When Presidents; Yoweri Kaguta Museveni of Uganda, Daniel Arap Moi of Kenya and Benjamin Mkapa of Tanzania met on November 30, 1993 to revive the East African Community that had collapsed 23 years earlier they argued that the three neighbouring states had to reunite to remove trade competition amongst themselves and also allow their people to move freely and tap opportunities anywhere in East Africa without barriers.
Then later, Mr Museveni mooted the idea to annex Rwanda and Burundi onto the trading bloc arguing that a united and strong East Africa would extinguish civil conflicts in the two countries which were prone to war. After the two became member states in 2009, THEN IN 2016 South Sudan, which had been embroiled in decades of civil war, was also brought on board with the same reasoning.
Fast forward, today the six member states appear to have lost direction even as they court the DRC and Somalia to join them.
The member states have failed to manage a common trade agenda neither do they have a binding solution to disputes including border conflicts amongst themselves.
For more than three years now, Kenya has been rejecting Ugandan commodities on account of low quality standards and safety risks. The commodities include; poultry products, beef and beef products, sugar, fruit juices and pharmaceuticals.
In just a year, Uganda lost Ush1.7trillion as a result of Kenya’s blockade on the former’s milk exports. Even though this put livelihoods of more than 100,000 farmers in the dairy sub sector at risk, Uganda did not take retaliatory action on Kenya’s move to confiscate and send back 19 truckloads of Lato milk that had been exported to the country.
Just last week Kenya banned maize from Uganda and Tanzania over safety concerns. After protests by the Uganda Parliament a few days later Kenya lifted the ban with strict conditions on exporters as the country seeks to curb shipping in of the cancer-causing aflatoxin on the imported maize.
Kenya’s annual production target of maize has been 40 million bags or approximately 3.6 million tonnes. However, over the past decade, the average production has been well below 40 million bags, with the exception of 2012, 2013, 2015 and 2018. But demand is projected to reach 60 million bags by 2025 because of population growth.
This has caused debate in Kenya on whether to import maize from outside the East African Community to plug the gap although importing from within the region is the first logical step in view of a 50 per cent common external tariff designed to protect local producers.
On the one hand Uganda acts as a supermarket for Kenyan-made products yet on the other hand there is a structured and institutionalised harassment of Kenyan traders and dealers dealing in Uganda made goods.
In addition there are impromptu stop-overs and rampant raids on Ugandan warehouses or warehouses with Ugandan goods, unnecessary issuance of quotas to Ugandan made sugar which contradicts the EAC Common Market Protocol and unending verifications whose findings always vindicate Uganda.
It should be, however, noted that Kenya has always benefited from both access to cheap Ugandan raw materials and fresh produce for their agro – processing industry and market for finished products.
The larger debate, however, is that Uganda overtime has developed capacity to manufacture and process goods that were originally being imported from Kenya from her own raw materials as well as imported inputs to survive and promote her economic independence.
This has been facilitated by the progressive initiative such as the Buy Uganda Build Uganda (BUBU) Policy and the Reservations and Preference Schemes under the PPDA Act.
Despite persistent trade distortions orchestrated against Uganda, the country’s exports to Kenya had been increasing until 2017, when Uganda for the first time in decades, recorded a trade surplus with Kenya.
Importantly, Kenyan exports into Uganda increased from $1.1 billion in 2017 to $1.2 billion in 2018 and 2019.
Ugandan traders have blamed authorities in Nairobi for blocking their products from accessing the Kenyan market on flimsy grounds and in contravention of the East African Common Market commitments that guarantees unfettered free movement of goods and services with the East African Community trading bloc.
In January 2020, the Uganda government issued a protest note regarding the unfair treatment the country’s products are being subjected.
Apart from blocking goods from neighbours, Kenya has unilaterally started pursuing bigger markets contrary to the spirit of East African integration.
For instance, Kenya has decided to pursue unilateral trade talks with the EU, UK and the United States. December last year Kenya and the UK signed the Economic Partnership Agreement. Further, Kenya and the US on July 8, 2020 formally launched negotiations for a bilateral trade pact.
This conflict has affected negotiations between the EAC and the European and trade talks between EAC and the United Kingdom as well as disrupting the progress of the African Continental Free Trade Area.
Although President Museveni has on several occasions said that he does not encourage trade retaliation his Tanzanian counterpart President, John Pombe Magufuli, has on several occasions retaliated against Kenya’s decisions deemed to affect his citizens.
For instance, in July this year, the Tanzanian government banned Kenya Airways and other Kenyan carriers from flying into its territory ostensibly to retaliate against Kenya’s move to remove Tanzania from a list of more than 30 countries allowed to resume international flights into Kenya from August this year.
The ban was only lifted when the Kenyan government included Tanzania on a list of countries whose flights were allowed into its territory.
Tanzania and Uganda have also imposed taxes on Kenya-made confectionery products like chocolate, ice cream, biscuits and sweets citing use of imported industrial sugar in the goods.
The two states have rejected certificates of origin issued by the Kenya Revenue Authority (KRA) and opted to levy 25 per cent import duty on Kenyan confectioneries.
Tanzania also has been on the spot for defying the EAC rule of origin and imposing a higher local content requirement of 75 per cent of total input for tobacco.
Tanzania has in the past locked out Ugandan timber, sugar and maize.
Last week, Burundi also joined the fray and banned maize grain and flour imports for the next six months starting March 8 although maize is a staple food in parts of Burundi while its bran is used to feed cattle. Much of Burundi’s maize imports are from Uganda and Zambia.
