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Kenya’s trade in EAC up despite tensions

trade

Kenya’s trade with the six-nation East African Community improved by 57.7 percent in the first quarter compared to a similar period last year despite the long-standing trade tension with some of the member states. FILE PHOTO | NMG

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Summary

  • The volume of trade was recorded at Sh54.94 billion during the period up from Sh46.28 billion last year.
  • The community represented the leading regional trade with inflows in favour of Kenya, followed by the Common Market for Eastern and Southern Africa, which also recorded a positive balance of trade of Sh25.31 billion.
  • Other trading regions, including the European Union (EU), which excludes the United Kingdom that exited the bloc in February, recorded balance of payments to Sh14.79 billion in favour of the EU.
  • Far East Asia and other trading categories recorded balance of trade to Sh196.07 billion and Sh61.02 billion on the negative.
  • Kenya’s exports to the EAC were worth Sh42.90 billion, representing 19.3 per cent of Sh222.72 billion worth of total Kenya’s exports in the quarter.

Kenya’s trade with the six-nation East African Community improved by 57.7 percent in the first quarter compared to a similar period last year despite the long-standing trade tension with some of the member states.

The Kenya National Bureau of Statistics (KNBS) data shows that balance of payments — net exports less net imports — with Burundi, Rwanda, Tanzania, Uganda and South Sudan rose to Sh30.86 billion in the three months to March from Sh19.67 billion in a similar period in 2019.

The volume of trade was recorded at Sh54.94 billion during the period up from Sh46.28 billion last year.

The community represented the leading regional trade with inflows in favour of Kenya, followed by the Common Market for Eastern and Southern Africa, which also recorded a positive balance of trade of Sh25.31 billion.

Other trading regions, including the European Union (EU), which excludes the United Kingdom that exited the bloc in February, recorded balance of payments to Sh14.79 billion in favour of the EU.

Far East Asia and other trading categories recorded balance of trade to Sh196.07 billion and Sh61.02 billion on the negative.

Kenya’s exports to the EAC were worth Sh42.90 billion, representing 19.3 per cent of Sh222.72 billion worth of total Kenya’s exports in the quarter.

This also represented 30.3 per cent increase from Sh32.92 billion exported to the neighbouring countries in the last year period, signalling the improved business activity during the period.

On the other hand, the Kenyan market purchased products worth Sh12.04 billion, representing a 9.8 per cent drop from Sh13.36 billion during the period.

UGANDA

During the quarter, Uganda was Kenya’s leading regional market having purchased Kenyan goods worth Sh18.88 billion, an increase from Sh16.33 billion exported in 2019.

“Uganda remained the leading export destination contributing 28.4 per cent of the total export earnings from Africa,” KNBS stated.

Kenyan exports to the landlocked neighbour include pharmaceutical products, sugar, confectionary, cement, alcohol, vehicles and iron and steel products.

Imports include milk and dairy products, beans, animal feeds, eggs, maize and other cereals.

Ugandan exports to Kenya were Sh6.10 billion, a drop from Sh7.84 billion in Q1 2019.

The decline was due to a decline in imports bill of processed milk and tobacco products.

This came amid proposed regulations, Dairy Regulations 2020, which are still awaiting national validation, to introduce a 10 per cent tax on imports from EAC to protect local farmers from dumping of milk. The decline in import bill, according to KNBS, also helped to ease import expenditure from the rest of Africa by 13.1 per cent to Sh46.9 billion during the review period.

TANZANIA

Kenya’s exports to Dar es Salaam were Sh7.99 billion, a 7.8 per cent growth from Sh7.41 billion in Q1 2019.

Imports from Tanzania increased to Sh5.61 billion from Sh5.04billion over the period under review.

“The value of imports from Tanzania increased by 11.4 per cent, largely driven by an increase in imports of pinewood and butane petroleum gas,” the report added.

Recently, the countries renewed the long-running trade dispute due to disagreements over procedures of testing truck drivers for Covid-19 disease at the common borders.

The trade disputes between Kenya, Tanzania and Uganda have been due to tariff and non-tariff barriers.

Early this month, local traders protested that Kenya-made cigarettes entering Tanzania are charged 80 per cent higher tax despite an agreement that such taxes do not apply on products made from raw materials sourced locally.

Local firms have also been for long objected that Ugandan illegally introduced a 12 per cent inspection fee in 2017 for Kenya’s pharmaceutical exports while it zero-rated Uganda- made drugs.

RWANDA, BURUNDI AND SOUTH SUDAN

Exports to Rwanda rose by 44 per cent to Sh6.09 billion, while imports to Kenya dropped to Sh296.8 million from Sh457.7 million over the period under review.

Goods to Burundi and South Sudan were valued at Sh1.37 billion and Sh8.57 billion, respectively, with the national data agency failing to record the imported goods into Kenya.

“Exports earnings from Rwanda, Uganda, Sudan and South Sudan jointly increased by Sh11.5 billion from the corresponding quarter of 2019 representing a 45.9 per cent increase.

“These countries jointly accounted for 55 per cent of the total exports to Africa during the period under review,” the report showed. The long-standing disputes between Kampala, Nairobi and Dar es Salaam amid the Covid-19 pandemic would disrupt the trade activities in the coming quarters.

A Central Bank of Kenya report on leading trade indicators shows earnings from goods sold to Uganda, Tanzania and Rwanda amounted to Sh5.61 billion in April, a drop of 38.47 per cent or Sh3.51 billion compared to a similar period in 2019.

The month represented the first full month of the adoption of containment measures as announced by the government.