The value of Kenya’s exports to Uganda fell for the first time in seven years during the first quarter of the year, partly reflecting the impact of tit-for-tat tariff and non-tariff measures in recent years.
Trade between the two countries has in recent years been hurt by on-and-off retaliatory protectionist measures leading to the blockade of goods at border points.
Kenya’s traders earned Sh29.60 billion from goods trucked to Uganda in the first three months of the year, data released by State-run statistician shows, marginally reduced from Sh29.67 billion in the prior year.
The fall, though marginal at 0.24 percent or Sh70.38 million, is the first since 2017 when domestic exports to the landlocked country dipped 9.52 percent to Sh12.92 billion, analysis of data collated by the Kenya National Bureau of Statistics (KNBS) shows.
The reduced earnings came in a period when manufacturers complained of the continued application of “discriminative” tariffs on Kenyan-made fruit juice and furniture despite pledges by Presidents William Ruto and Yoweri Museveni to remove the trade barriers.
“Uganda continues to apply discriminative taxes on furniture [which are subjected to excise duty] while there is lack of preferential market access for juices,” Kenya Association of Manufacturers, a sector lobby, said in earlier responses to the Business Daily in March.
“Previously, there were technical barriers to trade in tissue papers contrary to EAC harmonisation standards, but this has since been resolved.”
Traders in both countries have continued to battle tariff and non-tariff barriers on some goods despite the enforcement of a customs union treaty for the East African Community bloc two decades ago.
The EAC Customs Union Protocol, which became operational in 2005, allows free movement of goods, services, capital and labour within the seven-nation trading bloc, making it a free trade area with zero duty on domestic goods and services, and a common external tariff on imports.
Ugandan traders have, for instance, complained of on-and-off blockade of goods such as eggs, sugar and milk powder by Kenyan authorities because of protectionist policies aimed at shielding domestic producers.
“The laws are very clear, but in actual trading, we have push-and-pull and push back, because each country is trying to protect its jobs,” Odrek Rwabwogo, chairman of Uganda’s Presidential Advisory Committee on Exports and Industrial Development told Business Daily in an interview in September last year.
“It’s not a conflict — it is political constituencies that are entrenched in each of our countries that often interfere with good decision-making.”
The west-neighboring country remains the biggest destination of Kenyan goods, the KNBS data shows.
Cement and clinkers were Kenya’s biggest export to Uganda by value last year, earning the country Sh13.79 billion followed by petroleum products (Sh6.88 billion) and iron and steel products (Sh6.17 billion).
Increased trade barriers between the two countries was the main agenda of Uganda’s President Yoweri Museveni’s two-day state visit to Nairobi in May last year.
“We have agreed that trade between the two countries is unimpeded either by tariff or non-tariff barriers or arbitrary levies,” Kenya’s President William Ruto said following Mr Museveni’s visit.
“We have agreed that the common principle will be the full implementation of the EAC customs and other infrastructure that support trade between East African countries. Therefore, all the issues around rice, juice, furniture, eggs, chicken, and sugar are now resolved.”
Nairobi has struggled to sustainably expand exports to regional markets since the turn of the decade, a sign domestic factories have been losing their market share largely because of import substitution amid dwindling industrial competitiveness.
Domestic exports to Tanzania, which largely buy soap, medicaments as well as iron and steel products, were largely flat, growing a measly 1.16 percent to Sh13.54 billion in the first quarter of the year, according to provisional data collated by the KNBS.
“Policy and fiscal disruptions on the cost of raw materials for the steel and paper industries have significantly eroded the country’s export competitiveness compared to our regional peers,” KAM said in March.
Overall, the value of Kenya’s domestic exports dropped 6.54 percent to Sh237.26 billion in the three months compared with a similar period a year earlier.
That marked the first drop in the value of domestic goods sold abroad in six years, having last declined in 2019 at a slower pace of 3.14 percent to Sh137.48 billion.
