Only the work rate of President William Ruto’s new technocrats can fulfil Kenya’s pledge to unban Uganda’s poultry and milk products into its market by unbinding the restrictions imposed last year to protect local producers.
Last week, while at a function at the Kenya Association of Manufacturers (KAM), President Ruto gave the strongest hint that he would open up the Kenyan market to Ugandan products and do away with the protectionism exhibited by his predecessor’s regime.
“Uganda should bring cheaper milk here because they can produce it more cheaply. We should (also endeavour) to add value to our milk,” he said.
The idea, the Kenyan leader argues is to allow in goods from neighbours in exchange for their opening up to ensure Nairobi benefits from the provisions of the Africa Continental Free Trade Area (AfCFTA), which it can exploit instead of quarrelling.
“We should be adding value (to our milk), producing butter, powder for sale in the DRC, Central Africa and West Africa and we import cheaper milk from Uganda for our consumption,” said Ruto.
“Why should we quarrel with Uganda? It is because we have refused to take our rightful place in our continent. We should have taken action earlier but allowed Uganda to occupy this space. We must (therefore) have a different conversation.”
Kenya will, instead, task the Kenya Development Corporation to help producers improve the value of their products and target the broader market offered by AfCFTA.
“We now have the market infrastructure for us to take over the market in our continent. The reason our continent imports milk, powder and food is because Kenya has not taken its rightful place.”
Trade Remedies Act
But the immediate task of lifting the ban will bank on the bureaucracy involved. As is the tradition, presidential declarations do not amount to policy until the local technocrats turn around the way of doing things, in writing.
“The ban on Ugandan milk was not imposed by us (Trade) but by another ministry (Agriculture). Only they can lift the ban,” said Johnson Weru, Kenya’s Trade Principal Secretary.
“There is a specific process under the Trade Remedies Act of 2017. We have not prescribed any action under the Act and will have to sit down with Uganda under a bilateral arrangement.”
The PS hinted that trade, Agriculture and EAC Cabinet ministers will hit the road to ensure the trade bans of Ugandan milk are lifted by the end of 2022.
Road to unban milk products
Kenya’s Trade Cabinet Secretary Moses Kuria has already met and held discussions with his Ugandan counterpart Frank Tumwebaze, on the road to unbanning the milk products this week. On Thursday, Mr Kuria formally took office, providing certainty to the Ministry charged with trade policy.
But EAC issues fall under a different docket handled by new Cabinet Secretary Rebecca Miano. Successful unbanning will depend on priorities the three ministries will focus on.
The plan to lift the ban is informed by Dr Ruto’s policy and plan to open up trade in the region to increase intra trade within the EAC, which is currently below 20 percent.
Trade hostilities between the two EAC partner states began brewing in December 2019, when Kenya stopped importing Ugandan milk, particularly the Lato brand. And in July 2020, Kenya followed up with a ban on Ugandan sugar, against an earlier agreement to increase Uganda’s sugar exports to Kenya.
Kenya averted the ban on the export of its agricultural produce to Uganda after Nairobi agreed to lift restrictions on imports of poultry products from the neighbouring country at the end of last year.
The bilateral talks in December discussed and resolved trade issues touching on poultry, eggs, sugar and fish.
But immediately he took over from President Uhuru Kenyatta, Dr Ruto wants to have the ban on Ugandan goods totally lifted.
Open up more markets
The East African Business Council Kenyan chapter welcomed the move by president Ruto saying it will open up more markets for Kenyan goods as well.
“The point is for neighbours to trade with each other. It is the volume of that trade that matters rather than who is selling more eggs, milk or beans to the other, otherwise we will never grow. We must open up the market so that everybody can trade freely,” said Mucai Kunyiha, EABC board member and former chairman of KAM.
“People must also be able to trade in what they are competitive in because if we have expensive milk in Kenya, then you can’t sell it to Uganda. Conversely, since Uganda has cheaper milk, we must allow them to sell to us.”
The move is likely to see milk retail cheaply on Kenyan shelves where a litre milk costs Ksh78, the highest in recent times.
Struggling dairy farms
However, he warned that it could also impact negatively on Kenya’s dairy farms that are struggling.
“We have two levels of impact. We have two levels of producers, there are producers who are not competitive in Kenya; these will be outcompeted by the regional products which is a negative impact to some people,” Kunyiha explained.
“But on the positive scale, East Africa commerce grows, because that is the whole point of regional trade. Open markets are useful for us.”
“EAC intra-trade is between five to 10 percent of each country’s capacity and needs to be boosted. However, as we worry about Uganda, what about milk from Brazil, milk powder from New Zealand?” he posed.