We are stoking an unnecessary trade war with Uganda by spreading myths (Daily Nation (Kenya))

Why are we stoking a trade war with our largest trading partner? The noisy politicking over sugar imports from Uganda has the potential of damaging a system of co-operation which citizens of the two countries have painstakingly developed over years.

Indeed, statistics on trade balances between the two countries only show you a small picture of the level of co-operation.

Today, the ordinary middle-class person in Kampala is most likely to shop at Nakumatt, Uchumi or Tuskys, or deposit his money at the Kampala branch of the Kenya Commercial Bank, Equity Bank, or Commercial Bank of Africa, as well as insure his business with UAP.

Half of the 18 companies listed on the Uganda Securities Exchange are Kenyan.

Yet despite the fact that Kenyans hold high-profile jobs in Kampala’s corporate sector, especially in areas such as investment banking, insurance, marketing and ICT, resentment about domination by Kenyans is very mute, if any.

As for work permits, the regime in Uganda is very liberal. You cannot say the same of our other neighbour where a Kenyan working even on a short consultancy contract will not last for a month without being summoned for an interview.

Indeed, integration between Kenya and Uganda is at a level beyond personal relations between their leaderships.

Nor can this phenomenon be credited to the work of some bureaucrat sitting on an armchair in a carpeted office in Arusha.

It is about the attitudes of people of the two countries. Which begs the question: do we, really, want to squander and sacrifice this intangible asset developed by the citizens of the two countries over a mere 80,000 tonnes of sugar?

Our leaders are too preoccupied with short-term political calculations and risk losing sight of the benefits of co-operation between the two countries.

Mark you, the eight sugar milling plants in that country, at the very best, can only export 80,000 tonnes to Kenya in a year. We import in excess of 350,000 tonnes of sugar every year.

There are several myths being perpetuated by the political class which need to be exploded.

First, that Uganda sugar cannot come into the country without the permission of the Kenya Government.

The truth is that under the Customs Union of the East African Community, sugar from Uganda enjoys full access into Kenya.

Kenya and Uganda are also members of Comesa and Uganda sugar can, therefore, access our markets on Comesa terms. But importers must pay VAT, a Sugar Development Levy, and you need a permit from the Kenya Sugar Directorate.

Still, the point must be made that these are non-tariff barriers which infringe on free trade principles agreed upon under both the EAC and Comesa protocols.

The second myth is the following: That imports from Uganda are the reason the sugar industry in western Kenya is in dire straits.

If you look at the statistics on sugar imports between January and July, you will find that the largest quantities came from Zambia.

As a matter of fact, countries like Malawi. Swaziland, Madagascar and Zambia are bigger players here. The opposition to imports from Uganda is a complete red herring.

The third myth: If you stop sugar imports, the industry in Kenya will return to profitability.

Wrong, because the problem of the sugar industry in Western Kenya is basically a result of State neglect, illustrated by years of chronic under-capitalisation of State-owned sugar firms, mismanagement, low capacity utilisation rates by millers, corrupt outgrower sugar companies, poor crop varieties and delays in paying farmers.

The fourth myth: That unlike Uganda, the sugar industry is inefficient because it is State controlled. Not true because out of 12 mills, only four are state-owned.

West Kenya, Butali, Sukari, Trans Mara, Soin and Kwale are owned by private individuals and Mumias only partly owned by the State.

My parting shot: As long as the ex-factory prices by Ugandan millers remain much cheaper than what the millers in Kenya are charging, Ugandan sugar imports will keep flowing even if you place military tanks on the whole border between the two countries.

Releated