Can William Ruto tilt EAC trade balance?Tuesday September 13 2022
As Kenya welcomes William Ruto’s presidency Tuesday, the East African Community (EAC) will be keenly watching the new administration's approach to foreign trade policies.
With a combined gross domestic product (GDP) of over $100 billion — double that of Tanzania and nearly three times that of Uganda — Kenya remains the largest economy in the region.
An analysis of trade data in the past decade under President Uhuru Kenyatta shows that Kenya's balance of trade against EAC members has declined by Sh19.1 billion.
Gains from Rwanda and Burundi have partially helped to offset much of the deficit incurred with Tanzania.
Data from the Kenya National Bureau of Statistics (KNBS) show trade surplus with the neighbouring countries in 2012 was Sh119 billion —which was inherited by Mr Kenyatta when he assumed office in 2013 — and it declined last year to Sh99 billion.
Trade surplus between Kenya and Rwanda grew by Sh12 billion between 2012 and 2021, with Burundi recording a surplus of Sh7 billion.
When the outgoing President took power in 2013, trade between Kenya and Tanzania was in favour of the former, which had a surplus of Sh31.6 billion, but it declined to Sh11 billion at the end of his first term and to a deficit of Sh8.9 billion as at 2021.
Tanzania, which previously had a lukewarm relationship with Kenya, benefited greatly from the change in administration following the death of former President John Magufuli.
The coming into office of Samia Suluhu saw Kenya and Tanzania improve their trade relationship, abolishing several non-tariff barriers such as taxes that had been imposed on a number of goods.
The change of administration in Kenya has always resulted in uncertainties in the region as the country is a major trade route to Uganda, Rwanda, Burundi and the Democratic Republic of Congo.
Macharia Munene, a professor of History and International Relations at the United States International University in Nairobi, says so far there has been an indication that the trade between Kenya and its neighbours will remain steady.
“Kenya’s neighbours have so far reacted well [to Ruto's election] and this is a good sign that the trade between the countries will continue to flourish even with the change of guard,” Prof Munene told the Business Daily.
KNBS data show there has always been a change in terms of trade numbers between Kenya and her neighbours every time there is a transition in leadership.
Kenya had a surplus of Sh52 billion with Uganda in 2012, which declined to Sh12.6 billion in 2017 before rebounding to Sh57 billion at the end of last year.
President Yoweri Museveni and Dr Ruto have had a good relationship in the past and analysts believe that his election augurs well for the relationship between the two countries as well.
In July 2021, Mr Museveni hosted Ruto as the chief guest when laying the foundation of a new vaccine facility in Uganda in what pundits believed to be an endorsement of Kenya’s new president.
On the other hand, the Ugandan leader has had a lukewarm relationship with opposition leader Raila Odinga.
Uganda remains Kenya’s largest trade partner in the region, accounting for 44.2 percent of the total trade volumes last year.
Kenya mainly imports grain, milk, poultry products and sugar from Uganda while it exports animals, vegetable oil, machinery, steel and iron.
Tanzania was the second-largest trading partner with Kenya last year, with the volume of trade between the two countries rising 35 percent to hit Sh100 billion. Nairobi has in recent years scaled volumes of maize from the neighbouring country to cover for its local deficit.
Other countries in the region, especially the Great Lakes nations like Rwanda, Burundi and the DRC, will also be keen to know the trade agenda of the new administration in Kenya.
Besides cementing bilateral relations between the countries and offering room for intra-trade, they will be hoping that the Ruto administration will agree to finance the construction of the remaining sections of the standard gauge railway (SGR) connecting the Malaba route to Kampala.