called for dialogue to eliminate all outstanding trade barriers between Kenya and Uganda to boost trade, economic growth and jobs.
Ugandan sugar
“Not only do NTBs rise transaction time and the cost of doing business across borders but also set back the competitiveness of products originating from the EAC region,” Kalisa said in a statement.
He urged all EAC partner states to eliminate all sorts of barriers imposed on goods and services.
Local manufacturers also warned that the dispute would greatly affect the local manufacturing sector as Uganda is Kenya’s leading trading partner.
“The free flow of trade, devoid of geographical barriers, is an essential element for economic prosperity in any country,” said Kenya Association of Manufacturers (KAM) boss Phyllis Wakiaga.
She further warned that manufacturing could not survive on the local market only, but also on regional markets.
Kenya and Uganda have for long had trade fights but the latest hostilities between the two EAC partner States began brewing in December 2019, when Kenya stopped importing Ugandan milk, particularly the Lato brand.
In July last year, Kenya followed it up with a ban on Ugandan sugar, against an earlier agreement to increase Kampala’s sugar exports to Kenya.
Uganda had introduced discriminative excise duties under the Excise Duty Amendment Act, 2017.
However, in April, Maina led a delegation to Uganda seeking assurance that the sugar imported was produced in Uganda.
Kenya agreed to allow 90,000 tonnes of sugar from her landlocked neighbour as soon as the verification mission on the country of origin was completed.
As part of the pact, Uganda committed to abolish the 20 per cent excise duty on furniture and 18 per cent Value Added Tax (VAT) on exercise books manufactured in Kenya with effect from July 1.
This was a direct contradiction of an agreement between the two countries in April where Kenya agreed to allow 90,000 tonnes of sugar from her landlocked neighbour as soon as the verification mission on the country of origin was completed.
Trade data from Central Bank of Kenya indicates that imports from Uganda dropped from a record high of Sh3.2 billion ($29 million) in February to Sh2.09 billion ($19 million) in the review period, hitting a seven-month low.
