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Dar and Kampala in new push to end Kenya’s regional dominance

By Dominic Omondi | September 10th 2019

In the last two decades, Uganda’s economy has been in a taxi mode. But finally, it has flapped its wings and is headed for the skies.

There is no better symbolism of this take-off than the recent maiden flight by Uganda Airlines to a number of cities in the region. Uganda Airlines joins Kenya Airways, Ethiopian Airline, Air Tanzania and Rwandair in the crowded Eastern Africa skies.

Never mind that it will not be any better than the troubled Kenya Airways. After years of crawling, Kampala believes it has earned the right to be in the skies with Kenya, Ethiopia, and Tanzania.

Uganda is not flying for the sake of it. There are economic developments that have given Kampala the flying power, the latest of which has been the discovery of oil deposits in Western parts of Uganda.

Yet, some Ugandans, including an editor in a leading newspaper in the country, does not believe Kampala has grown wings strong enough to take to the skies. “Truth is that Uganda Airlines is for political reasons and national pride. With or without it, life goes on,” said the editor, who did not want his name revealed fearing recriminations.

It is also out of pride that Tanzania’s national carrier- Air Tanzania has in recent times been aggressively snapping up more routes as the battle to conquer the East African skies hots up. Ethiopian Airline, the profitable airline, in the region, has continued to brow-beat Kenya Airways.

Rwandair has almost found its balance and hopes to fly out of the headwinds soon.  These countries, are not taking to the skies for the sake of it, they believe that they are done with crawling; there are goods to export, and passengers jetting in and out of the country.   

Slowly, but surely, some clichés such as Nairobi is East Africa’s New York or Kenya being an oasis in the conflict-ridden region, are being demolished. After more than 30 years of reconstruction, Kampala believes it has earned the right to believe that it can fly; that it has every reason to be up there with Kenya, Ethiopia, and Tanzania.

Uganda has been shaking off the effects of the decades of civil war that left the economy in ruins. However, President Yoweri Museveni, albeit with an iron fist, has guided the East African country through a period of calm and tentative stability.

The International Monetary Fund notes that from 1990 to 2010, Uganda achieved high growth in per capita income, which allowed it to drastically reduce poverty.

Before the oil-craze, Uganda was already an agricultural powerhouse. The country has been able to produce enough food and exported the surplus to Kenya, though in the case of maize which is not their favourite dish, some Uganda farmers have produced just for the Kenyan market.

Interestingly, non-food imports from Uganda have also been going up. As of June 2018, the value of imports from Uganda stood at Sh30.2 billion compared with exports to Uganda, which were valued at Sh26 billion, with the landlocked country enjoying a trade surplus against Kenya for the first time in a long while.

Uganda’s industrial base has been growing with the country weaning itself off Kenya’s manufacturing products. While Kenya’s exports of manufactured products into Uganda - mainly steel, plastics, and confectionaries - have gone down. Food products from Uganda into Kenya have been going up.

Few Kenyans don’t mind that Lato, a milk brand from Uganda, is foreign or Kakira sugar among others. It is the same with Tanzania whose alcoholic drink, Konyagi has become an instant hit among poor revellers in Kenya. Same applies to onions and oranges.

The decision by the Dar regime to ditch the late President Julius Nyerere’s socialist experiment, Ujamaa, has seen it claw back some lost opportunities. As a result, a resurgent Tanzania has been breathing noisily behind Kenya, with analysts noting that done well, it is just a matter of time before Dar-es-Salaam deposes Nairobi from the second place, summing up Kenya’s economic Coup d’état that began with Ethiopia upstaging Kenya as the region’s largest economy.

According to the World Bank, Tanzania which has “maintained relatively stable, high growth” of between six and seven per cent over the last decade” seems to have cast its eyes on toppling Kenya as East Africa’s kingpin.

Ethiopia, whose airline is arguably the most profitable on the continent, has been doing even better.

The size of Ethiopia’s economy overtook Kenya’s with its gross domestic product (GDP)- or the total value of goods and services produced annually- hitting Sh7.4 trillion in 2016 compared to Kenya’s Sh7 trillion in the same year. Blessed with a huge population, Ethiopia, whose GDP per capita remains lower than even that of unrecognised Somaliland, has been laying the ground for an industrial expansion that Addis Ababa believes will result into millions of its people being lifted out of poverty.

The World Bank notes that since 2000, when Ethiopia had one of the highest poverty rates in the world, the impressive GDP growth averaging 10.9 per cent has seen the country’s share of population living in poverty by a more than a third.

“Agricultural growth drove reductions in poverty, bolstered by pro-poor spending on basic services and effective rural safety nets,” said the World Bank in an assessment of Ethiopia’s poverty. As a result, an estimated four Ethiopians escape poverty every minute. Worse even is that a business-friendly environment has seen factories shift base from Kenya to Ethiopia, denting one of President Uhuru Kenyatta’sbid to revamp the manufacturing and creating jobs.

Cheap power and labour in Ethiopia have been the main incentives. Of course, as the Ugandan editor noted, politics and national pride have underpinned some of these growths.

In Ethiopia and Rwanda, for example, some critics have even questioned the authenticity of the growth figures.

It is not clear, for example, if Uganda Airlines will be around for long given the massive cost outlays involved in running an airline.

Moreover, the growth story has started taking a different turn. “Since then, growth rates have slowed compared to peer countries, which is likely to have contributed to a stalling of poverty reduction,” noted IMF in a report.

Kenyan officials have decried the unfairness in Tanzania’s and Ethiopia’s growth. While Tanzania has been free to export its products in Kenya, it has frustrated entry of Kenyan products and people into its borders.

Ethiopia has also refused to open up a number of its sectors to competition, including banking and telecommunications.   

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