East African economies are looking to benefit from increased trade with the rest of the world following the extension of the 146-year-old Suez Canal in Egypt. The regional bloc has been receiving growing volumes of cargo — from 3.28 million tonnes in 2004 to 4.36 million tonnes in 2014 —through the canal. Official data from the Suez Canal Authority shows that the highest volumes were in 2006 (5.12 million tonnes) and 2008 (5.91 million tonnes). This cargo originates from countries in Europe, the UK, America, through the Black Sea, the Baltic Sea and the Mediterranean. The volume of cargo from the EAC to these countries through the canal however declined by 617 per cent from 14.83 million tonnes to 2.06 million tonnes in the same period. Products passing through the canal include petroleum and related products such as crude oil, gasoline, gas oil and diesel oil, fuel oils and liquefied petroleum gas (LPG). Other goods are cereals, fertiliser, fabricated metals, chemicals, coal and coke, foodstuffs, machinery and parts, ores and metals, oil seeds and vegetable oils. From January to June, the volume of cargo passing through the canal to East Africa increased 80 per cent to 458,000 tonnes from 254, 000 tonnes. On June 10, Cairo hosted 26 heads of state representing the Common Market for Eastern and Southern Africa (Comesa), the EAC and the Southern African Development Community (Sadc) at the official launch of the Tripartite Free Trade Area (TFTA). The TFTA is expected to increase trade in an...

Kenya is reviewing its law on importation of animal products to enable its traders to gain access to the Ugandan market. Uganda had rejected Kenyan beef and animal products because Kenya did not have restrictions on imports from countries once affected by Mad Cow Disease (BSE). A Bill to review the law is in the third reading stage in the Kenyan parliament. Whereas Ugandan law prohibit importation of beef and animal products from ex-Mad Cow countries, Kenyan laws only bar imports from Europe while the port of Mombasa receives imports from all over the world. “We expect that parliament will expedite the passing into law of the Bill for our traders to start entering the market soon,” said a Kenyan government official. Kenya exports beef mainly to the European Union. Other markets are Egypt, Malaysia, Qatar, Iran, the United Arab Emirates, Uganda, Democratic Republic of Congo, South Africa and Mauritius. At the recent bilateral trade meeting in Kampala, Kenya said it had also stepped up the fight against livestock diseases with the creation of disease-free zones so as to meet the required sanitary standards in the Laikipia-Isiolo complex and at the Coast. It has borrowed the zoning concept from Botswana, one of Africa’s leading beef exporters. Uganda banned Kenyan beef in 1997, claiming it did not meet the required standards. Earlier attempts to resolve the issue through bilateral talks had failed. The EAC Secretariat had earlier indicated that the resolution of the dispute would require political goodwill owing to pressure...

Kenya and Uganda are betting on more oil discoveries in the region to increase earnings from a crude oil pipeline that will connect the oilfields in Uganda through northern Kenya to the international market. The pipeline is expected to connect to export markets via the proposed port at Lamu. Estimated to cost $4.7 billion, the pipeline will have an initial capacity of 300,000 barrels per day, earning the joint pipeline company about $1.66 billion a year. The two countries will share the money depending on the volume of cargo passing through each. The route the pipeline will follow has been contested by Uganda and oil companies, which preferred an option through Nairobi for fear of insecurity in northern Kenya. Northern Kenya is prone to cattle rustling. The Kenyan government favoured the consensus route for its potential to open up the underdeveloped Turkana region, where Tullow Oil has discovered vast quantities of oil and its linkage to the Lamu Port South Sudan Transport (Lapsset) Corridor, which will link up to Juba and Addis Ababa. Studies also favoured the northern route for two key reasons: The route through Nairobi would, at $5.4 billion, have been more expensive because of passing through hilly terrain that requires more pumping. By passing through densely populated areas it would have required more funding for compensation of displaced people and their investments. It would also have been slightly longer, by 44 kilometres. The northern route, which will pass through gentle terrain and involve less disruption of settlements...

