By George Omondi
In Summary
- KRA data shows that Egypt and the United Kingdom overtook Tanzania and narrowed the gap with Uganda as top export destinations for Kenya in the first two months of the year.
- The value of exports to Egypt jumped 73 per cent to Sh7.67 billion in first two months of this year, placing the North African nation in the third position after UK and Uganda.
Kenyan companies have extended their search for
export markets beyond East Africa, seeking to avoid the trade disputes
and general economic slowdown that have been taking toll on their
operations in the regional market.
Kenya Revenue Authority (KRA) data shows that
Egypt and the United Kingdom overtook Tanzania and narrowed the gap with
Uganda as top export destinations for Kenya in the first two months of
the year.
The value of exports to Egypt jumped 73 per cent
to Sh7.67 billion in first two months of this year, placing the North
African nation in the third position after UK (Sh7.72 billion) and
Uganda which shed 9.4 per cent from the Sh10.73 billion it recorded in
February last year.
Tanzania, usually in neck-and-neck race for second
slot with UK, fell to fourth position as a major export destination
having taken in only Sh6.47 billion worth of Kenya’s January and
February exports. The amount was five per cent less than last year’s.
The first quarter figures are a continuation of
East Africa’s decline as a key market for Kenya’s exports that began
last year. Kenya’s exports to East African Community member states
shrank by 1.8 per cent to Sh134.9 billion in 2012 down from Sh137.2
billion in 2011, according to the Economic Survey 2013.
The decline in trade volumes came on the back of a
slowdown in the region’s economic growth to an average of 5.7 per cent
from an average of 6 per cent in 2011.
Growth was slowest in Uganda, Kenya’s single
largest market, where the rate of economic expansion dipped to 4.1 per
cent from 5.1 per cent the previous year.
Kenyan entrepreneurs have also linked the decline
in trade with EAC member states to persistent market access wars placing
it top on the agenda of newly-appointed Cabinet Secretary for East
African Affairs, Commerce and Tourism Phyllis Kandie.
“Most of the trade disputes have been resolved at
the top but remain outstanding on the ground due to poor flow of
information to implementing agencies,” Peter Kiguta, the
director-general of customs and trade told the Business Daily last week.
Ms Kandie is expected to come face to face with
the raging market access wars in the next two weeks when the region’s
ministers meet to review the state of the market in the first half of
the year.
Sustained
Egypt’s emergence as a major export destination
for Kenya comes hardly one year after Nairobi resolved its long-running
trade dispute with Cairo over the local value addition rule.
Egypt, a key importer of Kenyan tea, had in 2011
raised its local value addition requirement for Kenya’s goods to 45 per
cent, a move that Nairobi interpreted as an attempt to lock out its
galvanised iron sheets.
Like Kenya, Egypt is member of Comesa Free Trade
Area whose rules of origin require products from member states to have
at least 35 per cent local value addition for free entry into any of the
19-member trading bloc.
Kenya’s Jubilee government has set its sights on
riding the wave of positive economic prospects in Africa to boost its
chances of delivering high growth.
“Generally, the Sub-Saharan Africa growth will
be sustained and is projected to rise to 5.8 per cent in 2013 from this
year’s 4.8,” Cabinet Secretary for Devolution and Planning Anne Waiguru
said last week.
Pakistan, which gives Kenyan tea preferential
treatment in exchange for similar terms for its rice exports to Kenya,
has also emerged as a key export destination for Kenya that took in
Sh6.44 billion in the first two months of the year or a 41 per cent
growth over the first two months of 2011.
Kenya, which is East Africa’s largest economy, is
currently embroiled in a costly tit-for-tat trade wars with its EAC
partners. Top in the list of raging disputes is Uganda’s restriction of
entry to Kenya’s beef and imposition of a 75 per cent duty or $200
(Sh16,800) per tonne on Kenyan rice.
Under the EAC Customs Management Act, rice and
beef produced in the region have duty-free access to the regional
market. The quantity of exports is also unlimited.
Tanzania has also persisted in its denial of entry
to Kenyan cigarettes on grounds that they do not meet the 75 per cent
local tobacco content threshold.
Kenyan companies say these moves are purely driven
by rivals in neighbouring States who are using State apparatus to keep
potential competitors from domestic markets.
“Unless the private sector is united and begins to
think of the region as one market, these disputes will never end,” said
Vimal Shah, who chairs the Kenya Private Sector Alliance.
“We have reached a point where we have to agree on
the kinds of barriers that can be resolved through talking and those
that require legal sanctions, including redress from the East African
Court of Justice,” said Mr Shah.\
Most Kenyan firms have opted to resolve the
disputes through the established EAC institutions. Kenya’s Mastermind
Tobacco broke this tradition two weeks ago when it accused the Uganda
Revenue Authority (URA) of taking sides in the market access war that
pits it against rival cigarette producers in the landlocked country.
“The URA has used the dispute as an excuse to ban
the transit of our Supermatch cigarette to South Sudan and other markets
in the region,” the company said on May 10.
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