Meanwhile, Uganda is on the verging of losing $200m-Rwanda market. Uganda haggles with Kenya to allow its exports, Rwanda shows no sign of reopening it’s the border with the Pearl of Africa, which has resulted into huge losses.
Before the border closure, Uganda had been fetching an average of at least $18m earnings per month. Kampala lost more than $664 million’s worth of exports to Rwanda while Kigali lost $104 million during the three months the Gatuna border was closed.
The closure of Uganda-Rwanda border in February 2019 could explain the reduction in the volume of other commodities—notably maize and beans—as Uganda exports them to Rwanda.
The performance of the economy report for May 2019 indicated a 9.8% decline in exports to the East African Community (EAC) from US$ 96.22 million in April 2018 to US$ 86.79 million in April 2019 owing to the fall in exports to Rwanda as a result of the closure of the Uganda-Rwanda border.
Imposition of Non-Tariff Barriers (NTBs) on agricultural exports by some trading partners like Kenya and Tanzania in the quest to reduce agricultural exports from Uganda could also have worsened the situation.
These barriers, together with the political conflicts in Sudan have been a major obstacle in the trade relationships between Uganda and her neighbours.
The recently released 2020/21 National Budget Framework paper noted the slowdown in Uganda’s trade with EAC member states between FY 2017/18 and 2018/19 on account of the above two issues (existence of non-tariff barriers with partner states, the temporary closure of Uganda-Rwanda border).
It also highlighted the decline in maize and beans exports to the region, specifically Kenya due to increased domestic production of similar products (bumper harvest). According to Bank of Uganda, total exports to Rwanda and Kenya reduced from US$ 198 million and US$ 678 million to US$ 150 million and US$ 434 million respectively between FY 2017/18 and FY 2018/19.
Furthermore, given the continued conflict situation in South Sudan (a major export destination of Uganda’s maize) and the sticking non-tariff barriers with some of Uganda’s EAC trading partners, beans and maize exports are likely to continue reducing.
In addition, other agricultural exports are likely to decline for instance dairy products, given the imposition of a 16% Value Added Tax by Kenya on Uganda’s exported milk in December 2019. Also, the European Union (EU) ban that was imposed on Uganda’s agro-exports such as Pepper in August 2019 (on grounds of non-compliance with the international EU health and phytosanitary standards) may also worsen the situation.
Trade conflicts in East Africa have worsened since 2017. But it is Uganda and Rwanda that are losing much more as a result of trade deficits.
Uganda is gradually losing its most dependable markets of Kenya, Rwanda and South Sudan. Uganda’s trade deficit has shot from $2.4 trillion to $3.7 trillion, an increase of $1.2 trillion (about Shs4.4 trillion). Rwanda’s cost of international trade is likely to get out of control soon.
Some analysts suggest that a lasting solution lies in empowering the EAC Secretariat. That the EAC Secretariat should be given powers to sanction and punish where possible.
Mr Africa Kiiza, a trade policy and negotiations analyst says there is need for an independent dispute settlement body at regional level to settle such conflicts instead of going to court.
But Ugandan traders believe the East African Court of Justice should offer them relief against trade injustices by other partner states.
Some pundits have even suggested that just like Kenya and Tanzania, Uganda should focus on tapping into new markets unilaterally. This why Uganda has offered to build tarmac roads into the DR Congo.
However, these proposals may not be acceptable or are likely to be ignored. The only sustainable solution lies in Museveni’s proposal to fast-track the political federation.
Repetitively, Mr Museveni has suggested that for member states to survive the storm they should unite into a political Union that would tie the six partner states together.
On February 1, 2019, the EAC heads of state determined that political confederation was a top priority and nominated President Museveni to provide guidance towards reaching that goal.
Rwanda President Paul Kagame in his various public statements agrees with his Ugandan counterpart’s position that the region should federate sooner than later. However, there seems to be mistrust between these two leaders on who should dominate the region.
Tanzania and Burundi have expressed reservations on political federation citing mistrust amongst partner states. In fact, Kenya, Uganda and Rwanda previously forged a coalition of the willing to fast-track common infrastructure projects and then ultimately federate.
However, along the way this partnership collapsed like a pack of cards after sentiments emerged that Mr Museveni harboured intentions to become the first East African Head of State.
For a political federation to happen the two longest serving Presidents in the region; Museveni and Kagame, must bury the hatchet and go back to the drawing board to convince their counterparts in the other partner states to move together with a similar mind-set.
Uganda and Rwanda boast of longevity of the presidency, which may turn out to be an advantage over other EAC members. Regular change of guards in Tanzania and Kenya, the economic power houses of the region, has come with change of economic and political policies in those countries, which has tended to raise inconsistencies in handling the EAC project.
It is therefore only Uganda and Rwanda that seem to have continuation of clear policies towards regional integration.
Secondly, Presidents; Kagame and Museveni have positioned themselves as Pan Africanists just African forefathers; Julius Nyerere (Tanzania), Jomo Kenyatta (Kenya) and Kwame Nkurumah (Ghana).
While the chairman of the African Union recently, President Kagame became the lead sponsor of the African Continental Free Trade Area even though as the EAC chairman the Rwandan leader was at the centre of conflicts between Rwanda and Uganda and then Rwanda and Burundi.
But if these two leaders invest all their energies into building a political union for East Africa and sacrifice their domestic comfort zones it is possible for the region to become one strong bloc.
Otherwise, the EAC is prone to undermining its integration agenda to the extent that its entire project often appears to be on the verge of collapse.
UJA House, Bombo Rd,
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Kampala – Uganda