Kenya, Tanzania trade spat hurting integration

PRESIDENT UHURU KENYATTA (RIGHT) AND HIS TANZANIA'S PRESIDENT JOHN POMBE MAGUFULI AT STATE HOUSE NAIROBI ON OCTOBER 31, 2016. FILE PHOTO | DENNIS ONSONGO | NMG  

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Summary

• Kenya and Tanzania being members of the East African Community, it must be expected that both have anchored their economies, and therefore the welfare of their people, in free trade.
• Should it be trade imbalance that the neighbours are concerned about, then they are focusing on the wrong targets.
• What appears to be happening here is clearly a pure struggle for regional hegemony.
• Kenya and Tanzania need to focus on maximising their economic potential, trading with each other and other countries of the world as they leverage on their comparative advantages.

Whatever its causes and justifications, there can’t be doubt that the ongoing trade spat between Kenya and Tanzania is hurting business and ultimately the economy on both sides.

To be frank, it is on such matters of economic welfare that citizens should expect their governments to spare no effort in resolving.

That this trade war continued in the week after a truce speaks volumes about the level of trust between the top diplomats Amina Mohammed and her Tanzanian counterpart Augustine Mahinga.

One would have expected that the parties would implement the pact immediately.

If Kenya has lifted its ban on Tanzanian goods, including liquefied petroleum gas (LPG), as per the agreement, it must then follow up with Tanzania to ensure Dar keeps its side of the bargain and quickly find alternative means of resolving the issue.

Kenya and Tanzania being members of the East African Community, it must be expected that both have anchored their economies, and therefore the welfare of their people, in free trade.

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Arbitrary trade restrictions deny consumers lower prices, greater variety of goods and harm investment inflows, among other negative consequences.

What is particularly surprising about all this is that both countries are members of the EAC’s Common Market protocol, whose essence is to promote free movement of goods among other factors of production. It is clear that both Kenya and Tanzania import the bulk of their goods — not from each other — but from the more developed economies such as China, the United Arab Emirates and South Africa.

Should it be trade imbalance that the neighbours are concerned about, then they are focusing on the wrong targets. What appears to be happening here is clearly a pure struggle for regional hegemony.

Kenya and Tanzania need to focus on maximising their economic potential, trading with each other and other countries of the world as they leverage on their comparative advantages.

Any bottlenecks to free trade and foreign investment, especially the knee-jerk reactions seen in recent months, can only be mutually harmful.

It serves to slow down the full economic integration envisaged in the EAC.

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