Kenya eyes more business with Uganda as TZ plays protectionism

TRADERS in Kenya are now eyeing more business with Uganda following an agreement between the two countries to address both tariff and non-tariff trade barriers, in the latest of an East African bilateral agreement.

This comes as Tanzania is seen to play protectionism, with the latest being a hike in excise duty, levies and the recent move barring foreigners from operating small businesses, blamed for threatening East Africa's industrial growth and against the EAC protocol on free movement.

The Tanzania Finance Act 2025 and the amended Tanzania Excise (Management and Tariff) Act 2019, has introduced excise duties and an industrial development levy, at 10 and 15 per cent, respectively.

Some of the upward excise duty rate adjustments by Tanzania touch on potatoes, ice cream, whether or not containing cocoa, beer made from malt, wine, cider, opaque beer, vodka, whiskies, rum, fireworks, soap, cufflinks and studs and imported seats, with a higher duty on imports of up to 25 per cent. Some of the taxes, manufacturers say, are targeting Kenyan exports.

Kenya and Uganda have however reached an agreement to eliminate all tariffs and non-tariff barriers (NTBs) hindering trade between the two countries and fully implement trade related commitments under the EAC Treaty and Protocols.

This follows a directive by Presidents Yoweri Museveni and William Ruto who held a bilateral engagement in Nairobi in July this year, and tasked their respective ministers for trade to “urgently” convene a meeting to resolve all trade barriers between the two countries, including congestion along the major trade corridors, tariff and non-tariff barriers.

Uganda’s Trade, Industry and Cooperatives minister Wilson Mbadi and Kenya’s Investments, Trade and Industry CS Lee Kinyanjui convened a side line meeting in Nairobi on July 31 and agreed to exchange lists of all products affected by NTBs.

This was followed by a technical meeting in Mbale, Uganda between August 18 and 22 to consider the exchanged lists.

Technical officers from the two countries were directed to undertake assessment at the borders of Suam, Busia, Malaba and Lwakhakha to ascertain the causes of delays and congestions , and provide comprehensive recommendations to the ministers on how to resolve the barriers during their meeting of August 29 and 30.

The ministers have since agreed to remove “all discriminatory” excise duties, levies and other charges of equivalent effects, while reiterating their commitment in implementing the directives of the Heads of State; to specifically decongest the borders of Malaba and Busia and address all barriers hindering trade between the two countries.

The Shippers Council of Eastern Africa (SCEA), which also represents importers and exporters, have welcomed the move with Kenyan traders now eying to further increase trade activities with Uganda, which is the biggest trading partner in the region.

“The operationalisation of boarder crossing committee should prioitise 24/7 working hours at all boarders. Addressing NTBs will results to increased intra-regional trade currently standing and a poor 10.8 poer cent,” SCEA chief executive, Agayo Ogambi, said.

According to shippers, transit time between the Port of Mombasa and Malaba, which is currently oscillating between 73 hours and 80 hours , will improve to below 70 hours or slightly below two days, a boon for trade.

“We are also glad that the excise duty on transit goods, tea included, implemented from July has been addressed too in the document as NTB,” said Ogambi.

In 2024, transit volumes to and from Uganda accounted for 65.6 per cent of total transit volumes through the Port of Mombasa, up from 62.3 per cent in 2023. Value of exports to Uganda was Sh125.9 billion last year, a drop compared to Sh126.3 billion the previous year.

“This decline was largely attributable to a decline in domestic exports of cement clinkers and palm oil to this destination,” the Economic Survey 2025 indicates.

Imports were valued at Sh37.7 billion down from Sh41.2 billion in 2023.

Mombasa serves the East African Community landlocked countries through the 1,700 kilometre-long Norther Corridor which runs between the port city, Uganda, Rwanda, Burundi and Eastern DRC–the main trade route in the region.

Kenya and Uganda have agreed to treat all products originating between the two countries as transfers and address border delays, amid other measures including infrastructure development.

The move is expected to boost manufacturing in both countries even as Kenyan manufacturers remain concerned over Tanzania.

“The EAC is the largest external market for Kenyan goods led by Uganda, followed by Tanzania and Rwanda. However, this is currently being threatened by measures by partner states which inhibit the free movement of goods, for instance the recent Tanzania Finance Act 2025 and Tanzania Excise (Management and Tariff) Act 2019, which have introduced discriminatory tax measures that have targeted Kenya's major exports,” KAM chief executive Tobias Alando noted.