Goods purchased by Ugandan traders fell by nearly Ksh1 billion ($1million) in January compared to a year earlier, pushing the country down to third position in the list of top buyers of Kenyan products.
Exports to Uganda fell by 21.8 per cent to Ksh3.52 billion ($35 million) largely on import substitution, data collated by the Kenya National Bureau of Statistics indicate.
Uganda, which was last year dethroned by Pakistan as a top buyer of Kenyan goods, was in January overtaken by the Netherlands whose order book is largely made of cut flowers.
Order book from the Netherlands rose 10.38 per cent to Ksh4.19 billion ($40 million) in the month, while those to Pakistan — predominantly black tea — were flat at Ksh7.31 billion ($70 million), a 0.02 per cent drop year-on-year.
Orders from Uganda and Tanzania — traditionally Kenya’s top trading partners — have been under threat this decade, despite duty-free access because of the 2010 East African Community’s (EAC) common market protocol.
Market players have largely attributed the dipping exports to the six-nation EAC to a fledgling industry in partner countries.
“When we started the EAC, they didn’t have a lot of industries. (But) their industries have been growing. What, for example, Uganda used to import from here, they are now manufacturing,” said Kenya Association of Manufacturers chairperson Flora Mutahi in a past interview.
“They are also incentivising some of our manufacturers to go and set up shops there.”
Manufacturers have long blamed multiple fees and levies, relatively high power charges and inefficiencies at factories for piling up the cost of production, making locally made goods more expensive.
Industry secretary Adan Mohamed said talks with his counterpart at the Treasury to remove Import Declaration Fee (IDF) and Railway Development Levy (RDL) on industrial inputs, were ongoing ahead of Finance Bill 2018 in June.
“A plan that we are working on with our colleagues at the Treasury is actually to charge zero IDF, zero RDL on raw materials initially to start with, and then we load that revenue shortfall on raw materials into finished goods (imports),” he said on February 7.
Last year, exports to Uganda fell to Ksh49.98 billion ($486 million) from Ksh51 billion ($505 million) in 2016 and Ksh60.05 billion ($595) in 2015, while Tanzania’s orders dropped to Ksh22.72 billion ($218) from Ksh25.78 billion ($248) a year earlier and Ksh25.41 billion ($252) in 2015.
Consignments to the US, where Kenya exports textiles and apparels under the preferential African Growth and Opportunity Act, increased to Ksh46.94 billion ($456) in 2017 from Ksh43.10 billion ($426) the year before and Ksh40.41 ($397) billion in 2015.