Treasury mediatesKenya, Uganda trade dispute

By James Anyanzwa

Treasury has moved to quell a simmering diplomatic row between Kenya and Uganda over a cross-border trade.

Finance minister Robinson Njeru Githae has warned the Kenya Revenue Authority (KRA) against making unilateral policy statements without consultation, and called for a meeting with the tax body next week to resolve the matter that is threatening the bilateral ties between the two East African nations.

“Yes, I’m aware of these concerns by Ugandan traders and I have called for a meeting with them next week. I can tell you the president of Uganda is furious,” Githae told reporters in Nairobi yesterday. “I called KRA and told them before they make any major policy decisions they should consult Treasury.”

Cash bond

Ugandan importers have threatened to boycott the port of Mombasa in protest against a cash bond imposed by Kenya on goods transiting to Uganda. And business people and tax officials are questioning the rationale of the move by the KRA.

It is argued that the cash bond – equivalent to the value of the imported merchandise – is too high for the average business people to raise, on top of paying for the goods and clearing import duties.

 Traders also say the measure contravenes international business practice for goods in transit.

“ Uganda is Kenya’s main trading partner so we must be sensitive to their needs and requirements. We don’t need to do anything that destroys that relationship,” said Githae.

At a meeting last week, importers in Uganda resolved to hedge against Mombasa, first as a protest against the cash bonds, but also to start thinking of alternatives in case of unpredictable Government policies.

 “We are opting for Dar-es-Salaam. We have asked our members to route their imports through Dar. It’s a longer route; it’s a more costly alternative; but it’s what we will resort to since government’s diplomacy does not seem to be making headway. This is the best way to send a message of protest against Kenya’s policies. Besides, we have not forgotten what happened five years ago,” Kampala City Traders Association spokesman Issa Sekitto, was quoted saying referring to the losses suffered by Ugandan importers during the post- election violence in Kenya in 2007-08.

It is estimated that it will cost importers approximately $1,000 ( Sh84,000) more to transport a 40-foot container from Dar to Kampala, than the $3,800 (Sh319,200) they are paying from Mombasa to Kampala by road. Last year, KRA introduced the cash bonds to protect the country from dumping of sugar imports.

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