The vice-chairperson of the East African Business Council, who is also the chair of the EABC Uganda Chapter, Simon Kaheru, spoke to The EastAfrican's Luke Anami about trade disputes and their resolution.
Why do we have trade wars between Uganda and Kenya?
From where I sit, from the complaints we receive, from the updates we get from both sides of the border, the problem is misguided protectionism.
We call it misguided protectionism because of this mentality that ‘our goods’ are not selling because of the other goods from the other country. So, for our goods to sell, let us stop goods from other countries!
Some poultry farmers from Kenya claim, “We need to sell our eggs but Ugandan eggs are too many.” The same applies to sugar, milk and other Ugandan products.
What have been the effects of the trade war and how should they be resolved?
The trade war has affected Ugandan products in other regions. For example, there is our own company, Coca-Cola Beverages Africa. In Uganda, some dairy products are sold under Coca-Cola Beverages Africa. Now, Lato Milk is a supplier of skimmed milk and meets their quality standards.
Coca-Cola Beverages Africa standards are so strict that if you can supply one Coca-Cola bottle after being vetted, you can supply different countries provided you meet their specifications.
So, after Lato Milk supplied Coca-Cola Beverages Africa for some time, we got them to supply milk to Zambia. That meant that Ugandan dairy farmers were going to get money from Zambia.
But, just before the order was completed, the Zambian government said, “Hold on, we hear that there is a problem with Ugandan milk in Kenya. Why is Kenya saying no to Ugandan milk?” We were forced to delay the exports to Zambia. For a couple of months, Lato could not send milk to Zambia because Kenya had raised questions. If your sister does not trust you in your home, how can your neighbours trust you? How can your workmates trust you?
These things we do in East Africa have repercussions farther in the region.
We eventually got over that problem but only after President Yoweri Museveni, former Zambia President Edgar Lungu and President Uhuru Kenyatta had to call one another for Lato Milk to be sold in Zambia. Do we need our presidents to speak to each other in order to do business? The answer is no.
One way to resolve the wars is to harmonise standards, quality and domestic taxes. Why are Tanzanian standards different from Kenya’s and Uganda’s? It makes it difficult to treat East Africa as a common market.
You have to change the verification of one product in order to go to 60 million Tanzanians, 50 million Kenyans and 45 million Ugandans. It is complicated. We should instead be looking at this as a 150 million people market, and for my product, all I need is for the roads to be fixed, the rail to work, so I can supply.
The EAC has come under scrutiny for producing and manufacturing the same products. Why are they fighting over these rather than diversify?
Countries producing the same product cannot be a problem if we all think East African. Let Uganda and Kenya produce what they can. Let us consume what we can and sell the surplus. It is misguided protection because people are focusing on a small part here and not looking at the bigger opportunities out there.
We now have the African Continental Free Trade Area. How many countries in Africa produce chicken and sugar? So many. So, if Uganda and Kenya combine what they are producing, they can sell on the continent. Ugandan products that do not have a ready market in the region are many. An example is timber. It has petitioned us for over six years to intervene in their situation. Not long ago, East Africa imported timber from South Africa. We have businesses that can treat these poles, creating jobs in East Africa.
We urge East African governments to make decisions in consultation with the private sector. As we develop our production list, we must pay attention to standards and quality, reliability of supply across East Africa.