Why Kenya is at trade war with Uganda, Tanzania

Nothing summed up the triumphant feeling in Uganda after its soldiers arrested three Kenyan Administration Police officers on Lake Victoria two weeks ago like the way their newspaper, ‘The Independent’ described it.

“President Museveni has deployed the UPDF on Lake Victoria to reduce on illegal fishing after the vice nearly depleted fish stocks on the largest lake in Africa,” said the paper on June 16.

Although the lake is a shared resource among three East African countries, the spat between Uganda and Kenya over where the borders lie in the lake has sparked new sense of nationalism. So strong is the mounting pride across the border that the Ugandan press which shouted themselves hoarse about the arrest, gave the release of the three Kenyan officers a day later a blackout. The release itself did not come without drama. As negotiations were going on, Kenyan police intercepted a bus heading to Nairobi from Kampala at Bumala in Busia and detained 53 Ugandan nationals of being here illegally.

Although it appeared like an isolated incident, the spat over fishing rights on Lake Victoria has not been the only clash between Nairobi and Kampala in recent times. For some time now, Kenyan fishermen have been arrested on the lake over claims of illegal fishing. East African Affairs Cabinet Secretary Peter Munya says there should be an interstate agency to manage the lake.
“That is the only solution we see so far so that problems over who is fishing wherever whether you are in Uganda and Tanzania,” Munya says. “When that interstate agency is created then problems over fishing will be solved because the three countries will be managing the lake together.” Despite Munya’s assurances, everywhere you look, relations between Kenya and her neighbour to the west seem to be steadily heading south. In total, from our count from various news reports, Uganda has arrested over 150 Kenyans on the lake since the year started and the number keeps rising.

Like last week, eight more Kenyan fishermen were arrested on the lake. Their fate unlike those of the officers who were released after government intervention is still unknown. But in public, the body language of the presidents of the two countries when together shows there is nothing wrong. Such a chance came on Monday during the 14th Summit on the Northern Corridor where tensions about the lake which plays key economic, social and transport roles in the region were widely ignored. Instead, the closest tensions between Nairobi and Kampala were discussed was when Ugandan President Yoweri Museveni joked about how his immigration officers are slowing down the movement of goods between the two countries. “Goods are moving very quickly from Mombasa but Ugandan Revenue Authority (URA) officials only work for half a day then they go to sleep,” said Museveni.
“That is why I am here to apologise on their behalf because you know Ugandans are not easily embarrassed. But for me I feel very embarrassed on their behalf.” Coincidentally, on the same day Museveni was apologizing in Nairobi over a matter not related to the lake, his officers were closing a nursery school owned by Kenyans on Migingo Island. According to those in the know, Ugandan authorities shut down the school, the only one on the tiny island because they saw it as a symbol of Kenya’s authority. Lake Victoria contributes immensely to the socio-economic development of the riparian States that surround it. Fish is not only a rich source of animal protein for human consumption but also provides raw material for processing animal feeds.

The Food and Agriculture Organisation of United Nations (FAO) says, “the lake has the potential to yield fish valued at over $800 million annually on a sustainable basis.” “Further processing and marketing the fish in the local and export markets could provide opportunity to generate additional earnings. Currently, however, only about 500,000 tonnes of fish is landed annually, with an average landing value of approximately US$ 600 million,” says FAO. Besides, the fish industry contributes to the national and local government revenues through levying of various taxes, levies and licence fees. The sector has also contributed directly and indirectly to the improvement of physical infrastructure and social facilities, such as roads, schools and hospitals, particularly in remote fishing communities. Patrick Kamau, who teaches diplomacy and peace studies at the United States International University, says Uganda is just trying to test whether it can check Kenya’s influence picking cue from Tanzania. “In any geographical region, countries with the most wealth and military might hold hegemonic power over their peers and it is natural that peers flex their muscles from time to time as demands the principle of reciprocity in diplomacy,” he observes. But while it can easily be dismissed that the sudden flare up of tensions between Kenya and Uganda as a clash of inflated egos on both sides of the lake, evidence shows this could be a fight of economic interests that is reaching boiling point.
Most seriously, however, Kenya which has for the last few years been involved in a bare knuckle on and off battle of supremacy with Tanzania has now found herself in a new war with Uganda, a country that was until last year our biggest importer. This escalation of anti-Kenyan rhetoric in Tanzania and Uganda saw the two countries introduce taxes on Kenyan made confectioneries like ice cream, chocolate, sweets and biscuits citing use of industrial sugar in April. The East African common market made allows for free movement of locally manufactured goods. However, the two countries are accusing Kenyan manufacturers of using industrial sugar imported under a 10 percent duty remission scheme. No country in the region produces industrial sugar.

Citing this as a breach, Tanzania and Uganda rejected the certificates of origin issued by the Kenya Revenue Authority (KRA) and levied 25 percent import duty on Kenyan confectioneries. Next week a delegation from Kenya will be heading to Tanzania to try and iron out some of the trade issues between the two countries. “Our neighbours have been blocking Kenyan goods because they are not sure whether they are EPZ products or not,” alludes Trade Principal Secretary Chris Kiptoo. “We are awaiting the report from a verification committee then we will be able to make a decision.” he says. A verification team from Uganda and Tanzania have been camping at the Kenya Association of Manufacturers (KAM) premises the whole of this week tying to ascertain the raw materials of Kenyan confectioneries in a bid to end the tiff.
They are expected to issue a report which manufacturers hope will end the squabble but they are pessimistic on whether this will be the last one. “We will resolve this then a new batch off issues will come. This seems like a small trade war but when you look at it cumulatively it is a lot of money that has been lost,” says Phyllis Wakiaga, KAM’s chief executive. Last year, the two countries pulled a similar stunt when they created roadblocks for Kenyan textiles, cement, edible oils and lubricants. Manufacturers say they have lost at minimum of 58 percent worth of regional business since the year 2012 when Uganda and Tanzania started erecting barriers. “The region was created so that we grow each other. But if we allow other exporters to access our markets while we are blocking each other we are only hurting ourselves,” complains Wakiaga.

“The problem is that our neighbours are also trying to grow their industries so are kind of in a capture situation.” Supported by good infrastructure, a stronger manufacturing sector and strategic geographical position, Kenya still maintains a strong economic lead over its neighbours. As at the end of last year, Kenya’s economy was worth an estimated $70 billion, Tanzania $47 billion, Uganda $25 billion, Rwanda $8 billion and Burundi $3 billion. Since 2013 however, exports from Kenya to the region have fallen by 8 percent from Sh124 billion in 2013 to Sh114 billion last year. Over that period our biggest decline in exports have been felt in Tanzania by a staggering 29 percent from Sh40 billion in 2013 to Sh28 billion last year. Uganda which was overtaken last year by Sri Lanka as our biggest export market has had a 5 percent decline in five years from Sh65 billion to Sh61 billion.
Trade PS Kiptoo downplayed the dwindling export numbers insisting everything is fine. “We have had good working terms with Tanzania, more so Uganda. Yes issues come up but they are always sorted,” he says. “I am not defending any action on their part but it doesn’t help to say that we are fighting because it spoils the spirit of negotiation.” Kenya’s major exports to Tanzania include palm oil, soap, flat rolled iron, sugar confectionery, and household products. In return, Kenya imports paper and paperboard, maize, electricity transformers and poles, textiles, rice, animal products, pipes, wheat, maize, onions and fruits. To Uganda, Kenya exports fuel products, machinery, chemicals, metals, minerals, footwear, textiles, hides and plastic products. In return she imports foodstuffs, especially cereals, and electricity from the west-neighbouring country.

First Published by The Standard
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