Posted on :Friday , 16th July 2021

Kenyan manufacturers are hopeful the just concluded trade mission to Tanzania will help open up trade between the two countries.

The visit comes amid renewed political ties between the two countries, fostered by the warm relationship between Presidents Uhuru Kenyatta and Samia Suluhu, and their pledge to foster better working ties  between the two countries.

Last week, local manufacturers led by the Kenya Association of Manufacturers (KAM) were on a trade a trade mission to Tanzania, organised in partnership with the Confederation of Tanzania Industries.

The meeting "yielded promise, hope and a positive turning point for the two countries," KAM CEO Phyllis Wakiaga said.

"One thing stood out; trade relations between the two countries can flourish given sustained political goodwill and mutual understanding between businesses," she added.

While Kenya and Tanzania have for years shared strong trade relations, non-tariff barriers, high cost of production and cheap imports from outside the East Africa Community (EAC)  have impacted trade between the two countries.

Kenya's exports to Tanzania declined from $342.9 million (Sh37 billion) in 2016 to $294.9 million (Sh31.8 billion)in 2020.

Tanzania's exports to Kenya grew from $126.2 million (Sh13.6 billion) in 2016 to $258.2 million (Sh27.8 billion) in 2020.

"Looking at the nominal values of our trade statistics, there is plenty of room for improvement in the total volume of trade between the two countries,' Wakiaga said.

Some of Kenya's concerns have been discriminatory treatment of cigarettes manufactured in Kenya, which is charged excise duty that is 80 per cent higher than cigarettes manufactured in Tanzanian.

Tanzania also introduced import charges on animal and animal products intended to protect Tanzania’s domestic industry against other community goods.

These charges have rendered Kenyan exports especially milk and milk products and sausages uncompetitive in the Tanzanian market, local players say.

The Tanzania Bureau of Standards (TBS) also requires registration of food products, including those already certified by competent authorities in other partner states, which is seen as a violation of agreements on mutual recognition of standardisation marks.

Tanzania Revenue Authority (TRA) has also been demanding duties on motor vehicles assembled in Kenya.

Further, Tanzania Coffee Board charges one percent of the invoice value on coffee exported to Tanzania from Kenya.

Kenyans have also been paying $100 for permits to carry out temporary assignments in the neighbouring country while transporters subjected to varied weigh bridge readings.

Tanzania, through the Confederation of Tanzania Industries (CTI) has expressed willingness to address barriers to trade, giving hope for future growth.

"By working together, we shall have a stronger  impact, than as individual countries. Both Kenya and Tanzania, need to eliminate non-trade barriers (NTBs), and conclude the review of the EAC common external tariff (CET)," CTI Chairman, Paul Makanza,said.

Reviewing of the CET is expected to encourage manufacturing whilst protecting local industries from imported finished goods.

Whilst consensus has been achieved on the lower tariff bands of CET, it is yet to be achieved for the upper tariff band.

KAM holds that Kenya should adopt 35 per cent as the fourth tariff band, to support the industrialisation agenda.

The EAC-CET comprises a triple band structure for raw materials and capital goods (0 per cent), intermediate goods (10 per cent) and final goods (25 per cent), as well as a Sensitive Items list with exceptions to the three-band rule for specified commodities attracting high rates of duty (notably, all above 30 per cent).