Nairobi: Kenyan businesses have started reaping dividends from the removal of restrictions on goods entering Tanzania with exports to East Africa’s second largest economy overtaking those to the United Kingdom and Uganda for the first time in a decade. Data gathered by the Kenya National Bureau of Statistics indicates that exports to Tanzania grew by 65.6 per cent from Sh3.6 billion in October to Sh5.9 billion in November.
Uganda - which has been the top buyer of Kenyan goods since the integration was revived in 1999 - saw its Kenyan imports shrink by 27.2 per cent over the same period to Sh3.5 billion, falling behind the UK’s Sh4.6 billion.
“Tanzania has been accepting Kenyan goods that bear the Kenya Bureau of Standards’ quality mark into its market without subjecting them to further tests since this dispute was resolved last year,” said Vimal Shah, the CEO of Bidco Oil Products.
A number of trade disputes were also recently resolved, removing a number of items that the EAC Secretariat listed as non-tariff barriers to trade with Tanzania. Among them was a decision by the Tanzania Food and Drug Authority to ease testing procedures for food exports into the country after years of lobbying.
This has expanded the market for processed goods from Kenya. Edible oils and detergents dominated the list of Kenya’s exports to Tanzania, earning Sh2 billion each last year according to statistics prepared by the Ministry of Trade.
Maize and wheat flour, human and animal medicines, sugar, confectionary and plastics were also listed as important items for trade.
The Tanzania Revenue Authority (TRA) also suspended its contentious charges on pharmaceutical products from Kenya, widening their market. The agency had been charging sales vans $20 for each entry and $200 on every sales person per entry into Tanzania.
Easing of restrictions is expected to expand the market for animal and human drugs from Kenya which fetched a total of Sh1.3 billion from Tanzania in 2010.
BAT Kenya Ltd said it increased its exports to Tanzania despite higher excise duties charged because most of the tobacco used to make the cigarettes is not grown in Kenya.
“They convinced us last year that this requirement is part of Tanzania’s domestic laws. We still hope they will stop penalising us for sourcing tobacco from Uganda which is also part of EAC,” said BAT’s head of communications Selena Olende.
A case lodged by the Agriculture and Livestock Development ministries contesting the imposition of import quotas, holding and retesting of milk products that already bear quality marks from Kenya was also resolved last year.
“Generally, we have seen a significant drop in old complaints,” said Peter Kiguta, the director-general in charge of customs and trade at EAC secretariat. “If these (KNBS) figures are correctly computed, then they are confirming that the custom union is finally taking root in the region.”
Tanzania’s TISCAN inspection required documents to be transmitted to South Africa for clearance. Today, only traders who fail to produce bills of landing are subjected to this rule. Tanzania also used to force transporters from Kenya to produce road consignment notes even before their goods were packed.
Kenyan processers of tea are also benefitting from releasing of import licences as soon as trade data is filed, unlike previously when the process used to take up to several weeks.
The drop in exports to landlocked Uganda has been attributed to congestion at the port of Mombasa which worsened between November and December last year, forcing the Kenya Ports Authority to impose new levies on uncollected goods.
While Kenya exports building materials, edible oils, detergents and long-life milk to Uganda, most of the agricultural inputs, metal products, petroleum and liquefied petroleum gas — which are also classified as Kenyan goods — are actually re-exports which pass through the Mombasa port.
For instance, the significant drop in exports to Uganda coincided with the biting shortage of fuel and LPG in Kenya, indicating the importance of re-exports in trade with Uganda.
“We were forced to organise a meeting with President Kibaki over inefficiency at the port of Mombasa but I am afraid the technicians summoned to explain the situation lied about the enormity of the problem,” Kassim Omar, the chairman of the Uganda Clearing Industry and Forwarding Association said in Nairobi last week.
He was referring to recent visit to State House by East African Business Council Members. The drop in exports to Uganda came months after President Museveni began to turn his attention to Tanzania as an alternative route for its imports instead of the Northern Corridor, signalling a future drop in re-exports.
