Cautious Optimism as Kenya, Uganda Trade in Sugar, Milk Resumes

SUNDAY MAY 26 2024

By LUKE ANAMI

A section of Uganda businesses resumed trading with Kenya after the signing of a memorandum by Presidents William Ruto and Yoweri Museveni in Nairobi last week, ending longstanding issues chocking cross-border commercial activities.

While trade in sugar and milk has resumed, businesses are still cautious, as a number of taxes, including those on Kenyan juice, are yet to be reviewed.

Simon Kaheru, vice-chairman of the East African Business Council, who also chairs the Ugandan Private sector, told The EastAfrican that the Nairobi meeting was very helpful in opening up the two countries to trade.

“So far, a number of our members involved in some sectors that were previously affected by the blockades have begun trading once again. We have had confirmation specifically from the sugar and dairy sectors that the situation has improved,” he said.

During President Museveni’s state visit to Kenya, the two East African Community (EAC) founding Partner States signed seven memoranda in public service management, education, SME development, sports, youth, trade and investment sectors. The leaders also agreed to resolve the trade wars by adhering to the EAC’s protocols on the Customs Union and the Common Market.

“We should eliminate barriers which hinder trade not only between Kenya and Uganda, but also in East Africa and Africa as a whole. Protectionism is not good for Uganda, Kenya or Tanzania,” President Museveni said.

“All the issues around [trading in] rice, fruit juices, sugar, furniture, eggs, chicken and all the other issues are now resolved,” Dr Ruto declared.

But the private sector in Uganda remains wary: “We have been down this road before many times, for just as we start celebrations, another roadblock is erected,” Mr Kaheru observed.

For years, Uganda has been Kenya’s largest export destination. But in July 2020, Kenya instituted a ban on Ugandan sugar against an earlier agreement to increase Uganda’s sugar exports to Kenya.

“Our aspiration is for trade to be smooth the way it was designed to be before these borders were thought of by foreign influences. We need to stop being our own enemies and live up to the dreams of our forefathers, growing this region and continent together at the same pace as Ubuntu meant.”

In January 2021, Kenya banned all the importation of chicken carcasses, meat and eggs.

This has heightened suspicion that even though the two countries agreed to remove tariffs among them, there are products such as Kenya’s Juice that still attract excise duty until the Ugandan ministry of Finance moves with speed with a bill to amend the tax rates.

During the consultative meetings held in Kampala when Kenya’s Prime Cabinet Secretary Musalia Mudavadi and his Ugandan counterpart, Foreign Minister Gen Odongo Abubakhar, the two countries agreed to relook into the 13 percent excise duty imposed on Kenyan juice.

For instance, the duty is currently at 12percent on Kenyan Juice. It would take some time before this is amended.

“There are ongoing consultations in Uganda to have the excise duty Amendment Bill 2024 in consideration of widening the scope coverage of 12 percent excise duty or removing it on Kenyan juice, whichever will be determined, ‘ said Gen Abubakhar.

Both countries agreed that they should not apply discriminatory taxes, levies, and import duties for goods originating from another EAC country. Further, there should be no goods as per EAC protocol within EAC countries.

In March 2021, Kenya added maize and chicken to the list of banned exports from Uganda.

According to Kenya, the ban was to support Kenyan producers to recover from the trade disruptions in their livestock by the Covid-19 pandemic from 2020.