Kenyan traders shun imports from EAC bloc
Business Daily | September 30 2010
Kenyan traders shun imports from EAC bloc
By George Omondi
Kenyan traders continue to buy most of their products from outside the East Africa region despite the free trade agreement signed with neighbouring countries, new trade figures show.
Customs data gathered by the Kenya Revenue Authority (KRA) indicates that Asian countries have joined traditional European Western states as key trade allies, nine months since the region became a fully-fledged common market.
The moves locks goods from the four EAC partners — Rwanda, Burundi, Uganda and Tanzania — out of the free trade area’s biggest economy, limiting gains from the integration.
“Traders either find it beneficial to retain long established trade networks or are simply attracted outside the region by quality, prices or by inputs that are not locally available,” Evarist Mugisa, a Uganda-based trade economist said.
Kenya’s major sources for imports are the United Arab Emirates, China, India and South Africa in that order.
Others are Japan, Germany, the UK and US. Failure by the region’s free trade regime to stimulate intra-regional trade means revenue agencies — which had placed their bet on increased trade volumes to compensate for removed tariffs — will not easily meet their collection targets.
In January, the region removed tariffs on locally manufactured goods traded in the region in the hope of raising trade volumes among the five partner states.
In July, the countries launched a common market — a stage of integration that seeks to remove charges and restrictions on movement of labour, persons, capital and other factors of production.
“Most of these milestones that shine on paper are not experienced on the ground as traders still encounter many barriers in trying to sell their goods across the national borders,” said Chris Onyango, a regional integration expert at the Kenya Institute of Public Policy Research and Analysis.
Businessmen have defended Kenyan firms’ preference for goods from outside the region saying they are constrained by limited variety in the regional market.
The intra-regional trade is dominated by commodities including grain, coffee, tea and horticulture which are produced by almost all the member states.
Wide range
“East African states still produce homogeneous goods that are easier to export to other countries than to the rest of East Africa,” Godwin Muhwezi, the spokesman for the Arusha-based East African Business Council (EABC) told Business Daily on Wednesday.
Kenya has, however, made significant inroads into the manufacturing sector, producing a wide range of goods that readily find market in regional markets.
Latest economic indicators prepared by the Kenya Bureau of Statistics indicate that Uganda, the UK and Tanzania remain Kenya’s top export destinations.
In July, exports to Uganda hit an all time monthly high of Sh4 billion compared to Sh3.4billion realised in June.
At the same time, exports to Tanzania hit a 14-month high of Sh2.9 billion compared to Sh2.7 billion in June.
Exports to Rwanda however dropped in July to Sh846 million, down from Sh933 million in June.
Peter Kiguta, head of trade and customs directorate at the EAC secretariat, blamed the low intra-regional trade on poor information flow to the grass roots level.
The EAC, he said, had designed a simplified certificate of origin for use at border entry points with a view to facilitating cross border trade, but some traders shun borders for fear of signing it.
