Tanzania reaping the spoils of Uganda’s trade fights with Kenya and Rwanda
Tanzania is emerging as the biggest beneficiary of Uganda’s trade war with Kenya and a diplomatic row with Rwanda.
This week, Kampala announced an impending ban on Kenyan agricultural products, signaling an escalation of a trade dispute that has lasted nearly two years and which was expected to be resolved a month ago through a bilateral forum that has aborted.
Ugandan Minister of East African Community Affairs Rebecca Kadaga has asked the agriculture ministry to list Kenyan products that will be banned from the Ugandan market, noting that trade disputes between the two partners in the EAC had “lasted too long”.
“In a short time, they (Kenya) will also understand what we are going through,” warned Ms. Kadaga.
“We have been too patient. In the past we haven’t fought back, but now we will. As the Ministry of Agriculture drafts the list of potential products to be banned, the East African Ministry and its trade counterparts must continue to engage the Kenyan authorities on the outstanding issues, ”the minister said. in Kampala.
Meanwhile, there is no respite in the Uganda-Rwanda dispute, which led to the closure of the one-stop Katuna / Gatuna border post in February 2019, with both sides taking a hard line on issues that led to the closure, in particular security concerns.
No one has watched Kampala’s recent tantrums with more interest than Tanzanian President Samia Suluhu, who has launched a charm offensive in the region since taking office in March this year after the death of John Magufuli. , selling his country as an investment destination of choice. and business partner.
On December 9, Kenyan President Uhuru Kenyatta was the main guest of Tanzania’s 60th independence anniversary celebrations during which he and President Samia held bilateral talks to improve trade between the two countries.
The Tanzanian leader had held talks three weeks earlier with Ugandan Yoweri Museveni, opening up business opportunities that will be important in charting the course of Tanzania’s economic growth in the post-Covid period.
All EAC partners are now looking to Tanzania under President Samia as a lucrative consumer market and trading partner, following the removal of some of the punitive tariff and non-tariff barriers that initially increased the cost of doing business. with Dar es Salaam and have been contrary to the EAC Common Market.
President Samia visited EAC member states except South Sudan and tabled development and trade agreements.
During talks with President Kenyatta, President Samia announced that a Joint Commission for Cooperation (JCC) tasked with removing non-tariff barriers between the two nations, which had had trade disputes throughout Magufuli’s reign , had done a good job.
“I commend the JCC for quickly resolving 46 of the 64 non-tariff barriers that existed and I am sure the others will be resolved soon,” she said.
This opportunity would not have come at a better time as Kenya appears to have decided to ditch Uganda as the region’s most important trading partner after months of trade disputes involving agricultural products.
In March, Kenya banned imports of Ugandan maize, a move that saw Ugandan lawmakers demand retaliatory bans on Kenyan products. But President Museveni rejected the calls, noting that such action would be against the Common Market.
“The other day I heard some of our MPs talk about retaliation,” he said during his State of the Nation address in June. “I couldn’t agree with that line. What we need is to work patiently for the integration of East Africa. We have worked hard to revive the East African Common Market and Uganda is benefiting a lot from it. Therefore, the idea of retaliation is not good because it plays into the hands of those who want us to break up.
Uganda’s recent shift in stance, analysts say, could be due to several failed attempts to resolve the stalemate with Nairobi. Cabinet this week appeared determined that something had to be done.
Kampala has reportedly been angered by Kenya’s apparent loss of interest in resolving the dispute, and the drop in trade figures between the two is evident.
Kenya canceled a scheduled trade mission to Uganda in November to resolve a dispute over trade in sugar and milk. The Principal Secretary of the Livestock Department, Harry Kimutai, blamed the delay on the Kenya Dairy Board’s lack of preparation. The postponement extended a two-year struggle over the milk and sugar trade between Kenya and Uganda. The mission was to verify claims that sugar and milk imported from Uganda came from third countries, a claim that Kampala denies. “The dairy council was not ready and we had to postpone this meeting until December,” said Kimutai.
Ugandan officials accuse Nairobi of ignoring the private sector and failing to publish reports on the verification process.
