Uganda’s new levy on industrial imports to benefit Kenyan firms
Treasury Cabinet secretary Henry Rotich (left) and Budget committee chair Mutava Musyimi leave after reading the Budget at Parliament Buildings in Nairobi June 13, 2013. Photo/STEPHEN MUDIARI
What you need to know:
Uganda will from next month start levying 10 per cent import duty on most industrial inputs from outside the East African Common Market which includes Kenya, Uganda, Rwanda, Burundi and Tanzania.
Uganda will significantly cut the number of industrial inputs imported duty free, giving Kenyan firms a more level playing ground in the market.
The landlocked country will from next month start levying 10 per cent import duty on most industrial inputs from outside the East African Common Market which includes Kenya, Uganda, Rwanda, Burundi and Tanzania.
“During a meeting of EAC ministers for finance held on May 18, Uganda agreed to reduce its list of duty free inputs from 138 to only 49 and I expect this to be good news to our manufacturers,” said Treasury Secretary Henry Rotich in his Budget statement.
This is the first time in 19 years Uganda is yielding to pressure to open up its market to fair competition.
“This is a double win. We are going to compete on the basis of fair pricing of finished goods in the region.
‘‘We also expect Ugandan firms to start buying some of these inputs which are readily available in Kenya,” said a spare parts manufacturer who asked not to be named.
The duty free inputs, commonly known in the region as Ugandan List, were introduced in 1994 by President Yoweri Museveni as an incentive to the country’s manufacturing sector. The region launched its custom union in 2005 and settled on a 10 per cent Common External Tariff (CET) on industrial inputs.
Uganda initially requested an extension of five years saying its 94 firms were not ready for unbridled competition.
Kampala has since kept the incentive scheme alive by successfully negotiating for extensions.
The list will now be catered for under the Duty Remission Scheme for one year. Uganda is the single-largest market for Kenyan goods, accounting for Sh67.5 billion or 13 per cent of the Sh517 billion exported last year. However, the EAC ministers allowed a number of small companies in Burundi and Rwanda to ship in inputs from outside EAC without paying the region’s CET.
The EAC secretariat is expected to gazette 17 companies that Rwanda has requested to put on the input remission scheme. Uganda and Tanzania have also agreed to open up their borders for vehicles assembled in Kenya.
