How Tanzania trade war cost Kenyan firms Sh7.5 billion
SEE ALSO :US auto shares rise as China’s drop“We share one of the largest borders in East Africa and our economies are fairly stronger than the other countries in the region, so I don’t see why there is bad blood,” he says. So bad is the suspicion and rivalry between the two states that Tanzania continued blocking Kenyan goods into her territory for over a month even after a deal lifting trade restrictions was signed on July 24. Things have been further complicated by suspicions by the Kenyan government that the National Super Alliance political grouping had a parallel tallying centre in Tanzania during the just concluded General Election. Dar es Salaam has disputed the allegations. Among the complaints that Tanzania has raised against Kenya is the lengthy period it takes for inspection and approval of entries for Tanzania Breweries Ltd (TBL) consignments at the border. Invoked rules In addition, it says the Kenya National Bureau of Statistics (KNBS) conducts double checks on products approved by the Tanzania Bureau of Standards and Tanzania Food and Drugs Authority, which it claims is discriminatory. Tanzania also claims Kenya has invoked the EAC rules of origin and imposes duties on TBL products by insisting Redds and Castle Lite beer are manufactured in South Africa while they are manufactured in Tanzania. Kenya, on the other hand, accuses Tanzania of subjecting its goods to the highest number of non-tariff barriers in the region. For example it says that to register a product in Tanzania, Kenyan companies are forced to pay $2,000 (Sh200,000) while the rest of the countries charge $1,000 (Sh100,000). Kenya also says its exports to Tanzania are subjected to verification three times — at the manufacturer’s premises and at the border which consumes time and is costly. The Kenya Association of Manufacturers details the challenges in a document on the ongoing trade barriers between Nairobi and Dar esalaam. “There are numerous institutions involved in imposing levies and carrying out inspections on goods. Besides, some of the levies were recently raised by 100 per cent. Discriminatory levies and permits which apply to imports from Kenya and not applicable to locally-produced dairy products are thus making our products uncompetitive,” says KAM. “It has been observed that EAC intra-regional trade is declining since 2015. This could possibly be attributed to the increasing restrictions imposed by partner states on country-specific stays of application and duty remission,” it says. Trade between Kenya and Tanzania constitutes over 45 per cent of the entire trade within the East African Community. Combined, the gross domestic products of the two countries amount to 76 per cent of the region’s economy. As at the end of last year, Kenya’s economy was worth an estimated $70 billion, Tanzania $47 billion, Uganda $25 billion, Rwanda $8 billion and Burundi $3 billion. Economic lead Supported by good infrastructure, a stronger manufacturing sector and strategic geographical position, Kenya still maintains a strong economic lead over her neighbours. Some quarters have, however, projected that Tanzania’s economy - which has been growing by seven per cent annually partly due to rapid industrialisation - would overtake Kenya by 2022. Patrick Kamau, who teaches diplomacy and peace studies at the United Stated International University, says this thought alone has made Tanzania test whether it can upstage Kenya’s influence in the region. “In any geographical region, countries with the most wealth and military might hold hegemonic power over their peers and it is natural that Tanzania is flexing its muscles and Kenya is reacting as demands the principle of reciprocity in diplomacy,” he observes. “But if anyone is doubting Tanzania’s increasing influence they should recall that Uganda and Rwanda have opted to pass an oil pipeline and standard gauge railway in the south,” says Mr Kamau. “At the same time, Tanzania is weaning itself off Kenyan goods. Since Kenya exports more to Tanzania than what it imports, it is the biggest loser in the standoff.” Kenya’s major exports to Tanzania include palm oil, soap, flat rolled iron, sugar confectionary, and household products. In return she imports paper and paperboard, maize, electricity transformers and poles, textiles, rice, animal products, pipes, wheat, maize, onions and fruits. But in the last five years, Kenya’s exports to her neighbour have dropped 26 per cent from Sh46 billion in 2012 to Sh34 billion last year, according to data from KNBS. “Total export earnings from the EAC registered four per cent decline to Sh121.7 billion, to account for 51.9 per cent of total exports to Africa, during the review period,” said KNBS in the Economic Survey 2017. During the period, imports from Tanzania dropped from Sh14 billion in 2012 to Sh11 billion in 2013, then rose to Sh18 billion the next year, dropped to Sh16 billion in 2016 before a sharp drop to Sh12 billion last year.