A World Bank report states that safety and technical barriers to trade in Kenya push up commodity prices way above those in Uganda. “As a result, Kenyan consumers are significantly losing out and domestic producers benefiting only to the extent of the limited production,” the report said.
Statistics show that in Kenya sanitary and phytosanitary (SPS) measures cover 70 per cent of all food products while technical barriers to trade (TBT) cover 60 per cent of foods, three times more than in other countries.
“Their price-raising effect is typically a by-product of the measures which have non-trade objectives such as public health,” the bank said. Because of this, the World Bank said, prices of key food items such as rice, bread, cereals and flour, sugar, fruits and vegetables are 30 per cent higher despite the existence of surplus stocks in the region.
The high food prices mainly affect poor households which are most vulnerable to inflation owing to their low purchasing power.
“For example, due to SPS measures, the poorest 20 per cent of households in Kenya will experience on average 23 per cent rise in goods they purchased, compared to only a 14 per cent rise in goods purchased for the 20 per cent richest households,” the bank said in the update titled Walking on a tightrope. Food producers in Kenya said barriers such as cess and duplication of inspection routines by government agencies were partly to blame for the extra cost of items in the supply chain.
“Farmers usually ask for reasonably fair prices, but barriers in the supply chain that are beyond their means push up the prices of commodities by the time they reach the consumer,” Mr David Nyamieno, the Cereals Growers Association CEO, said.
Mr Nyameino said that aspects such as inspection of food products should be harmonised and handled at a one-stop-shop in order to reduce transaction costs.
Economists with the World Bank said uniform trade rules could help the East African Community countries boost their food security by cutting back on barriers to trade.
“More open trade promotes food security because food is allowed to move from surplus to deficit areas,” Mr Wolfgang Fengler, the bank’s lead economist in Kenya, said.
Traders, economists, and producers have blamed non-trade barriers for lack of progress several years since the region became a common market in July 2010.
“It is not about removing regulations but bettering regulations,” Mr Paul Brenton, an economist with the World Bank, said during the media briefing on Monday.
Intra-regional tariffs within the region have been reduced gradually in line with the customs union protocol. Statistics show that in the last two decades, the EAC partner states slashed the number of tariffs from approximately 26 per cent in 1994 to 10 per cent in 2011.
The World Bank said Kenya and Uganda particularly imposed a wide variety of rules and regulations on its EAC partners, slowing growth of trade among them.
A study by the institution revealed that Kenya and Uganda mainly posed barriers through strenuous pre-shipment measures and sanitary and phyto-sanitary standards. “It may be okay to maintain high standards to prevent dumping but there should be a limit,” Ms Jane Kiringai, an economist with the bank, said.
