Why smuggling of cement from Kenya into Uganda has persisted

The Uganda Revenue Authority (URA) law enforcement is recording increasing cases of smuggling of cement from Kenya into Uganda.

Between October and December 2023, URA enforcement teams have intercepted 3,286 bags of smuggled cement, which is equivalent to 164.3 metric tonnes.

An investigation conducted by Kikubolane discovered a lot of cement is being smuggled into the country through the porous border points in Lwakhakha, Busia and Malaba.

This illicit trade involves both large and small scale traders who use smaller vehicles to carry cement through uncontrolled border points and the most common brand smuggled is Simba Cement Semu 4.

Cement manufactured within the East African region and imported into Uganda attracts 0% import levy. However, they must declare the goods and pay VAT of 18%, Withholding tax of 6% and infrastructure levy of 1.5%.

Cement pays excise duty of UGX 500 per 50kgs by applying digital tax stamps. The application of the digital tax stamps, which rolled out in 2019, eases declaration and payment of excise duty to URA by the importers and manufacturers of the 13 items gazette to apply tax stamps.

This means the government of Uganda is losing revenue since URA is supposed to collect Shs2,000 per 50kg bag of cement that gets into the country.

So, why do smugglers continue to smuggle cement from Kenya yet Uganda has its own cement factories?

According to some traders we talked to, a bag of cement in Kenya costs about Ksh 800 per bag (about Shs19,200) yet a bag of cement in Uganda costs about Shs33,000. This makes Kenyan cement more affordable when sold locally.

Martin Okolong, a trader in Busia town, says cement from Kenya costs Shs20,000 while that in Uganda costs Shs30,000.

According to the Chief Executive officer of  Tororo Cement, Mr Morgan Gagran ,some smugglers steal Tororo cement packaging bags in which they repackage  their smuggled cement. 

“We currently have enough quality cement  on the Uganda market unlike the smuggled one which may be of poor quality,” he said.

Martin Wandera, a resident of Mugungu B village says that smugglers have opened up many porous routes that link them to Kenya and Uganda.

Geoffrey Mbulu Kawo, the LCI chairman Mugungu B village in Western Division says that security officers deployed at the porous routes are abetting the smuggling through extorting money ranging between Kshs.500 to Kshs.1000. 

The URA spokesperson, Mr Ibrahim Bbosa said URA is taking action to prevent the smuggling of cement from neigbouring Kenya.

Mr Bbosa  said unscrupulous traders   smuggle  cement from Kenya using unmonitored routes, primarily using bicycles and motorcycles.

 “These smuggled items are consolidated and then transported by trucks to various destinations within Uganda,” he said, adding that price difference between Ugandan and Kenyan cement is identified as the main driver of this illicit trade.

 He added that they have also enhanced information sharing and coordination with government agencies at border points, including security and immigration departments.

“We will prosecute repeat offenders and individuals involved in smuggling activities,” he said, adding that they are committed to protecting the local cement industry from unfair competition brought about by smuggling activities.