Holland overtakes Uganda as top buyer of Kenya goods

Kenya Association of Manufacturers chairperson Flora Mutahi. FILE PHOTO | NMG 

By CONSTANT MUNDA

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Summary

• Exports to Uganda fell by 21.8 per cent to Sh3.52 billion largely on import substitution, data collated by the Kenya National Bureau of Statistics indicate.
• Orders from Uganda and Tanzania — traditionally Kenya’s top trading partners — have been under threat this decade, despite duty-free access because of the 2010 East African Community’s (EAC) common market protocol.
• Market players have largely attributed the dipping exports to the six-nation EAC to a fledgling industry in partner countries.

Goods purchased by Ugandan traders fell by nearly Sh1 billion in January compared to a year earlier, pushing the country down to third position in the list of top buyers of Kenyan products.

Exports to Uganda fell by 21.8 per cent to Sh3.52 billion largely on import substitution, data collated by the Kenya National Bureau of Statistics indicate.

Uganda, which was last year dethroned by Pakistan as a top buyer of Kenyan goods, was in January overtaken by the Netherlands whose order book is largely made of cut flowers.

Order book from the Netherlands rose 10.38 per cent to Sh4.19 billion in the month, while those to Pakistan — predominantly black tea — were flat at Sh7.31 billion, a 0.02 per cent drop year-on-year.

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Under threat

Orders from Uganda and Tanzania — traditionally Kenya’s top trading partners — have been under threat this decade, despite duty-free access because of the 2010 East African Community’s (EAC) common market protocol.

Market players have largely attributed the dipping exports to the six-nation EAC to a fledgling industry in partner countries.

“When we started the EAC, they didn’t have a lot of industries. (But) their industries have been growing. What, for example, Uganda used to import from here, they are now manufacturing,” said Kenya Association of Manufacturers chairperson Flora Mutahi in a past interview. “They are also incentivising some of our manufacturers to go and set up shops there.”

Multiple fees

Manufacturers have long blamed multiple fees and levies, relatively high power charges and inefficiencies at factories for piling up the cost of production, making locally made goods more expensive.

Industry secretary Adan Mohamed said talks with his counterpart at the Treasury to remove Import Declaration Fee (IDF) and Railway Development Levy (RDL) on industrial inputs, were ongoing ahead of Finance Bill 2018 in June.

“A plan that we are working on with our colleagues at the Treasury is actually to charge zero IDF, zero RDL on raw materials initially to start with, and then we load that revenue shortfall on raw materials into finished goods (imports),” he said on February 7.

Last year, exports to Uganda fell to Sh49.98 billion from Sh51 billion in 2016 and Sh60.05 billion in 2015, while Tanzania’s orders dropped to Sh22.72 billion from Sh25.78 billion a year earlier and Sh25.41 billion in 2015.

Consignments to the US, where Kenya exports textiles and apparels under the preferential African Growth and Opportunity Act, increased to Sh46.94 billion in 2017 from Sh43.10 billion the year before and Sh40.41 billion in 2015.