Kenya-Uganda Trade War Hurting Free Trade in East Africa

The Kenya-Uganda trade wars are not only a threat to economic prosperity in the involved states but are also a threat to free trade in the EAC.

Both Countries have for long engaged in a trade dispute. The latest hostilities between the two East African countries began in December 2019 when Kenya stopped importing Ugandan milk.

In July 2020, Kenya instituted a ban on Ugandan sugar against an earlier agreement to increase Uganda’s sugar exports to Kenya. Kenya’s ban on eggs from Uganda in January 2021 quickly escalated into a diplomatic row. Consequently, Uganda, in December 2021, decided to take action by placing an embargo on some raw and processed agricultural products coming from Kenya.

The back and forth between the East African Community (EAC) member states is ultimately bound to decrease trade volume within the region.

Uganda is Kenya’s leading export destination. In 2020, Uganda took up the most significant fraction of Kenyan exports at 11.2 percent of the total export value. Also, Kenya was the second-largest export market for Uganda in 2019, with the country’s goods destined to Kenya taking up 9.38 percent of the total export value.

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However, analysts predict the never-ending trade wars will ruin this vibrant commercial relationship.

The Kenya-Uganda trade wars hurt consumers in both countries. The economic conflict has led to higher import prices and ultimately higher consumer prices. Experts have warned that consumers will be the main losers. Most households are denied cheap high-demand goods whose local production has not been able to keep up.

More pathetic is that the imposition of quotas and other restrictions leads to unemployment. The Kenya-Uganda trade wars are counterproductive to both countries and pose a fatal risk to free trade in the region. As such, there is an immediate need to mediate the issues and end the wars.

The East African Business Council (EABC), an umbrella body for the region’s business community would need to speed up its arbitration process so that both parties can have a bilateral dialogue to eliminate all outstanding Non-Tariff Barriers (NTBs) between them.

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Equally, economic arbitration via political avenues is a viable method to resolve the wars. The parties involved only need to heed the call because the trade wars violate the Protocol on the Establishment of the East African Community Common Market.

The East African Court of Justice (EACJ) also has a role in ensuring complete application of and compliance with the EAC Treaty. The EACJ’s commitment will enable settling the economic disputes between the member states.

It is best if the EAC adopts a system similar to the World Trade Organisation (WTO) dispute settlement system. This adoption should help settle the Kenya-Uganda trade wars once and for all. A replication of the WTO’s compulsory nature and enforcement mechanism of its dispute settlement system would end the trade wars.

More so, the EAC partner states need to ratify Article 24 (2) of the EAC Customs Union Protocol to pave the way for the operationalisation of the EAC Trade Remedies Committee. The Trade Remedies Committee reflects the WTO panel system and would effectively mediate the trade conflicts.

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The Kenya-Uganda trade wars are not only a threat to economic prosperity in the involved states but are also a threat to free trade in the EAC. There is an urgent need for a truce.

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