David Malingha Doya
19 May 2008
Nairobi — The business community in Uganda is accusing the Kenyan and Tanzanian governments of inconsistency in implementing regional trade pacts at their expense, the latest being the prohibition on plastics that was agreed on by the three countries to protect the environment.
During last year's budget reading, the three countries announced a ban on polythene bags and plastic containers of 30 microns and below, and imposed a prohibitive tax of 120 per cent on those above 30 microns.
However, whereas the Ugandan government has ensured strict adherence to the pact since last July to the point that it is planning to ban bags over 30 microns as well and establish an environment police the Nairobi City Council announced this month that it would only begin enforcing the ban in June.
Nairobi also conceded that it had not implemented the ban earlier because of several institutional and logistical constraints.
This is not the first time Uganda's business community is crying foul- over regional trade policies not being uniformly implemented in each state. Earlier incidents involved fisheries in 2000, and trade in 2005 soon after the establishment of the East African Customs Union.
The Uganda business community - the Uganda Manufacturers Association (UMA), the Kampala City Traders Association and the Private Sector Foundation of Uganda - have complained of lack of uniformity on regional initiatives, with Uganda emerging as the biggest loser. Some players in the affected sectors have reported losses as a result. They further say the government has "insensitively" opened itself to international co-operation.
Keith Muhakanizi, deputy Permanent Secretary in the Ministry of Finance, Planning and Economic Development, said, "What we can do is talk to our counterparts to ensure that what was agreed on is what is being done. But I agree with the manufacturers on uniform implementation of the ban and tax because we met as governments and agreed on this."
UMA's new executive director Gideon Badagawa, said that when the ban was announced, manufacturers of plastics reorganised their production processes to conform to the regulations and postponed expansion plans in order to fund adaptation measures such as installing recycling plants, which together shaunk production to 20 per cent.
Now UMA is claiming that a significant portion of the market shortfall of 80 per cent is being filled by polythene bags of below 30 microns smuggled from Kenya, whose government allowed manufacturers to produce the banned product as long as it is for export only.
Polythene bags of below 30 microns from Kenya passing through Ugandan territory while in transit to other markets, particularly Congo, end up being dumped in the country, claims UMA.
The Uganda Revenue Authority said, "We are not in position to deny or confirm this claim, but polythene bags in general are highly prone to smuggling. The importer of polythene bags has to present URA with a certificate of analysis from the Uganda National Bureau of Standards before clearance is allowed through Customs. URA's mandate therefore stops at ensuring that the polythene bags below 30 microns do not enter the country."
In the 1990s, Ugandan fisheries accused their Kenyan and Tanzanian counterparts of using fishing gear that promoted over-fishing, contrary to an agreed-on policy.
More recently, the East African Customs Union introduced common external tariffs on products such as sugar and rice, but implementation has been inconsistent, with Uganda emerging as the biggest loser.
The Kampala City Traders Association reported that whereas the external tariff on rice was agreed at 75 per cent, Kenya backtracked and started charging 30 per cent, while Zanzibar charged 25 per cent saying it was a staple food.
Import duty for sugar was agreed at 100 per cent, but Tanzania charged 10 per cent for imports from its partner states in the Southern Africa Development Community, while Kenya charged the same for members of the Common Market for Eastern and Southern Africa.
"The Uganda government in either case observed the set tariffs, leaving us at a disadvantage," said Issa Sekito, spokesperson for the Kampala City Traders Association.
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