TIT FOR TAT

Uganda to ban Kenyan goods as trade dispute hots up

Agriculture ministry to identify and list Kenyan products that will be banned by the Ugandan government within “a short time.

In Summary
  • Most of Uganda's imports pass through Kenya but the former has been wooing Tanzania in recent days.
  • In July 2020, Kenya followed up with a ban on Ugandan sugar, against an earlier agreement to increase Uganda’s sugar exports to Kenya.
Long distance trucks line up along the Amagoro-Malaba Highway as they wait to cross the border to Uganda
Long distance trucks line up along the Amagoro-Malaba Highway as they wait to cross the border to Uganda
Image: EMOJONG OSERE

The trade dispute between Kenya and Uganda is set to blow up after Kampala announced plans to restrict raw and processed agricultural products from its market. 

On Tuesday, the Monitor quoted Uganda's minister for East African Affairs, Rebecca Kadaga saying that the Cabinet has directed the Agriculture ministry to identify and list Kenyan products that will be banned by the Ugandan government within “a short time.”

''We have been too patient. In the past, we have not reciprocated, but now we are going to. This has gone on for too long and within a short time they too will understand what we are going through,” the Monitor quoted Kadaga. 

Kenya and Uganda have for a long time been embroiled in a trade dispute.

The latest hostilities between the two EAC partner states began brewing in December 2019, when Kenya stopped importing Ugandan milk, particularly the Lato brand.

In July 2020, Kenya followed up with a ban on Ugandan sugar, against an earlier agreement to increase Uganda’s sugar exports to Kenya.

Uganda had introduced discriminative excise duties under the Excise Duty Amendment Act 2017.

However, in April, Kenya's cabinet secretary for Trade Betty Maina led a delegation to Uganda seeking assurance that the sugar imported to the was wholly produced in Uganda.

Kenya agreed to allow 90,000 tonnes of sugar from her landlocked neighbour as soon as the verification mission on the country of origin was completed.

As part of the pact, Kampala committed to abolishing the 20 percent excise duty on furniture and 18 percent value-added tax (VAT) on exercise books manufactured in Kenya with effect from July 1.

Additionally, Uganda undertook to abolish the 18 percent VAT charged on processed poultry meat exported from Kenya and zero-rate drugs manufactured in Kenya with effect from July 1.

Despite these pledges, both countries have reneged on implementing some of them—triggering intermittent disputes such as the latest one on the sugar trade.

In September, Sugar Directorate in Nairobi said that traders will only be allowed to import 18,923 tonnes of sugar from Uganda.

This was a direct contradiction of an agreement between the two countries in April where Kenya agreed to allow 90,000 tonnes of sugar from her landlocked neighbour as soon as the verification mission on the country of origin was completed.

The dispute between the two countries has trade depreciated in recent times, with the value of imports from Uganda dropping 34 per cent in eight months to August.

Trade data from the Central Bank of Kenya indicates that the imports from Uganda dropped from a record high of Sh3.2 billion ($29 million) in February to Sh2.09 billion ($19 million) in the review period, hitting a seven-month low.

Most of Uganda's imports pass through Kenya but the former has been wooing Tanzania in recent days.

In April, Uganda opted to join Tanzania on the East African Crude Oil Pipeline project, ditching Kenya. It also backed out on Kenya's Standard Gauge Railway project.