Tanzania has edged past Uganda as Kenya’s largest export market in East
Africa as a result of the ongoing elimination of non-tariff barriers and
increasing local production in Uganda of goods that were previously
imported. TEA GRAPHIC |
NATION MEDIA GROUP
By JOINT REPORT The EastAfrican
In Summary
- Kenyan officials attributed the change in trade volumes to increased monitoring of non-tariff barriers after the EAC became a Single Customs Territory.
- Uganda has over the past two decades attracted substantial foreign direct investment in key sectors like manufacturing and services, reducing its reliance on imports.
- Trend, if maintained, presents Kenyan manufacturers with a bigger and more diversified market.
Tanzania has edged past Uganda as Kenya’s
largest export market in East Africa as a result of the ongoing
elimination of non-tariff barriers and increasing local production in
Uganda of goods that were previously imported.
Uganda has traditionally been Kenya’s top trading
partner in the region, but latest data from the Kenya National Bureau of
Statistics (KNBS) ranked the country third, with Tanzania coming
second.
Uganda was overtaken by the US in June as the leading export destination for Kenyan goods.
The report showed that the US imported goods from
Kenya worth Ksh3.7 billion ($41.8 million) in June, followed by Tanzania
at Ksh2.8 billion ($31.6 million) and Uganda at Ksh2.5 billion ($28.3
million).
“The EAC integration means that Tanzania has to
apply tariffs to products from the Southern Africa Development
Community, while Kenyan goods are basically entering a domestic market,”
said Sam Watasa, lead advisor on non-tariff barriers at Uganda’s
Ministry of Trade.
Although it is difficult to project future trends
based on a month’s data, Kenyan exports to Uganda have declined by
almost half since November last year, at Ksh4.5 billion ($51 million), a
trend analysts attributed to the growth of the manufacturing sector in
Uganda.
Over the same period, Kenya’s exports to Tanzania
were between Ksh3.2 billion ($36.2 million) and Ksh2.7 billion ($30.5
million).
“Uganda has drastically reduced its imports from
Kenya. Tanzanian imports have remained fairly stable. However, June is
not a good month for imports because it is usually the end of the budget
year,” East African Business Council trade economist Adrian Njau said.
Uganda imported more from Kenya than Tanzania in June last year.
Kenyan officials attributed the change in trade
volumes to increased monitoring of non-tariff barriers after the EAC
became a Single Customs Territory. Officials from the bloc now meet
quarterly to address obstacles to trade.
“There are some non-tariff barriers that we’ve
been looking at in the EAC, and resolving them has led to an increased
flow of goods between the two countries,” said the director of
international trade at Kenya’s Ministry of Foreign Affairs and
International Trade Nelson Ndirangu.
According to Kenya Investment Authority managing
director Moses Ikiara, Uganda has over the past two decades attracted
substantial foreign direct investment in key sectors like manufacturing
and services, reducing its reliance on imports.
“Some of the products that Kenya was selling can
now be manufactured in Uganda. The elimination of some forms of
non-tariff barriers has also seen the flow of goods from Kenya to
Tanzania increase,” Mr Ikiara said, adding that the quality of some
Kenyan products is now rivalling that of items Tanzania previously
imported from South Africa.
Savanna Cement, which exports a third of its
products to the region, said the trend, if maintained, presented Kenyan
manufacturers with a bigger and more diversified market
“Kenyan’s exports to Uganda may be slowing down but Tanzania is
picking up. Tanzania is a much bigger market for commodities and their
population is bigger. The Tanzanian market is opening up and for us it
is a win-win situation,” Savannah managing director Ronald Ndegwa said.
Mr Watasa said products like soap, cosmetics, detergents and spices were now being manufactured in Uganda.
Ugandan manufacturers also appear to be
responsible for the decline in exports from Kenya to Rwanda, which fell
from Ksh1.1 billion ($12.4 million) in November last year to Ksh712
million ($8 million) in June.
Gideon Badagawa, the executive director of the
Private Sector Foundation Uganda, however, said the data needed to be
examined over a longer term to avoid jumping to conclusions.
“I don’t think it’s possible that after the
aggregation of all Kenyan businesses in the insurance, retail and
banking sectors and workers in the hotel industry, Tanzania would be
ranked as a bigger trade partner,” Mr Badagawa said.
He said Kenya should nurture relations with Uganda
for strategic reasons, including access to the landlocked countries of
Burundi, Rwanda, DRC and South Sudan. “This makes Uganda Kenya’s
shortest route to the hinterland,” Mr Badagawa said.
Mr Ndirangu said Kenya has been diversifying its
products to the international market to widen its export revenues and
minimise over-reliance on agricultural produce.
“Our exports to the US are mainly textiles under
the Agoa framework. We have been branching out to products like cut
flowers and horticultural produce,” he said.
Tea tops the list of Kenya’s exports, followed by
horticulture and coffee. A return to political stability in Egypt has
seen exports, mainly of tea, rise for the third month running.
The 2014 Economic Survey released in
February by KNBS showed that Kenya’s exports to Uganda declined for the
second year in a row to Ksh65.36 billion ($739.6 million) last year,
from Kshs67.45 billion ($763.2 million) in 2012.
Kenya traditionally exports lime, cement,
fabricated construction materials and consumer goods to Uganda. Tanzania
was last year Kenya’s second largest export destination with products
like soap, foodstuffs, cleansing and polishing preparations as the major
exports, according to KNBS.
“With the harmonisation of border procedures and
single documentation procedures coming into effect, the ease of doing
business in the region has improved,” Mr Ndegwa said.
In the year to June 2014, the value of exports of
goods and services to Tanzania was $13.99 billion, equivalent to an
increase of 8.5 per cent over the previous period.
Importation of building and constructions
materials went up by 25.7 per cent to $1 billion, partly associated with
the ongoing increase in construction activities in the economy
The July edition of Bank of Tanzania’s Monthly Economic Review
states, “A significant increase was recorded in the category of all
other consumer goods, particularly pharmaceutical products, paper
products and plastic items.”
Reported by Joshua Masinde, Benedicta Asiimwe and Rose Mirondo
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