Let's not slip into Uganda trade war

In Summary

• Uganda is threatening to slap retaliatory tariffs on Kenyan products after Kenya placed a 16 percent tax on Ugandan milk

• Thousands of Kenyan professionals are working in Uganda with no restrictions

Milk powder.
Milk powder.
Image: FILE

Uganda is threatening to slap import tariffs on Kenyan products in retaliation for the 16 percent import duty imposed on Lato milk (see P14).

Local producers have been unhappy that Ugandan milk was undercutting Kenyan producers. Eventually the government bowed to pressure and placed a tariff on Ugandan milk. Similar action has been taken against Ugandan maize and eggs.

The East African Community is supposed to be a free market where local products  move duty-free between countries. 

There are winners and losers in every common market. Thousands of Kenya professionals work in Uganda (far more than the Ugandans working in Kenya). That is a big win for Kenya. On the other hand, Uganda has lower agricultural production costs so it can export to Kenya. That should be a win for Uganda. 

You cannot expect only wins in a common market with no losses.

The government should drop the tariff on Ugandan milk (much of which is produced by Brookside, a Kenyan company). Otherwise Uganda may hit Bidco, Unilever and many other Kenyan exporters with retaliatory tariffs that hurt their businesses and, by extension, Kenyan jobs.

Quote of the day: It's important to give a better country to your children, but it is more important to give better children to your country.

Carlos Slim
The Mexican businessman was born on January 28, 1940