Kenya’s exports to the East African Community fell by 15 per cent in the first five months of the year.

The drop was attributed to unfriendly tax regimes and a growing preference among traders for the Dar es Salaam port.

New data from the Kenya National Bureau of Statistics (KNBS) show the country exported goods worth Ksh48 billion ($551 million) to Tanzania, Uganda and Rwanda in the five months to May, compared with exports of Ksh41.8 billion ($480 million) in the same period last year.

The country’s exports to Uganda, Tanzania and Rwanda stood at Ksh23.36 billion ($271 million), Ksh13.53 billion ($155.55 million) and Ksh5.81 billion ($66.78 million) respectively.

In the same period last year, the country’s exports to the three countries stood at Ksh25.78 billion ($296.30 million), Ksh16.72 billion ($192.80 million) and Ksh4.92 billion ($56.52 million) respectively.

The region accounts for about 26 per cent of Kenya’s total exports mostly manufactured goods.

Business leaders said non-tariff barriers (NTBs) created by regulatory regimes in East Africa region contribute to increased cost of doing business along the region’s trade corridors.

While the five EAC partner states had in principle agreed to remove NTBs by December 2012, in the absence of a legally binding framework, action largely depends on the willingness of the different countries.

Removal of NTBs has suffered hiccups as businesses continue to incur huge costs arising from weighbridges, roadblocks, poor infrastructure, unnecessary delays at border posts, and lack of harmonised import and export standards, procedures and documentation.

Kenya’s imports grew at a weaker rate compared with its exports, deepening balance of trade deficit, which stood at Ksh370 billion ($4.2 billion) in May.

The country’s exports to the EAC have been dropping over the past two years. For example, in 2012, exports to the EAC fell to Ksh134 billion ($1.54 billion), down from Ksh137 billion ($1.57 billion) exported to the region in 2011.

Kenya’s exports to Egypt also dropped, from Ksh12.2 billion ($140 million) to Ksh9 billion ($103 million) in the first five months, compared with the same period last year, in the wake of the country’s political turmoil.

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Egypt is a major importer of tea and tobacco products from Kenya.

Businessmen blame the decline partly on high taxes charged by neighbouring countries, especially Uganda — Kenya’s largest export market in the region.

“Uganda’s 25 per cent tax levy on Kenyan goods is against the EAC Market Protocol and has discouraged  Kenyan businesses from doing business in the region,” said Vimal Shah,  the CEO of Bidco Oil Refineries, who is also the chairman of the Kenya Private Sector Alliance (Kepsa).

Transporters say part of the fall in Kenya’s trade could be down to the growing preference among traders for the port of Dar es Salaam.

Dar es Salaam has increased the pace of its port reforms, taking business away from the port of Mombasa in 2012, Dar saw its business increase by 12.9 per cent compared with Mombasa port’s growth of 11.1 per cent in the same period.

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“The central corridor is becoming more efficient and thus eroding Kenya’s competitiveness. Some traders now prefer using the port of Dar es Salaam,” said Willington Kiverenge, the acting CEO of the Kenya Transporters Association (KTA).

The growing trade deficit is seen as one of the biggest threats to the local currency.

The continued crisis in Egypt especially is seen as having partly contributed to the shilling’s depreciation against the dollar — it has lost 3 per cent since April — with analysts adopting a cautious outlook on the local unit in view of this.

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“We expect that the skewed trade balance will continue to exert pressure on the local unit, particularly for as long as the situation in Egypt remains unsettled,” said Sarah Wanga, an analyst at ICEA Lion group.

President Uhuru Kenyatta has singled out trade with other African countries as a key pillar to support the country’s economic growth.

Additional reporting by Scola Kamau