Tanzania, a major beneficiary of Uganda’s trade war with Kenya and a diplomatic spat with Rwanda.
Tanzania is emerging as the major beneficiary from Uganda’s trade war with Kenya and a diplomatic spat with Rwanda.
This week, Kampala announced an approaching embargo on Kenyan agricultural exports, escalating a trade dispute that has lasted over two years and whose settlement was anticipated a month ago via a bilateral summit that was canceled.
East African Community Affairs Minister Rebecca Kadaga of Uganda has asked the Agriculture Ministry to compile a list of Kenyan items that would be barred from the Ugandan market, citing “too lengthy” trade squabbles between the two EAC members.
“They (Kenya) will comprehend what we are going through in a short time,” Ms. Kadaga said.
“We’ve been much too patient. We haven’t retaliated in the past, but we will now. While the Agriculture Ministry compiles a list of probable items to prohibit, the East Africa Ministry and its trade counterparts will continue to engage Kenyan authorities on the outstanding concerns,” the minister said in Kampala.
Meanwhile, there is no reprieve in the Uganda-Rwanda conflict, which resulted in the closure of the Katuna/Gatuna one-stop border post in February 2019, with both sides maintaining a hard position on the problems that led to the closure, which included security concerns.
No one has been more interested in Kampala’s recent tantrums than Tanzanian President Samia Suluhu, who has been on a charm offensive across the region since taking office in March this year following the death of John Magufuli, pitching her country as a premier investment destination and trading partner.
Kenyan President Uhuru Kenyatta was the primary guest at Tanzania’s 60th Independence Day festivities on December 9, during which he and Tanzanian President Samia conducted bilateral discussions to strengthen bilateral commerce.
Three weeks previously, the Tanzanian leader met with Uganda’s Yoweri Museveni, opening up commercial options that would be critical in charting Tanzania’s economic development route in the post-Covid future.
Following the removal of some of the punitive tariff and non-tariff barriers that initially raised the cost of doing business with Dar es Salaam and ran counter to the EAC Common Market, all EAC partners are now looking to Tanzania under President Samia as a lucrative consumer market and trading partner.
President Samia has visited all EAC member countries, with the exception of South Sudan, and has proposed development and commercial agreements.
During his discussions with President Kenyatta, President Samia said that a Joint Commission for Cooperation (JCC) entrusted with removing non-tariff obstacles between the two countries, which had trade disputes during Magufuli’s administration, had done an excellent job.
“I thank the JCC for quickly eliminating 46 of the 64 non-tariff obstacles that existed, and I am certain that the remaining ones will be handled shortly,” she added.
This change could not have come at a better time, since Kenya seems to be abandoning Uganda as its most significant trading partner in the area after months of a trade dispute concerning agricultural exports.
Kenya restricted imports of Ugandan maize in March, prompting Ugandan politicians to urge reciprocal sanctions on Kenyan commodities. President Museveni, on the other hand, rejected the requests, stating that such action would be against the Common Market.
“I heard some of our MPs talking about retribution the other day,” he stated during his State of the Nation speech in June. “I couldn’t agree more with that sentence.” What we need is to work steadily for East Africa’s unity. We worked hard to revitalize the East African Common Market, and Uganda has benefited much as a result. As a result, retribution is a bad decision since it plays into the hands of those who want us to split us.”
Analysts believe Uganda’s recent shift in posture is the result of repeated unsuccessful efforts to end the standoff with Nairobi. This week, the Cabinet appeared adamant that something is done.
Kampala is claimed to be enraged by Kenya’s apparent lack of interest in settling the issue, as seen by a drop in trade data between the two countries.
Kenya canceled a scheduled trade delegation to Uganda in November to settle a disagreement over sugar and milk trade. Harry Kimutai, Principal Secretary in the Department of Livestock, blamed the postponement on the Kenya Dairy Board’s lack of preparation. This delay extended a two-year dispute between Kenya and Uganda over milk and sugar commerce. The mission’s purpose was to check reports that Ugandan sugar and milk were sourced from third-party nations, which Kampala denies. “The dairy board was not prepared, so we had to postpone this meeting until December,” Mr Kimutai said.
Ugandan authorities accuse Nairobi of disregarding the private sector and failing to provide verification reports.
“They merely roam about with technocrats and then go back to Kenya and remain silent,” Minister Kadaga said. Kenya is facing an embargo on important agricultural exports to Uganda, including palm oil ($64.2 million last year), sorghum ($12.4 million), vegetables ($2.77 million), and legumes ($1.78 million).
