Tanzania becomes Kenya s largest East Africa market

Posted on : Tuesday , 16th September 2014

Tanzania has edged past Uganda as Kenya’s largest export market in East Africa as a result of the ongoing elimination of non-tariff barriers and increasing local production in Uganda of goods that were previously imported.

Uganda has traditionally been Kenya’s top trading partner in the region, but latest data from the Kenya National Bureau of Statistics (KNBS) ranked the country third, with Tanzania coming second.

Uganda was overtaken by the US in June as the leading export destination for Kenyan goods.

The report showed that the US imported goods from Kenya worth Ksh3.7 billion ($41.8 million) in June, followed by Tanzania at Ksh2.8 billion ($31.6 million) and Uganda at Ksh2.5 billion ($28.3 million).

“The EAC integration means that Tanzania has to apply tariffs to products from the Southern Africa Development Community, while Kenyan goods are basically entering a domestic market,” said Sam Watasa, lead advisor on non-tariff barriers at Uganda’s Ministry of Trade.

Although it is difficult to project future trends based on a month’s data, Kenyan exports to Uganda have declined by almost half since November last year, at Ksh4.5 billion ($51 million), a trend analysts attributed to the growth of the manufacturing sector in Uganda.

Over the same period, Kenya’s exports to Tanzania were between Ksh3.2 billion ($36.2 million) and Ksh2.7 billion ($30.5 million).

“Uganda has drastically reduced its imports from Kenya. Tanzanian imports have remained fairly stable. However, June is not a good month for imports because it is usually the end of the budget year,” East African Business Council trade economist Adrian Njau said.

Uganda imported more from Kenya than Tanzania in June last year.

Kenyan officials attributed the change in trade volumes to increased monitoring of non-tariff barriers after the EAC became a Single Customs Territory. Officials from the bloc now meet quarterly to address obstacles to trade.

“There are some non-tariff barriers that we’ve been looking at in the EAC, and resolving them has led to an increased flow of goods between the two countries,” said the director of international trade at Kenya’s Ministry of Foreign Affairs and International Trade Nelson Ndirangu.

According to Kenya Investment Authority managing director Moses Ikiara, Uganda has over the past two decades attracted substantial foreign direct investment in key sectors like manufacturing and services, reducing its reliance on imports.

“Some of the products that Kenya was selling can now be manufactured in Uganda. The elimination of some forms of non-tariff barriers has also seen the flow of goods from Kenya to Tanzania increase,” Mr Ikiara said, adding that the quality of some Kenyan products is now rivalling that of items Tanzania previously imported from South Africa.

Savanna Cement, which exports a third of its products to the region, said the trend, if maintained, presented Kenyan manufacturers with a bigger and more diversified market.