The Kenya Revenue Authority has reversed a directive compelling Kenyan traders to declare shipments to the east African market through its Simba system, ending a month of uncertainty. The withdrawal of a directive issued to exporters and clearing agents last month took effect on Friday. “All such goods will now be declared under the Single Customs Territory procedures only”, Mr Julius Musyoki, KRA’s acting Commissioner of Customs and Border Control, said on Friday. The taxman on July 2 ordered traders servicing the EAC markets to declare their exports on the Simba cargo clearance system amid concern over a backlog of tax refunds claims, which have remained a thorny issue for KRA and the Treasury with traders pushing for reimbursement of money owed to them. Delayed payment of tax refunds has forced some businesses to borrow from banks in order to meet their cash flow needs, adding to the high cost of doing business in Kenya. “In order to facilitate VAT refunds pertaining to exports destined to East African Community (EAC) partner states, all exporters or clearing agents will now be required to declare their exports through the Simba system while importers in the country of destination will continue lodging import entries in the ASCYUDA/TACTIS system,” KRA said in a notice to traders and agents on July 2. As at December last year the government owed traders about Sh30 billion in VAT refunds accumulated over the years partly due to lack of a reliable system to capture and audit claims by...

Kenya is set to cede regulation of its sugar industry to a regional agency in the latest bid to end a long running market access war with Uganda. The joint agency, described by the two states as "the long term solution to intermittent sugar wars", will take up the role of licensing and vetting dealers, currently undertaken by national agencies. The two states are yet to agree on the nature of the inter-state agency -- whether to make it a single entity located at border points or a joint committee made up of officials from national agencies. "We will meet in Nairobi in coming days to lay down long term solutions so that this problem does not recur," Foreign Affairs and International Trade secretary Amina Mohamed said in a statement. The sugar wars between the two countries have eluded several bilateral agreements since Kenya slapped an initial ban on Uganda sugar in 2012. "The two countries are considering formation of a joint body to manage the sub-sector in the region," Ms Mohamed said. Under the East African Customs Management Act, sugar produced in the region should be sold in any of the member states without attracting tariffs or administrative restrictions. Under pressure from farmers and millers, Kenya banned sugar from Uganda in 2012 with regulatory agencies accusing dealers from the landlocked neighbour of abusing the free trade treaty to ship in cheap sugar imported and repackaged from other regions. Kenyan millers have frequently blamed their woes on cheap sugar smuggled...

In his article titled “British Airways exit and drying symptom of worsening inflows” in etruth Uganda of August 6, Mr Karoli Ssemogerere makes a number of interesting points about the business environment in Uganda. But I would like to challenge his assertion that the decision of British Airways to suspend its London-Entebbe route reflects a lack of UK business confidence in the market. The recent entry of two prominent UK multinationals, Prudential and Vodafone, testify to the growing interest from British business. UK companies are also at the forefront of a number of other important sectors in Uganda, including oil. The UK government has classed Uganda’s (and East Africa’s) oil sector as one of the top 20 major projects globally as part of the High Value Opportunity (HVO) programme. The UK remains the largest cumulative investor in Uganda. Our companies have an international reputation for providing quality goods and services and offering long term value for money. British companies are leaders in the field of corporate responsibility, with the highest standards of probity and professionalism. The UK government’s export credit agency has broadened its range of products to ensure UK companies remain competitive and respond to increasing development and infrastructure needs in countries such as Uganda . The current annual country cover for Uganda is £100m and a number of major projects are currently under consideration. But we are not resting on our laurels. The British High Commission is working hard with the Ugandan government and business communities in both...

Now there is this small argument between President Kenyatta and opposition Cord leader Raila Odinga about, of all things, Ugandan sugar. Kenyatta says it makes business sense to import Ugandan sugar, because Uganda is reciprocating and will import diary and beef products from Kenya, as per the trade pact he just signed with President Yoweri Museveni in Kampala. That is better than importing sugar from Brazil, which is not buying Kenyan goods in return, and Uganda is, after all, a fellow member of the East African Community. Raila’s concern is that this will result in cheap sugar being dumped into the Kenyan market, and cane farmers will suffer. His position, though, is understandable, because the stronghold of his Cord is in the sugar-growing areas, and he is doing the right thing by them. But as an East Africanist, I am with Kenyatta on this one. First of all, just like not every country needs to make its own cars or aeroplanes, not every country needs to produce its own sugar — even if they could do it more inefficiently than Kenya’s. Thus, airlines in the Middle East and Asia, which don’t make aircraft, are using American and European planes to run more successful airlines than European and US carriers. CAPITALISM But sugar is also a metaphor for some of the surprising differences between Uganda and Kenya. If you came of age in the 1980s, there were only three “capitalist” countries in Africa: South Africa, Malawi, and Kenya. However, South Africa...

