Busia town loses out as cross-border trade favours ‘cheaper’ Uganda economy

At the Kenya–Uganda border, Jane Nafula glances at her watch, then increases her pace as she walks past the railed border gate into the Kenyan side.

It is 7.30 am and the border is a hive of activity. People criss-cross the Busia border to catch up with the day’s businesses in either countries.
Ms Nafula, a Kenyan, is a secretary at a government office in Kenya’s Busia town, but she lives in Sofia town, Uganda.

She has rented a two bed-roomed house in Uganda at Sh5,000. A similar house goes for about Sh10,000 in Busia-Kenya.

“Life is much cheaper and easier in Uganda. Food is readily available at friendly prices. I have been living there for three years. The only time I spend a night in Kenya is when I am visiting my rural home in Budalang’i,” says Ms Nafula.

She is not the only one. Hundreds of Kenyans live and run businesses including shops, pubs and boda boda from the Ugandan side, thanks to their cheaper economy and better security.

In the evenings, Kenyans are seen crossing into Uganda without any restrictions. Some cross over to evade the so- called “Mututho” drinking rules that limit opening hours for bars.

John Mututho, the chairman of the National Authority for the Campaign against Alcohol and Drug Abuse Board limited drinking hours six years ago.

But pubs and entertainment joints in Uganda open and sell alcohol round the clock. Queens Palace, Club Lindas, Club Comrades, Winkers Club are usually full of Kenyan revellers.

At the clubs and lodges, both Kenyan and Ugandan currencies are acceptable as forms of payment. In Busia, only the Kenyan shilling is accepted.

Famously known for seemingly unending queues of long distance trucks plying Rwanda, Burundi, the Democratic Republic of Congo, Malaba and Busia border towns have been a transit point for drivers and other visitors.

Yasin Jaja, a truck driver, told Business Daily that many drivers prefer seeking hospitality and entertainment services in Uganda because they are cheaper and with less restrictions.

“You can get a good room for Sh600 in Uganda. Beer prices are quite friendly. A Guinness goes for Ush3,700, equivalent of Sh110. I buy a meal for as low as Sh50,’’ said Mr Jaja.

In Kenya, a Guinness beer retails on average at Sh200.

“We can also walk freely even at night without fearing arrest and drink into the wee hours of the morning, unlike in Kenya.”

The introduction of the East African Community (EAC) protocol that allowed free movement of people and goods within Kenya, Uganda, Tanzania, Rwanda and Burundi gave the communities a leeway to trade freely.

Seamless trade is seen to have thrived more on Kenya and Uganda sides compared to Tanzania. Entering Tanzania from Isebania border in Migori, a Kenyan is subjected to checks and one cannot allowed to pass without a passport and yellow fever immunisation card. Use of national IDs at the exit/entry points by the citizens of Kenya, Uganda and Rwanda started two years ago.

In Burundi and Tanzania, Kenyans cannot use national IDs to cross borders.

Busia and Malaba are now like towns in the same country, save for difference in business environment. Kenya’s Luhya community speak Luganda language and vice-versa.

But as businesses favour Uganda, Busia county government is seeking ways to woo back consumers. Following devolution, Busia town started attracting many entrepreneurs, but some are now eyeing the other side of the border.

Kizito Wangalwa, the Busia deputy governor who is also the Trade executive says the county is facing challenges as investors are now opting for Uganda. He faults double taxation since both the national and county governments demand licensing fees.

Busia county government is looking for joint projects that will benefit the two sides.

“We have come up with a masterplan for the Malaba and Busia border that is awaiting implementation. We have established industrial parks, business centres to accommodate the business community and even space to interested investors,” he says.   

He said they have organised an intergovernmental forum that will bring on board all licensing institutions to address double taxation and issuance of multiple licences that has affected investors on the Kenyan side.

“There are proposals that a single institution should do joint licensing. We can for instance use Kenya Revenue Authority,” he said.

Lack of parking spaces and insecurity in Busia have also contributed to the influx of Kenyan truck drivers to the Ugandan side.

Long distance truck drivers operating within East African states say they enjoy ample parking spaces in Uganda and the safety of their goods on transit is guaranteed.

“In Kenya, we struggle to get safe parking spaces, the accommodation prices are high and entertainment places are costly,’’ says Fred Muchiri, a Kenyan truck driver.

But there is the other side of the coin. As Uganda attracts more consumers, prostitution and other vices are also thriving.

Dan Emuria, a Kenyan living in Uganda said Ugandan prostitutes are preferred because they are cheaper.

‘‘They take Sh150, with the sophisticated ones taking Sh1,000, inclusive of accommodation as most of these women have rented small cubicles permanently for that business.”

Most clubs are full on Wednesdays and Saturdays when strippers hit the dance floors.

As business flourishes in the Ugandan side, Kenya’s worry is the loss of revenue from taxes.

Martin Nyakiamo, the Kenya Bureau of Statistics’ regional manager, says most of the counterfeit products in the region are smuggled in from Uganda and Tanzania.

“We have been engaging in rigorous fights against sub-standard products. Together with other stakeholders including the Kenya Revenue Authority and public health officers, we monitor all the porous borders to ensure that no fake goods come in,” he says.

The border is also a route through which saddle wood, stolen cars, fake money and other illegal products find their way to Uganda.

Due to tax exemptions and low value added tax (VAT), there has been an infiltration of cheap Ugandan products; agricultural, textile and automobiles, dealing a blow to local business.

Kenyan traders buy clothes, shoes, second hand cars and vehicle spare parts, fruits, animal feeds, eggs and other household commodities from Uganda. Eggs retail at Sh4 compared to Sh10 in Kenya.

Cars with Ugandan number plates now dot many roads especially in western Kenya towns.

Charles Munyore, the Kenya Auto Baazar Association Secretary says Kenyans go for corruptly-imported vehicles because they are cheaper.

“People have realised that it is cheaper to buy and operate a Ugandan vehicle in the country. This is hurting the business of locals who dutifully pay their taxes,’’ he says.

The backdoor trade that by-passes the customs office denies the country billions of shillings in taxes as each vehicle owner escapes paying the Sh200,000 excise fees for cars of three years and over and Sh150, 000 for those less than three years in accordance with the new Excise Act effected from December 1.

Being an open border, a number of children from Uganda also cross daily to Busia schools, but Kenyans seeking even cheaper education send their children to as far as Tororo town.

A majority of pupils in Malaba Primary School, Kajei Secondary in Teso North, Kajei Primary, St James ACK Academy, Malaba Township primary are from Uganda.

Ugandan schools such as Teens Challenge Primary, St. Jude primary, He Reigns Secondary, Malaba Secondary, Malaba Town Secondary, Manjasi Secondary in Tororo also have many Kenyan students.

Then there is a “no man’s land”— a stretch acting as a security buffer zone between the two countries. Many have taken advantage of the ‘‘free, lawless land’’ and opened temporary eateries, drinking and  nyama choma places, which do not attract any council taxes from either sides.

Cereals dealers, pineapples, oranges and watermelon sellers are doing brisk business.

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