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Analysis & Opinions

Uganda-Kenya Trade Wars: Why It Is More Than Quality Concerns

Uganda has been a victim of trade blockades, many of which border on trade barriers and protectionists tendencies.

The East African Community (EAC) Common Market Protocol that allows  the free movement of goods, people, labour, services and capital from one Partner State to another is under question.

It is being undermined by Kenya through banning goods from other countries particularly Uganda from accessing its market under unclear reasons.

In early March 2021, Kenyan authorities stopped corn imports into the African nation from Uganda and Tanzania, saying tests on the grain from two neighboring nations revealed high levels of mycotoxins.

The results of tests conducted on maize imported from Uganda and Tanzania showed toxin levels that were “consistently beyond safety limits,” according to a statement by the Agriculture and Food Authority. “Mycotoxins, particularly aflatoxins and fumonisins, are known to be carcinogenic,” the statement read in part.

Uganda has been a victim of trade blockades, many of which border on trade barriers and protectionists tendencies.

In a January 14 memo, East Africa’s biggest economy stopped all chicken, meat and egg imports on the pretext that it needed to support its “producers to recover from disruptions in their livestock enterprises occasioned by Covid-19”.

“We have instructions to suspend importation of frozen chicken carcases and cuts and chicken table eggs for human consumption. This  …  is to instruct you to suspend further approval of the said importation by issuance of import veterinary certification until further notice,” Dr Obadiah N Njangi, the Director of Veterinary Services, wrote in a memo, in which he notified all heads of veterinary services, officers in charge and ports of entry to implement the instructions without exception. 

Additionally, Kenya has in recent years blocked   milk products and sugar from Uganda into  its market.

However, analysts say Kenya’s increasing ban of Uganda’s products is not necessarily about quality, but a pure case of protectionism considering the fact that the trade deficit between the two countries is narrowing.

According to Bank of Uganda (BoU), Kenya earned US$788.28m (Sha2.89 Trillion) in exports to Uganda  in 2020 from US$785.17m (Shs2.88 Trillion) in 2019.

In comparison, Uganda earned US$465.49m (Shs1.7 Trillion) in exports to Kenya in 2020, up from US$442.67m (1.62 Trillion) recorded in 2019.From the above figures, it’s clear that whereas Kenya’s exports to Uganda have remained flat, Uganda’s exports to the neighbouring country are increasing.

BoU figures further indicate that Kenya’s exports to Uganda in January 2021 were worth US$56.68m down from US$71.98m recorded in December 2020 while  Uganda’s exports to Kenya stood at US$43.42m in January 2021 compared to US$47.12m earned in December 2020.

In an exclusive interview with Bushiness Focus, Chris Kaijuka, the Chairman of Grain Council of Uganda, noted that the issue of quality is a regional problem and Kenya isn’t an exception.  

“It is true Aflatoxin is a killer but it is a regional problem which requires concerted efforts to solve. The recent ban is an eye opener. The Grain Council of Uganda will work with Government to ensure Uganda’s grains are safe for human consumption,” Kaijuka said.

He revealed that Kenya’s recent ban of Uganda’s maize wasn’t in good faith, describing it as  a blanket ban. He said  it affected all traders equally including those who had quality maize.

 “Kenya is the one that has promoted unprocessed grain; they have been promoting informal trade (Kenyans buying unprocessed grain from Uganda). There are protocols to follow before you come up with a blanket ban. We think it’s more than quality,” Kaijuka said.

He added that Kenya doesn’t have records about the said affected maize.

Kaijuka told this website that 80% of Uganda’s grains is traded informally with no control quality controls.

The over 120 members of Grain Council of Uganda including companies, farmer groups and cooperatives  fall under the 20% that is traded formally.

He said that the Grain Council of Uganda members have warehouses across the country with  capacity to handle 750,000 tonnes. He adds that they have capacity to process 90,000 tonnes per day.

“We have made proposals to Government on how the grain business can be streamlined including setting up Central Processing Facilities across the country where grains from traders can be standardized,” he said, adding: “Grain Council has more capacity to help non-members. If Government can subsidize on the cost, we are ready to help other informal  traders in the immediate to medium term.”

State Minister  for East African Affairs, Julius Maganda recently  said Government has now  resolved to regulate all foreigners with grain stores within Uganda so as to kick illegal ones out.

He noted that  government has learnt that some foreign traders (from mainly Kenya) cross over to Uganda and establish stores deep in villages and process grain for export and still call it business from Uganda .

Setback for Pearl Dairies Ltd (Lato Milk)

It is now a year since Kenya blocked  Pearl Dairies Uganda products including Lato milk from accessing its market citing lack of required standard.

On contrary, the company’s products are certified by Uganda Bureau of Standards (UNBS) and are being consumed by Ugandans without safety concerns.

Uganda has over 30 dairy companies including Brookside Dairy Limited which is a Kenyan company linked to President Uhuru Kenyatta .

There are concerns why Lato milk is not allowed in Kenya yet Brookside milk is allowed to move freely across the two countries.

This particular ban has attracted the attention of Parliament, with MPs wondering why the Ugandan Government has not done enough to ensure that the blockade on Pearl Diaries Ltd’s products into Kenya is lifted.

Manjiya County MP, John Baptist Nambeshe claims that the EAC  is being misused by the head of states .

The Minister of Trade, Industry  and Cooperatives, Amelia Kyambadde says although Uganda has made several engagements with the authorities in Kenya, the matter is still the subject of discussion and negotiation between the two countries.

However, the Speaker of Uganda’s Parliament, Rebecca Kadaga has often expressed her disappointment with Government for continuing to open Uganda’s market to the neighboring countries while Ugandan goods are being blocked.

Pearl Dairies Limited has since been forced to scale down on production and as a result, over 1,500 employees have been laid off.
 Milk exported within East African Community member states had hit 110.7 million litres by September 2019, from just three million litres in 2016. Pearl Diaries exported most of its processed milk to Kenya. 

Data from Bank of Uganda, Uganda Revenue Authority and Uganda Coffee Development Authority indicate that  trade blockades within East Africa cost Uganda $454.7m (Shs1.6 trillion) worth of export revenue in 2019. 

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Taddewo William Senyonyi
https://www.facebook.com/senyonyi.taddewo
William is a seasoned business and finance journalist. He is also an agripreneur and a coffee enthusiast.

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