Ruto, Museveni meeting gives glimmer of hope to traders

Monday May 20 2024
visit- kenya

Uganda's President Yoweri Museveni (L) is on a two-day State visit to Kenya. PHOTO | PCS


Ugandan and Kenyan traders may have reason to smile after President Yoweri Museveni met his Kenyan counterpart William Ruto this week, with their discussions centred on the removal of the non-tariff barriers that have hindered trade between the two biggest trading partners in the region.

Museveni was in Kenya for a three-day state visit and accompanied by officials, including Agriculture Minister Frank Tumwebaze.

The two presidents directed their respective ministers of Trade to convene “as soon as possible” to address the NTBs that continue to stifle Uganda-Kenya trade.

Uganda remained Kenya’s biggest trading partner in terms of exports for the period ending October 2023, according to data published by the Kenya Bureau of Statistics (Kebs) in early January.

Read: Kenya, Uganda agree to extend oil pipeline

Exports to Kenya, mainly iron and steel products, accounted for 31.5 percent while imports to Uganda, mainly farm produce and petroleum products, made up 43.5 percent of the total goods sold to the EAC.


But the two countries have sparred over trade, with Kenya blocking several Ugandan products, including milk, poultry, sugar, beef products, and maize to the chagrin of traders and manufacturers who have called for retaliatory measures or accused the government of not doing enough as Kenyan traders continue to enjoy Uganda’s open trade policies.

Technocrats from both sides have met several times to iron out the protectionist practices without success.

Kenya’s Prime Cabinet Secretary Musalia Mudavadi, who was in Kampala earlier in the week, asked Uganda and Kenya to end barriers hampering cross-border trade. His call came as EAC member states shift from the total ban of goods produced within the region to using tax measures and quotas, in contravention of the Common Market Protocol.

“It’s my desire that the issue of non-tariff barriers that have continued to hamper cross-border trade between the two countries are further discussed at length and a conclusive position reached to enable augmentation of bilateral trade,” said Mudavadi.

He was speaking at 2nd session of the Kenya-Uganda Joint Ministerial Commission (JMC) which kicked off on May 14, 2024, in Kampala, Uganda.

The meeting which Kenyans and Ugandans have waited for four years brought together high-level officials from both countries to address the persistent obstacles hindering cross-border trade and economic growth.

Read: Kenya opens window for Uganda powder milk

Interviews carried out by The EastAfrican at the sidelines of the meeting show that Kenya is using quotas and tariffs to block Ugandan eggs, milk, and sugar.

Uganda is also using exercise duty to make some of Kenya’s goods uncompetitive.

For instance, The East African 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 The EastAfrican shows that, Mama Nick Investments a Nairobi-based eggs dealer paid Ksh62,000 ($475) to Kenya Revenue Authority customs officials at Busia before the 1000 trays were allowed in Kenya.

Taxing each rate at Ksh72 ($0.6) a tray makes Ugandan eggs expensive making them 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, Aga Sekala Jr, chairman of Poultry Producers of Uganda accused Kenya of using ad hock measures to block Uganda’s eggs.

“We have been ok with poultry meat it has been going to Kenya. Day old chicks have been going but eggs attract excise duty, which is illegal,” Sekala said, adding that they notified Frank Tumwebaze, Uganda’s Agriculture Minister.

Kenya is Uganda’s biggest egg export market. The cost of delivering them in Tanzania is high. Since 2019, when Rwanda closed its market only and only imports during emergencies, delivering exports into the DR Congo market remains a big challenger owing to insecurity while South Sudan a promising market is constrained by the high costs coupled with low liquidity in the economy.

Read: Kenya loses 42pc of Tanzania maize imports

Now the Uganda sugar millers through the trade ministry are pushing the East African Community (EAC) secretariat to block Kenya from enjoying duty-free sugar imports at the same time president William Ruto's 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 neighboring countries.

The EAC Secretariat gave Rwanda, Tanzania, and Kenya the greenlight to import tax-free sugar outside the region and to plug their domestic deficits, but Mwine Jim Kabeho, chairman of Uganda Sugar Manufactures Association says the measure has sharply eaten into Uganda’s regional sugar export market.

Domestic market sugar sales have also been affected by smuggled sugar from Kenya to Uganda resulting in a buildup in stock, the millers wrote to their trade ministry on April 11, 2024.

“Firmly oppose Kenya’s request for further extension of duty-free importation of sugar and advocate for the protection of our domestic sugar sector,” a note authored by the millers reads in part. The Ugandan millers are also opposed to the Ksh5 ($0.03) per kg exercise duty.

“Due to the free trade arrangement agreed upon under the EAC customs union, the exercise 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 Kabeho.

With the tax, imported sugar from countries like 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 South Sudan government’s move to introduce electronic cargo tracking notes to monitor the outflow of goods has hit the Uganda sugar industry harder, with several trucks now stuck at the Nimule-Elegu border shared by South Sudan and Uganda. The domestic sugar prices in Juba have also skyrocketed.

Customs agents from Uganda and South Sudan collect $350, to help the government of South Sudan to maximize its revenue collection by remedying the challenges of underestimation, undervaluation, and diversion of cargo and round-tripping. ECTN also known as Waiver Certificate is a mandatory shipping document for importing cargo to 25 African countries.