Bad deal? Questions on Kenya-Uganda import talks
What you need to know:
The pledges seemed to incense the public, which went on social media to claim the country was mortgaging its economy.
By allowing Uganda to sell more goods to Kenya and giving it free land for dry port, government hopes country will accept the railway pact.
- But the cries of Kenyan traders may have a basis. Since 2015, trade with Uganda has been benefiting Kampala. In 2012, Kenya sold to Uganda goods worth Sh76 billion but those sales dropped to Sh62 billion in 2017, as Uganda sold Sh49 billion.
Kenya agreed to allow in more Ugandan goods in the hope that Kampala will finally reach a favourable decision to extend the Standard Gauge Railway to its territory.
On his three-day State visit, Ugandan President Yoweri Museveni seemed to have scored more points for his government to boost trade sales into Kenya, leaving the public to accuse Kenyan officials of way too much easily.
COMMERCE
Nairobi agreed to raise Ugandan sugar exports quota into Kenya from 36,000 to 90,000 metric tonnes, as long as they prove they manufactured it.
Kenya also lifted the ban on Ugandan poultry and offered it land in Naivasha for an inland dry port.
The pledges seemed to incense the public, which went on social media to claim the country was mortgaging its economy. Still, there was no guarantee from Kampala that it will buy into the railway deal.
On Saturday, senior government officials were defending the deals as “mutually beneficial”. The Principal Secretary at the Foreign Affairs ministry Macharia Kamau stated in a short text message: “The point of all this is to create a more integrated market where we have free flow of goods and services between the two countries without hindrance. And to create better competition for our markets internally and within East Africa.” The chief administrative secretary at the same ministry, Mr Ababu Namwamba, was even more candid; “The talks led by our two presidents cleared a number of gridlocks that have been constraining free flow of commerce across our borders.”
“Overall, the deals should raise the volumes of trade between these two close partners with the domino effect likely to pull the rest of the East African Community along,” he added.
The unsaid target though seemed to be the SGR. At a cost of about Sh400 billion, the line that now runs from Mombasa to Naivasha is not yet viable, despite carrying 3.2 million containers of cargo between Kenya’s biggest cities so far.
State House said it was inviting Uganda to come on board, having done so initially without success.
“Kenya is inviting Uganda to join in the joint development of the SGR to ensure it continues to Kampala,” State House said during the visit.
REGIONAL RAIL
The actual length through Kenya could cost the government more than Sh750 billion, from Mombasa to Malaba. Most of the money is coming from China in form of loans. The matter of financing for the remainder of the line is currently under fresh discussion between Nairobi and Beijing, but Uganda has previously been reluctant because of high debt.
When President Uhuru Kenyatta toured Beijing last year, he proposed that part of the money from China should come as a grant, to alleviate the debt burden on Kenya.
Mr Namwamba did not comment on whether Uganda had agreed on the deal, but generally said infrastructure like the SGR will be the trend everyone would like to be on board. “The trans-border road belts and regional rail corridors are the future for East Africa and indeed the whole African continent. No foresighted leader and country would want to be left behind,” he said.
“The one-stop border posts being opened along the borders of East Africa, from Busia and Malaba to Namanga and Isebania, should be seen in this broader context of an East Africa keen to trade more robustly with and within itself,” he added.
Whether tapping into the SGR could soothe an angry lot of Kenyan farmers and traders, it remains to be seen as the construction of the railway itself had its critics who charged it was an expensive venture. Museveni’s tour means Ugandan farmers can look forward to a bigger share of sales for their sugar, eggs and milk. Though this will be subject to verification that the sugar is indeed produced in Uganda and that the milk and eggs meet the highest sanitary and health standards.
EMPLOYMENT
“Kenya gets crucial concessions on meat, juices and pharmaceutical products whose export to the Ugandan market had suffered heavily from imposition of heavy tariffs like the 12 per cent excise duty that Uganda has committed to waive,” a dispatch from the Ministry of Foreign Affairs said.
“Kenyan meat products have been locked out of the Ugandan market for 17 years since the serious mad cow epidemic ravaged our land. This market is now open. Kenyan livestock farmers, fruit farmers, juice factories and pharmaceutical dealers can look forward to sunny days.”
For Uganda, an offer of land for a dry port means they could run their inland container terminal “to ease movement and storage of goods”.
Kenyan officials argued the inland port will “cement long-term commercial ties with our most important trading partner.”
“It will improve speed and efficiency in the movement of goods to and from Uganda, lowering costs and raising volumes of business. The terminal will generate employment for our young people and increase the cargo haul for the standard gauge railway,” Mr Namwamba told the Sunday Nation.
But the cries of Kenyan traders may have a basis. Since 2015, trade with Uganda has been benefiting Kampala. In 2012, Kenya sold to Uganda goods worth Sh76 billion but those sales dropped to Sh62 billion in 2017, as Uganda sold Sh49 billion.
