Rash protectionism and petty politics are hurting trade relations between Kenya and Uganda, which have been marred by a series of tit-for-tat retaliatory measures, a senior government official in Kampala has warned.
Nairobi and Kampala have been at loggerheads over the import of key agricultural products such as eggs and milk powder.
“The laws are very clear, but in actual trading, we have push-and-pull and push back, because each country is trying to protect its jobs,” Odrek Rwabwogo, chairman of Uganda’s Presidential Advisory Committee on Exports and Industrial Development told Business Daily in an interview.
“It’s not a conflict—it is political constituencies that are entrenched in each of our countries that often interfere with good decision-making,” the official added.
Kenya and Uganda are each other's biggest export markets, but their trade relationship has frayed over the past year amid a wave of disputes over products ranging from dairy to diesel.
Data from the Kenya National Bureau of Statistics (KNBS) shows that Nairobi shipped goods worth Sh33.02 billion to Kampala in the three months to March this year alone.
However, the value of goods trucked into Kenya from Uganda through formal routes fell to Sh7.48 billion in the three months to March 2024, from Sh8.23 billion a year earlier, according to preliminary trade data from the KNBS.
“When you put tariffs on food in Uganda, you cause a lot of problems,” Mr Rwabwogo said.
“If you say ‘I cannot supply you milk,’ but then your consumers are paying 30 percent more, they will begin to smuggle that milk. It’s not good economics” the Uganda official said.
Mr Rwabwogo urged cooperation on food supply chains, but stressed that it's not as simple as joint development in clear cases where one country produces goods more cheaply than another. For example, Uganda grows maize much more cheaply than Kenya, the official said.
“We could process maize jointly and have feed for animals. Feeding animals will mean cheaper milk produced in Kenya. But why do you want cheap milk in Kenya when Uganda has two rain seasons and can give you cheaper milk?” Mr Rwabwogo said.
“Now our production capabilities have grown in Uganda, I expect pushback,” he said.
Mr Rwabwogo also took issue with Kenya's move in July to double the bond fee for imported fuel consignments destined for Kampala via the port of Mombasa, which is hampering Uganda's direct fuel import scheme.
He said this was another non-tariff barrier that prolonged the ability of Uganda and its state oil company to stand alone on fuel imports, but was still negotiable.
Rwabwogo also urged business leaders to take a more prominent role in trade, including the East African Business Council, which should take a stronger stance on non-tariff barriers.
“Stop fearing each other or treating each other in a suspicious manner…Have a genuine conversation about what the future looks like. Because if you don’t, there are larger companies that will come and have you for a pittance,” the official said.
Rwabwogo also encouraged both countries to work together to stop exporting raw materials such as iron and copper, and to invest in onshoring regional processing capacity to produce things like steel and electrical cables, as well as upscale East African industry.
“We’re not using [trade cooperation] tools. We’re taking knee-jerk reactions, nationalistic, and we’re not looking at the bigger market of East Africa,” said Rwabwogo. "There is no alternative to trading with each other because if we don’t, these markets become supermarkets of those with better productive capabilities.”
