What you need to know:
- Trade relations between Uganda and Kenya have been frosty, especially in the last four years. Unfortunately, Uganda has suffered more than Kenya from endless blockades placed on its milk, eggs, sugar and other export products
If there has been something that has troubled Uganda in the last three years like trade with Kenya, then it is something quite serious.
In fact, Uganda’s trade relations with Kenya under former president Uhuru Kenyatta were one of the most fragile in the region, enlisting threats from both government and the private sector that go against commitments under the East African Community (EAC).
On December 2, 2020, industrialists and exporters under Uganda Manufacturers Association (UMA) issued an unprecedented threat to Kenya.
In an early morning presser, UMA, well aware of non-retaliation position of President Museveni regarding regional trade, decided to change tact, threatening to drag Kenya to the East African Court of Justice.
Before this, UMA had protested government’s inability to decisively resolve the unfair trade practices subjected to Uganda by Kenya in blatant disregard of EAC Common Market commitments.
In a statement, UMA noted that despite a protest note issued by government in January 2020 - which actually was never responded to - Kenya had remained adamant, yet President Museveni had threatened to deal with any official who would impose retaliatory measures against East Africa’s largest economy.
There was little to suggest that the issues were being handled at the level of heads as traders continued to be blocked at different port areas.
“The situation has reached worrying levels warranting tough measures to address trade issues in EAC, otherwise Uganda is doomed,” said the then UMA executive director, Daniel Birungi.
UMA also noted that their action was a culmination of untold frustration and failure of government to pursue equity from EAC partner states.
“Yes, Uganda believes in regional integration. However, Uganda must also benefit from the integration process. UMA thus demands that government changes tactics to retaliate against partner states that breach the EAC Common Market Protocol through blocking goods originating Uganda into their markets. UMA expects action before Christmas,” a statement issued then, reads in part.
However, Christmas passed but not so much had changed. Blockades on different goods continued into the very end of president Uhuru’s presidency.
Shedding off old shell
For years, if not decades, Uganda has been a supermarket of sorts for products made elsewhere. Kenya has always benefited from both access to cheap Ugandan raw materials and fresh produce for its agro-processing industry and market for finished products.
However, trade wars between Kenya and Uganda started to become obvious when Uganda’s exports to Kenya increased exponentially in 2017, when, for the first ever, Uganda reported a trade surplus with one of its biggest trade partners.
Since then, Kenya has intensified non-tariff barriers, which according to trade and regional integration experts such as Kizza Africa and Martin Munnu, contradict commitments under the EAC Common Market Protocol.
Data from Bank of Uganda shows that Kenyan exports into Uganda grew from $1.1b in 2017 to $1.2b in 2018.
However, whereas Kenya continues to benefit, trade blockades as a result have cost Uganda close to 114,810 jobs, particularly in manufacturing and the agricultural value chain.
Uganda’s exports to Kenya, among which included, sugar and confectionaries, coffee, honey, dairy products, eggs and cereals, stood at $465.55m (Shs1.7 trillion) during 2020, according to Kenya Association of Manufacturers.
The growth has been slow but steady and judging from the goings on, a section of Kenyan manufacturers is worried of the trend.
However, unlike his predecessor, President William Ruto has made it clear that he would open up the Kenyan market to Ugandan products, which would do away with the protectionism that had become normal business.
Uganda has been working progressively through a number of policies such as Buy Uganda Build Uganda and Reservations and Preference Schemes under the Public Procurement and Disposal of Public Assets (PPDA) Act, to push the manufacturing sector.
Data indicates that this approach has seen established industries grow production efficiencies to produce enough for local and export market.
Other data sets including manufacturing sector analysis, Ministry of Trade briefs and Economic Policy Research Centre (EPRC) reports have corroborated this growth but has been stifled by artificial barriers that go against EAC Common Market guarantees.
For instance, Kenya has continued to block Ugandan goods under the pretext of originality, with some claims indicating that Uganda has not developed capacity to produce for its local and the export market.
Other claims have indicated that Uganda’s products are substandard yet they carry quality marks issued by Uganda National Bureau of Standards.
Therefore, it is from such claims that cases of structured and institutionalised harassment of Ugandan exporters have taken root, especially for poultry, milk and sugar products.
This has been worsened by impromptu stopovers and raids on Ugandan warehouses, issuance of quotas to products such as sugar, which contradicts EAC Common Market Protocol.
Change of guard
However, with the change of guard in Kenya, there has been some optimism that trade between Kenya and Uganda might get back on the rile, built on the hope that President Ruto might be looking at forging a different set of trade relations.
In his inauguration on September 13, he was clear on the East Africa he wants - a borderless bloc - noting that together, with other leaders, he will push the agenda to eliminate trade, financial and cultural barriers.
It is from this that it looks like the chains of the never-ending non-tariff barriers meant to frustrate Uganda’s exports into Kenya, will be broken.
As we speak, the long standing trade impasse over milk, sugar, beef and poultry products has been relaxed just within months of Ruto’s presidency.
And this has happened without issuance of protest notes.
A mini survey recently indicated that domestically manufactured goods are now crossing into Kenya with much ease than before.
Claims that Uganda’s goods are substandard or smuggled from other countries, have reduced.
In an interview recently, UMA chairman Deo Kayemba, said President Ruto, like President Museveni, has already shown that he is pro-regional trade.
“Many of the products that have previously been denied entry into Kenya now have free access. I can tell you non-tariff barriers have largely decreased unlike in Tanzania and Rwanda,” he said, but noted that given that everything gets done through processes, in about three or four years, the region might be free of non-tariff barriers.
Similarly, Richard Mubiru, the UMA economic policy committee member, said the leadership change in Kenya has created new hope for “for our products.”
“The new administration seems committed to regional trade and integration and that has always been our prayer. Chickens, milk and many other things are now all going through with limited or no hassle at all. The concern now is the skirmishes in parts of DR Congo, but we hope that 2023 will be a defining moment in terms of market access in all EAC partner states. As manufacturers we have between 35 and 40 per cent export capacity ready to be rolled out,” he said.
Contribution of government
However, this has not been achieved without government involvement.
Emmanuel Mutahunga, the Commissioner External trade at the Ministry of Trade, says since 2005, EAC has gone through so much changes, especially in the area of movement of goods and people.
"Our goods can move across the borders despite some few non-tariff barriers, and even then we have mechanisms for resolving them, something that wasn’t the case before,» he said.
The gains, other stakeholders such as Moses Sabiiti, the Presidential Advisory Committee on Exports and Industrial Development vice president, say must be consolidate, while creating more trading opportunities to achieve real economic and trade growth.
Uganda’s trade with different blocs
The Comesa trading bloc remained the main destination for Uganda’s exports with a 51.32 percent share of total export earnings.
EU ranked the second main destination for Uganda’s goods and services with a 19.68 percent share while the Middle East, followed accounting for 14.32 percent of total export earnings.
Asia, the rest of Africa, the rest of Europe and the Americas followed in that order but with minimal returns.