At a meeting held at Kampala Serena on Sunday, Ugandan officials and sugar industry players from the private sector complained that Kenya was blocking access to its lucrative sugar market. Foreign Affairs Cabinet Secretary Amina Mohamed, who led the Kenyan delegation to the meeting, blamed the situation on changes in the sector. She said the Kenya Sugar Board had morphed into a new agricultural organisation — the Agriculture, Fisheries and Food Authority. “There was a technical problem in the processing of permits but I would want to assure the Ugandan Government and the private sector that the issue has been dealt with." “We will meet in Nairobi in the coming days to lay down long-term solutions so that this problem does not recur,” she told the audience mainly from the Uganda Manufacturers Association. It was not the first time the lobby group was voicing concern. Ugandans had previously complained that despite the East African Community Common Market Protocol, Kenya is not allowing Ugandan sugar into its territory. Kenya exports about $700 million (Sh70 billion) worth of goods to Uganda, but it buys only Sh18 billion from the same country. Last year, Ugandan traders petitioned their government to impose similar restrictions in the name of balance of trade. The traders charged that Uganda should start doing more business at the Port of Dar es Salaam than Mombasa until Nairobi behaves. UNDER PRESSURE So, when President Uhuru Kenyatta was in Uganda for a three-day State visit early this week, he was under...

After missing the 2010 deadline, the Southern African Development Community (SADC) will now negotiate a new target date for the transformation of the organisation into a Customs Union (CU), during the 2015 Ordinary Summit. A CU is where a group of countries that have established a free trade area agree on common external tariffs and a common external trade policy, in a bid to drive increased trade and economic development in the region. Originally scheduled for 2010, the formation of CU is seen as key to deepening regional integration before the region incrementally moved towards a common market and a monetary union. Briefing the media on standing committee meetings being held in Gaborone ahead of next week’s Summit, SADC Director of Policy, Planning and Resource Mobilisation, Dr Angelo Mondlane said although the original target was not met, significant progress has been made towards regional integration efforts with all but two of the SADC members now part of a Free Trade Area (FTA). “We have not set a new deadline for transforming into a customs union. It is one of the items to be discussed here as we realised that operating without a target is not very helpful,” he said. The Heads of State and Government Summit will take place in Gaborone from August 17-18, 2015. According to Mondlane, there are numerous reasons why the original target was not met, which include overlapping membership with some SADC countries belonging to multiple organisations such as East African Community (EAC) and Comesa. Under...

Uganda will host the first East African Community manufacturing business summit and exhibition in early September. According to the organisers - the EAC secretariat and East African Business Council (EABC) - the summit aims to promote East Africa as an attractive and competitive hub for manufacturing hub. James Mutende, the minister of state for Industry, said the manufacturing business summit is a platform to show how the East African bloc can grow through a diversified manufacturing sector. "The manufacturing summit will be held at Speke Resort hotel, Munyonyo, and the exhibition will be graced by President Yoweri Museveni. We expect the presence of international and regional development partners and captains of industries in the region," Mutende told the press at the Media Centre recently. Jean Baptiste Havugimana, the director of products at the EAC secretariat, said the summit was expected to unveil new possibilities of manufacturing within the region and generate solutions and strategies to address any shortcomings within the sector. "The contributions of industries to the GDP in all the countries in the region is only 10 per cent, according to reports from International Monetary Fund and EAC data, but through such summits and discussions we want to see that the contribution increases to 25 per cent in the near future," Havugimana said. "Our strategic plan at the EAC secretariat is to ensure that the manufacturing sector is on the frontline in driving the economy..." Shem Bageine, Uganda's minister of state for EAC, said the two-day event would have...