Kenyan President William Ruto gestures as he welcomes his Ugandan counterpart Yoweri Museveni at State House Kenya during the latter’s State visit on May 16, 2024. PHOTO/ PPU
President Museveni and his Kenyan counterpart William Ruto yesterday directed their trade ministers to address the Non-Trade Barriers (NTBs) that continue to stifle trade between the two countries.
According to a communique signed by the permanent secretaries of the Foreign Affairs ministries of the two governments, the two principals discussed bilateral, regional, and multilateral issues of mutual interest and “directed the ministries responsible” to develop implementation modalities of the MoUs inked.
While data indicates that the two countries remain the biggest trading partners in the region, Kenya has several times blocked many Ugandan products, including milk, poultry, sugar, beef, and maize, although Mr Museveni has rejected calls by Ugandan traders to retaliate.
Uganda is also using excise duty to make some of Kenya’s goods uncompetitive.
For instance, Monitor has learnt that Kenya continues imposing a 25 percent excise duty on Ugandan table eggs even as the East African Community Partner States suspended the levy in June 2023.
A tax payment slip seen by this publication shows that Mama Nick Investments, a Nairobi-based eggs dealer paid Ksh62,000 ($475) to Kenya Revenue Authority customs officials at Busia before the 1,000 trays were allowed in Kenya.
Taxing each rate at Ksh72 ($0.6) a tray makes Ugandan eggs expensive and uncompetitive in pricing in Kenya and violates the East African Community (EAC) policy of free movement of goods and services originating from the member states.
Besides, Mr Aga Sekalala Jr, the chairperson of Poultry Producers of Uganda, accused Kenya of using ad hoc measures to block Uganda’s eggs.
“We have been okay with poultry meat; it has been going to Kenya. Day-old chicks have been going but eggs attract excise duty, which is illegal,” Mr Sekalala said.
Sugar exports
The Uganda sugar millers through the Trade Ministry are pushing the EAC Secretariat to block Kenya from enjoying duty-free sugar imports. At the same time, Kenya imposes Excise Duty on sugar imports, locking their commodity out of the Kenyan market.
While the duty-free import window is to plug the local sugar deficit, sugar millers say unscrupulous traders in Nairobi are re-exporting the commodity to neighbouring countries.
The EAC Secretariat gave Rwanda, Tanzania and Kenya the green light to import tax-free sugar outside the region and to plug their domestic deficits, but Mr Jim Mwine Kabeho, the chairperson of Uganda Sugar Manufacturers Association, says the measure has sharply eaten into Uganda’s regional sugar export market.
“Due to the free trade arrangement agreed upon under the EAC customs union, the excise duty is a clear signal implying that Kenya has now moved from using NTBs to direct tariff barriers against Uganda sugar which should not be the case under the customs union,” notes Mr Kabeho.
With the tax, imported sugar from countries such as Brazil, whose millers enjoy economies of scale, are export tax-exempt, and enjoy more subsidies, has crowded out the local EAC milers from the EAC market.
The barriers
Kenya has several times blocked a number of Ugandan products, including milk, poultry, sugar, beef, and maize. For instance, Kenya is imposing a 25 percent excise duty on Ugandan table eggs even as the East African Community partner states suspended the levy in June 2023. Kenya also imposes Excise Duty on sugar imports, locking the commodity from Uganda out of the Kenyan market. Kenya’s Prime Cabinet Secretary and CS for Foreign and Diaspora Affairs Musalia Mudavadi says they are ready to iron out the trade differences.