“They only travel with technocrats and go back to Kenya and are silent without releasing a report,” Minister Kadaga said. Kenya faces a ban on its main agricultural exports to Uganda: palm oil, which brought in $ 64.2 million last year, sorghum ($ 12.4 million), vegetables ($ 2.77 million) and pulses ($ 1.78 million). But trade between Nairobi and Kampala has been on a downward trend since April 2021, with Kenya’s export value rising to $ 83.25 million in April, $ 71.78 million in May and $ 66.85 million in May. dollars in June. Tanzania has therefore overthrown Kenya as Uganda’s main export market in the EAC. Ugandan Minister of State for Agriculture Bright Rwamirama said while the ministry continues to engage Kenya and the EAC secretariat on the bans, it has a retaliatory master plan it could implement soon.
As politicians play the smart game, the East African Business Council (EABC) warns it will hurt the bloc’s integrated agenda. “We call for an early convening of the bilateral public-private dialogue between Kenya and Uganda to find sustainable win-win solutions on the elimination of non-tariff barriers,” said EABC Managing Director John Bosco Kalisa, in a statement. The EABC wants the EAC partner states to ratify the article on the appeal resolution process of the EAC Customs Union Protocol in order to pave the way for the operationalization of the Trade Remedies Committee of EAC. the EAC.
“The non-existence of the committee prevents the EAC Council of Ministers from referring NTB elimination issues to the team, as provided for in the NTB law of 2017,” Kalisa said. Kenya’s Ministry of Commerce said it had not received any formal complaints from Kampala, as stipulated in the EAC’s Common Market trade dispute settlement mechanism.
Free market standards
“We are ready to engage with our counterparts to resolve the trade dispute. We have not yet received any complaints through official diplomatic channels. When we see something formal, we will respond, ”Johnson Weru, Kenya’s principal trade secretary, told The EastAfrican.
However, he noted that trade disputes are an integral part of a free market.
“We have a common market that allows the free movement of goods and services, so it’s a free market,” he said.
In December 2019, Kenya stopped importing Ugandan milk, including the Lato brand. Then the battle shifted to corn. Kenya needs corn imports of 600,000 tonnes per year, while the exportable surplus elsewhere in the EAC is between 200,000 and 300,000 tonnes.
Uganda exports at least 90 percent of its maize to Kenya, with a cumulative average of 330,620 tonnes. In January 2021, Kenya imported 450,000 bags of maize from Uganda and Tanzania, and another 300,000 bags in February. Then he cut the power, banning maize from Uganda and Tanzania in March, claiming it was infested with aflatoxin, a toxic compound produced by molds.
Kampala fought back, imposing tariffs on Kenyan products like juices and roofing materials.
Nairobi has since lifted the ban on Ugandan corn, but uncertainty surrounds the fate of dairy and poultry products. At the end of October, Uganda found an alternative market for its dairy products in Zambia.
This week, Ugandan poultry farmers and traders called on their government to intervene to help gain access to the Kenyan market. Kenya is Uganda’s largest market for poultry products, given the variation in per capita egg consumption between the two countries. An average Kenyan eats between 55 and 68 eggs per year while a Ugandan only consumes 17.
For Kampala, escalating trade disputes with Nairobi and Kigali are doomed to hurt the economy. The Bank of Uganda says the ban will cost the country at least $ 121 million.
But Kenya’s economy is also on the verge of losing, as Uganda now grants more import business to Dar. Rwanda, which imported goods via Uganda on the Northern Corridor from the port of Mombasa, increasingly uses the port of Dar, especially for importing petroleum products.
And as the political climate heats up ahead of next year’s August elections in Kenya, more importers are expected to avoid the port of Mombasa. Many still remember the post-election chaos of 2007/8 which caused damage to goods destined for Uganda and Rwanda.
The aggrieved companies went to court and received some $ 63 million, which they have yet to receive. Weru admits that ongoing talks with Tanzania will tip the trade balance with Uganda in Tanzania’s favor. “Right now, Tanzania is winning at someone else’s expense. If you look at the trade figures, there are more products from Tanzania entering the Kenyan market, compared to Uganda lately, ”Weru said.
Tanzanian traders reap the spoils of Uganda’s war with its neighbors. In the third quarter of 2021, Tanzanian exports to Rwanda reached 66.37% of the EAC’s total of $ 228.41 million, compared with 61.18% recorded in the third quarter of 2020, according to data from the Rwandan Institute of statistics released last week.
The volume of goods from Kenya, which is the second largest exporter to the Rwandan market, fell 33.44% to $ 76.39 million in the third quarter of this year, compared to 38.82% recorded in the same. period in 2020.