However, commerce between Nairobi and Kampala has been declining since April 2021, with Kenya’s exports valued at $83.25 million in April, $71.78 million in May, and $66.85 million in June.
As a result, Tanzania has surpassed Kenya as Uganda’s primary export market in the EAC. Bright Rwamirama, Uganda’s State Minister for Agriculture, said that although the ministry is continuing to engage Kenya and the EAC Secretariat on the prohibitions, it has a retaliatory master plan that it might activate shortly.
The East African Business Council (EABC) fears that the politicians’ game of wits would harm the bloc’s integrated objective.
“We encourage a prompt convening of the bilateral public-private conversation between Kenya and Uganda to establish win-win lasting solutions on the eradication of non-tariff barriers,” EABC CEO John Bosco Kalisa said in a statement.
The EABC wants the EAC partner nations to ratify the EAC Customs Union Protocol’s clause on the remedy settlement procedure, which would pave the path for the EAC Trade Remedies Committee to become active.
“Because the committee does not exist, the EAC Council of Ministers cannot send concerns concerning the abolition of NTBs to the team, as provided for in the NTB Act, 2017,” Mr. Kalisa said. According to Kenya’s Trade Ministry, it has not received any formal complaints from Kampala, as required by the EAC Common Market’s trade dispute settlement process.
“We are ready to work with our colleagues to resolve the trade issue.” We have yet to receive any complaints through formal diplomatic channels. “When we see anything official, we will reply,” Kenya’s Trade Principal Secretary, Johnson Weru, told The EastAfrican.
He did, however, point out that trade disagreements are unavoidable in a free market.
“We have a Common Market that provides for the free movement of goods and services, therefore it’s a free market,” he said.
Kenya prohibited importing Ugandan milk, namely the Lato brand, in December 2019. The struggle then switched to maize. Kenya needs 600,000 tonnes of maize imports per year, whereas the EAC exportable surplus is between 200,000 and 300,000 tonnes.
Uganda sends at least 90% of its maize to Kenya, with a total average of 330,620 tonnes exported. Kenya bought 450,000 bags of maize from Uganda and Tanzania in January 2021, followed by another 300,000 bags in February. Then, in March, it pulled the plug, banning maize from Uganda and Tanzania, claiming that it was contaminated with aflatoxin, a deadly substance generated by molds.
In retaliation, Kampala imposed duties on Kenyan imports, including juice and roofing materials.
Nairobi has subsequently removed the embargo on Ugandan corn, but the status of milk and poultry goods remains unknown. Late in October, Uganda discovered a new market for its dairy goods in Zambia.
Ugandan chicken producers and dealers petitioned their government last week, requesting assistance in accessing the Kenyan market. Given the disparity in egg consumption per capita between the two nations, Kenya is Uganda’s largest market for chicken goods. A typical Kenyan consumes 55 to 68 eggs per year, but a Ugandan consumes just 17 eggs.
The intensification of trade tensions with Nairobi and Kigali is sure to harm Kampala’s economy. According to the Bank of Uganda, the restriction would cost the government at least $121 million.
However, Kenya’s economy is also poised to suffer as Uganda shifts more import business to Dar es Salaam. Rwanda, which formerly imported commodities through Uganda via the Northern Corridor from the port of Mombasa, is increasingly utilizing the Dar port, particularly for the purchase of petroleum products.
As the political situation in Kenya heats up in the run-up to next year’s August elections, more imports are expected to avoid Mombasa port. Many people remember the post-election unrest in 2007/8, which caused products headed for Uganda and Rwanda to be damaged.
The firms that were wronged went to court and were granted $63 million, which they have yet to collect. Mr. Weru agrees that current discussions with Tanzania will tip the trade balance in Tanzania’s favor. At the moment, Tanzania is prospering at the expense of someone else. According to trade data, more Tanzanian items have recently entered the Kenyan market than Ugandan products, said Mr. Weru.
Tanzanian businessmen are enjoying the benefits of Uganda’s battle with its neighbors. Tanzanian exports to Rwanda increased to 66.37 percent of the total $228.41 million from the EAC in the third quarter of 2021, up from 61.18 percent in the third quarter of 2020, according to Rwanda Institute of Statistics statistics published last week.
The number of commodities exported from Kenya, the Rwandan market’s second-largest exporter, fell 33.44 percent to $76.39 million in the third quarter of this year, down from 38.82 percent in the same period last year.