Trade spat cuts Kenya exports to Tanzania by 33pc

SUMMARY

• The EAC partner states have each banned certain commodities from each other’s market
• Value of goods fell to Sh8.2b in five months to May
• Among the products that have been banned from the Tanzanian market are milk and milk products and cigarettes

NAIROBI, KENYA: The quantity of goods that Kenya sells to Tanzania has sharply reduced this year, indicating that a spat between the two countries is affecting cross-border business.

The latest government data shows that Kenya's exports to its neighbour reduced by a third in the first five months of this year, a trend that is likely to be sustained throughout 2017 if efforts to resolve diplomatic and trade rows are not successful.

Kenya National Bureau of Statistics (KNBS) data on the economy show that the value of the exports dipped by 33 per cent to Sh8.2 billion between January and May, compared to Sh12.5 billion last year.

The two countries have historically held different positions on numerous issues, which has affected trade as well as movement of people across the border. This has in the recent past escalated, with the East African Community partners each banning the other's imports.

The ministers of foreign affairs from the two countries last month agreed to lift the trade restrictions the countries had imposed on each other. However, the agreement was short-lived, with Kenyan manufacturers reporting that they have yet to gain access to the Tanzanian market and Kenyan universities being ordered to shut down their colleges in Tanzania.

Among the products that have been banned from the Tanzanian market are milk and milk products and cigarettes.

Tanzania is one of the largest export markets for Kenya and is the second largest in Africa after Uganda.

According to the Kenya Economic Survey 2017, exports to Tanzania stood at Sh34 billion last year.

According to the KNBS data, Uganda remained the largest export market despite the value of exports to the country growing marginally to Sh21.9 billion over the five months to May this year, compared to Sh21.4 billion in 2016.

Exports to Pakistan nearly doubled this year. The Asian country has traditionally been a huge market for Kenyan tea and recent reports indicate that the commodity could be driving the growth, with the Tea Directorate noting that Pakistan accounted for 32 per cent of tea exports in the first quarter of this year.

According to KNBS, exports to Pakistan grew 91 per cent over the first five months of this year to be valued at Sh24.8 billion, compared to Sh12.9 billion in 2016.

The Economic Survey notes that in 2016, Africa was the leading destination of Kenya’s exports, accounting for 40.6 per cent, with the East African Community accounting for 21.1 per cent of total exports.

Europe and Asia accounted for 24.5 per cent and 24.3 per cent respectively, with the European Union and the Far East accounting for 21 per cent and 15.6 per cent respectively.