Dar trade spat starves Kenya of close to Sh3b export cash

Tanzania's President John Magufuli (left) with President Uhuru Kenyatta at State House (Photo: Courtesy) 

The trade row between Kenya and Tanzania cost the former Sh2.6 billion in the first seven months of this year, data shows.

The latest figures from the Kenya National Bureau of Statistics show that Kenya’s exports to Tanzania dropped by 17.8 per cent between January and July to Sh11.9 billion, from Sh14.5 billion in the same period last year.

And with the value of exports to Dar es Salaam averaging Sh1.7 billion a month, total exports at the end of the year are likely to hover around Sh20.4 billion, a far cry from the Sh34 billion that Kenya raked in from its exports to the neighbouring country.

Besides the trade row, which saw relations between the two countries hit rock bottom when Nairobi banned the importation of LPG and wheat from Tanzania a few months ago, the heightened political activity in Kenya for the better part of the year has also contributed to the plunge in exports.

Experts believe that things can only get worse, aggravated by the toxic political climate following the annulment of the August 8 presidential results by the Supreme Court.

A number of traders from Uganda, Rwanda, and Burundi have given Kenya a wide berth in transporting their goods, fearing the possibility of ethnic skirmishes similar to the ones that erupted after the disputed presidential election in 2007.

The Petroleum Institute of East Africa (PIEA) recently released a report showing that diesel consumption has gone down due to, among other factors, traders from the neighbouring landlocked countries of Uganda and Rwanda ditching Kenya for Tanzania.

Kenya’s exports to Tanzania include packaged medication, soap, cleaning products, plastic lids, refined petroleum, confectionery sugar, electric batteries, salt, and margarine.

Fast-moving goods

Part of the reason for reduced exports to Tanzania, experts say, is the fact that the country has been weaning itself off Kenyan products, particularly first-moving consumer goods that President John Magufuli believes his country can easily produce, said Scolastica Odhiambo, an economics lecturer at Maseno University.

The goods that the country has scaled down on include milk, margarine, steel, and iron sheets. “He (Magufuli) is trying to help his country industrialise and as such, they are importing only that which they cannot produce,” said Dr Odhiambo.  

A plunge in the value of exports to Tanzania contributed to a 3.4 per cent drop in exports to the entire region, with total exports to the East African Community countries of Rwanda, Tanzania, and Uganda declining from Sh52.2 billion in the same period last year to Sh50.4 billion this year.

Biggest source

The survey, titled Lead Economic Indicators: August 2017 Issue, did not indicate Kenya’s exports to Burundi, another EAC member state.

Pakistan, the chief consumer of Kenya’s tea, stretched its lead as the country’s main export destination.

The value of exports to the Asian country grew by 72 per cent from Sh21.3 billion in the first seven months of 2016 to Sh36.7 billion in the same period this year. This even as the value of exports to Uganda, for long Kenya’s leading export destination, grew marginally from Sh29.6 billion in the same period last year to Sh30.2 in the first seven months of this year.

China remained Kenya’s biggest source of imports in the period under review , with the country importing goods worth Sh251 billion from Beijing. This was an increase of 40 per cent from the same period last when Kenya’s import from the world’s second largest economy was valued at Sh179.6 billion.