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Trade spat between Kenya & Uganda flares up again
Once again, the Kenya, Uganda trade relations are on the verge of straining as Kampala accused Nairobi of stopping its milk from accessing the country. Kenyan farmers last year raised concerns over the influx of cheap Ugandan milk in the country which saw the price of the commodity drop. Analyst Charles Bwogi joins CNBC Africa for more.
Mon, 15 Feb 2021 15:34:17 GMT
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AI Generated Summary
- Accusations of unfair trade practices between Kenya and Uganda have heightened tensions, with Kampala alleging a blockade on its milk exports to Kenya.
- Efforts to resolve the impasse diplomatically have faltered, prompting Uganda to consider legal action through the regional court.
- Both countries stand to lose significant trade revenues due to the ongoing dispute, emphasizing the economic consequences of the trade tensions.
Trade tensions between Kenya and Uganda have once again reached a boiling point, with Kampala accusing Nairobi of blocking the entry of Ugandan milk into the country. The strained relations stem from concerns raised by Kenyan farmers last year over the influx of low-cost Ugandan milk, which led to a drop in prices. Analyst Charles Bwogi sheds light on the escalating tensions between the two East African nations, pointing to a history of disputes dating back to 2018.
The accusations levied by Kenya, which are denied by major dairy products producers in Uganda, have fueled the current standoff. Members of parliament in Uganda are calling for sanctions against Kenyan producers, citing unfair trade practices due to the ban on Kenyan dairy products. The core issue revolves around the competitive pricing of dairy products from Uganda compared to Kenya, with Ugandan producers attributing their lower costs to different livestock rearing practices. Whereas Kenyan farmers often employ zero-grazing systems, Ugandan animals are typically reared in a free-range setup.
In response to the trade blockade, Uganda's Minister for South African Affairs, Julius Maghanda, has not ruled out taking Kenya to the regional court over the matter. Efforts to resolve the impasse through diplomatic channels have stalled, prompting considerations of legal action as the next course of action.
The economic stakes are high for both countries, considering their significant trade volumes and revenues. In a recent financial year, Uganda recorded a surplus of $122 million in trade with Kenya, marking a historic surplus for the nation. With Kenya pursuing free trade agreements with the UK and the US, concerns have arisen about the impact on its regional relations within the East African Community (EAC). However, regional trade agreements are stipulated to take precedence over external partnerships, ensuring continuity in intra-regional trade dynamics.
While the trade tensions have persisted over the years, the resolution lies in political will from both sides. Despite the option for Uganda to escalate the matter to the East African Court, past rulings from the court have shown limited efficacy in enforcing decisions on member states. Thus, the onus falls on the chief executives of both nations to prioritize resolving the impasse for the greater good of the East African common market. Without a concerted effort and commitment from political leaders, a sustainable solution to the Kenya-Uganda trade dispute remains elusive.
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