Kenyan traders want long-running business war with Tanzania solved

Kenyan traders say they have had enough with Tanzania playing hard ball when it comes to local products entering its market.

From requirements to label items in Kiswahili to concealed visa fees for traders entering Tanzania and loaded taxes that make products hard to sell there, Kenyan traders are now pushing for retaliation in what may result in spasmodic bilateral tiffs between the two East African neighbours.

Tanzania, according to details of multiple meetings meant to break trade stalemates between the pair, has continued to tilt the playground even as goods from the country enter Kenya freely.

The simmering tit-for-tat feud, according to sources familiar with the ongoings, started after a Sectoral Council on Trade, Industry, Finance and Investment (SCTIFI) meeting held in Arusha between November 12-16 last year.

The Kenyan delegation led by Trade and Industrialisation Cabinet Secretary Peter Munya was in Tanzania for the second time after a similar forum in May raised concerns over multiple non-tariff barriers placed on Kenyan goods entering Tanzania.

While partner states of the East African region are required to treat goods manufactured from one another’s country like local, Tanzania has been finding various reasons to slap heavy duty on Kenyan products.

It cites several inconsistencies including duty-free importation of sugar into the Kenyan market in 2017.

Tanzanian authorities insist that Kenyan manufacturers had used the duty-free product to make sweets and other confectioneries.

Dar then slapped a 25 per cent import duty on Kenyan confectionery, juice, ice cream and chewing gum. The duty went on for months forcing Kenya to threaten its neighbour with a ban after Tanzanian officials set to visit Kenyan factories to verify the claim kept postponing the tour.

Uganda had joined the punitive duty as Kenyan products became uncompetitive in the two markets and traders suffered massive losses.

When they finally visited in June 2018 and found that none of the Kenyan manufacturers of confectioneries and sugar-based products benefited from sugar imported under zero duty, only Uganda lifted the duty. Tanzania refused to bulge.

“Uganda has implemented the findings while Tanzania reported that they have reservations. Further, Tanzania charges 35 per cent duty to confectionery and sugar-based products, in addition they also charge Railway Development Levy at 1.5 per cent and Tanzania Food and Drugs Authority (TFDA) levy of 1.5 per cent, among others. This is contrary to what Tanzania was directed not to charge stayed tariffs during the SCTIFI May2018,” read a briefing prepared by the Kenya Association of Manufacturers after the November meeting.

Tanzania reportedly wrote to the EAC secretariat informing the reasons for not granting preferential treatment to confectioneries from Kenya. The matter remains unresolved.

Tanzania has since asked for a second verification; a move Kenya has rejected, according to the KAM brief.

“The Republic of Kenya does not find merit in the second verification proposed by the United Republic of Tanzania and therefore rejects it. This also requires Kenya to retaliate to Tanzania’s similar products: juices, confectionery, ice cream,” reads the KAM brief.

The East Africa Community common market made up of Tanzania, Kenya, Uganda, Rwanda and Burundi allows free movement of locally manufactured goods within the bloc.

Duty free sugar is not only the bone of contention between the two countries, Tanzania has been punishing Kenyan tobacco manufacturers exporting the commodity into the country in a dispute that remains unresolved since 2005 when the custom union commenced.

Not even the various forums including bilateral meetings and at the presidential level between the two countries have been able to resolve the issue. Tanzania continues to levy a discriminatory excise duty of 80 per cent on tobacco products from Kenya making them too expensive to compete in the country.

In August, Tanzania through a gazette notice restricted its beef product dealers on where to source from locking out some Kenyans from the market. The increased fees also rendered animal and their products from Kenya uncompetitive in Tanzania.

A litre of Kenya’s UHT milk for example rose to Tz Sh3,300 (Sh145) to Tz Sh6,500 (Sh284) against local products which are retailing at Tz Sh3,300 after the fees were lumped on them against the Custom Union Protocol which prohibits partner states from imposing protective taxation to local out products from partner states.

Kenyan traders have also been unhappy with Tanzania for charging $250 for a business visa. The fees charged on all the EAC business persons entering Tanzania is branded a ‘Certificate of Temporary Assignment (CTA) as Tanzania maintains that the charge is just a ‘fee on a pass.’

Kenyan traders are now pushing for a similar discriminative visa or pass fee until the charges are dropped by Tanzania.

Kenya largely imports wheat, textiles and clothing, cooking gas, hides and skin, oil seeds, vegetables, rice, paper and paperboard, footwear, wood, plastic and rubber, among other products from Tanzania.

Exporters who spoke to Sunday Nation incognito for fear of further product discrimination said goods from Tanzania get smoothly in Kenya with some of the traders bragging of having Kenyan authorities ‘in their pockets.’

“When we make any ban, Tanzania pulls the diplomatic card and then we go into negations, temporary truce and then back to where we were. It is tiring and Kenya must now act to save us from this unfair trade,” the exporter said, adding that senior trade authorities are aware of the simmering trade tiff.

Such barriers including a lengthy processing of single Customs Territory (SCT) export documents which take up to 10 days to be cleared instead of three adding to the cost of business as transporters charge up to Sh30,000 for the delay have tilted cross-border trade in favour of Tanzania in what is fanning protests from local manufacturers.

Tanzania’s hardball is part of the reasons Kenya’s exports in EAC declined by 30 per cent from $1.6 billion to $1.1 billion in the period 2012 to 2017 while imports have expanded by 60 per cent from $0.4 billion to $0.6 billion in the same period.

Increased exports by Tanzania and Uganda, however, drove up intra-regional exports from $2.7 billion in 2016 to $2.9 billion in 2017. Tanzania and Uganda export grew by 18.4 per cent and 37.3 per cent respectively.

Rwanda recorded intra-regional export growth of 6.4 per cent while Kenya, South Sudan and Burundi recorded a decline of 7.4 per cent, 24.2 per cent and 6 per cent, respectively.