Overview:
The decline is attributed to the ongoing trade tensions between Nairobi and Kampala, which have led to restrictions on Ugandan goods such as eggs, sugar, milk powder, and grains.
A notable decrease in Uganda’s exports to Kenya has been recorded in the first quarter of 2024, with a 9.09% drop compared to the same period in the previous year. The value of goods imported from Uganda through formal channels decreased to Sh7.48 billion, down from Sh8.23 billion in 2023. This decline has raised concerns about the impact on trade and economic growth between the two East African nations.
The decline is attributed to the ongoing trade tensions between Nairobi and Kampala, which have led to restrictions on Ugandan goods such as eggs, sugar, milk powder, and grains. Kenya’s protective measures aim to safeguard its farmers but have resulted in reduced imports from Uganda. These restrictions have affected various sectors, including dairy and grains, which are significant contributors to Uganda’s economy.
Brookside Limited, a prominent dairy company, has been severely impacted, with 114 export permits denied by the Kenya Dairy Board since March last year. This has forced the company to explore alternative markets, primarily in North and West Africa. Other businesses have also been affected, leading to a decline in Uganda’s exports to Kenya.
The East African Community (EAC) Customs Union Protocol aims to facilitate the free movement of goods, services, capital, and labor within the region. However, Kenya’s actions have deviated from this agreement, leading to trade tensions with Uganda. The protocol’s implementation has been inconsistent, with some member states prioritizing protective measures over regional trade cooperation.
Tanzania’s restrictions on grain exports last year have also affected Uganda’s trade. The new regulations required traders to establish offices in Dar es Salaam and obtain licenses and tax clearance certificates to export maize and other grains. This has further limited Uganda’s export options within the region.
Recently, Kenya’s President William Ruto and Uganda’s President Yoweri Museveni agreed to resolve the trade disputes and ensure unimpeded trade between the two nations. The implementation of this agreement is awaited, and its impact on Ugandan exports to Kenya remains to be seen. A resolution to the trade tensions would benefit both countries, enhancing economic cooperation and regional integration.
The trade dispute has highlighted the need for a coordinated approach to regional trade, emphasizing the importance of adhering to the EAC Customs Union Protocol. A resolution would not only benefit Uganda and Kenya but also strengthen regional economic ties, promoting growth and development in East Africa.