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Economy

Kenya's EAC exports rise to Sh102bn on thawing ties

Sachen Gudka
KAM chairman Sachen Gudka (right) and other members of the lobby during a factory tour in Nairobi in April 2019. PHOTO | DIANA NGILA  

Increased orders from Tanzania and Rwanda lifted exports of Kenyans goods to the six-nation East African Community (EAC) market to a four-year high in the period to September.

Kenyan traders earned Sh102.69 in the nine-month period, representing a growth of Sh5.60 billion or 5.77 percent compared by the same period a year ago.

This is the highest level of receipts from the bloc in the January-September period since Sh104.29 billion was recorded in 2016. It signals improving trade ties between Nairobi and Dar es Salaam.

Exports to Rwanda surged Sh3.38 billion, or 25.06 percent, to nearly Sh16.89 billion, while orders from Tanzania climbed Sh2.25 billion, or 10.12 percent, to Sh24.43 billion, data collated by the Kenya National Bureau of Statistics (KNBS) show.

Sales to landlocked Uganda, Kenya’s largest trading partner, increased a measly Sh901.3 million, or 1.95 percent, to Sh47.02 billion, while Burundi bought Sh5.18 billion goods — Sh156.4 million or 3.12 percent growth year-on-year.

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Exports to South Sudan, which has been ravaged by years of civil strife, dropped Sh1.08 billion to Sh9.18 billion, the KNBS data shows.

This snaps a trend in recent years where Kenyan factories have struggled to grow exports to regional markets, largely due to tariff and non-tariff barriers fuelled by mistrust and unresolved trade disputes, particularly with Dar es Salaam and, in some isolated cases, Kampala.

“If Kenya is to industrialise and really be a manufacturing powerhouse in the region, we need to have our own four-band tariff. This is zero for (importation of) raw materials, 10 percent for intermediate goods not produced in the region, 25 percent for intermediate goods produced in the region and finished goods and 35 percent as the rate for finished goods,” Mr Sachen Gudka, the chairman of Kenya Association of Manufacturers (KAM) said in an interview.

The EAC bloc member countries have, however, failed to agree on a common external tariff (CET).

While Kenya, Uganda and Tanzania have been pushing for 35 percent as the CET rate for finished goods imports, Rwanda, Burundi and South Sudan who largely rely on imports due to their low industrialisation level want CET to be capped at 30 percent.

Domestic manufacturers have also blamed multiple fees and levies, relatively high power charges and inefficiencies at factories for piling up the cost of production, making locally-made goods expensive in regional markets.

“Kenya is facing significant competition from the region because we have decided not to move from the low-technology activities. For instance, you are producing a product and selling it to Uganda which has now decided they are now going to produce that product on their own,” Ms Rose Ngugi, executive director of State think-tank, Kenya Institute for Public Policy Research and Analysis, recently told a forum in Nairobi.

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