12 August 2017

Tanzania: No Change Expected in Nairobi Trade With Dar

The results of the Kenyan presidential election may not change the business relations between Nairobi and Dar es Salaam, although trade between the two countries continues to fall.

Figures from the Kenya National Bureau of Statistics show that in the first five months of the year, exports from Nairobi to Tanzania dropped by 34 per cent. Exports to Tanzania dropped to $77.6 million from $118.8 million in the same period last year.

Last week, Tanzania opposition leader Edward Lowassa attended a campaign rally in Kenya and expressed support for President Uhuru Kenyatta. Back home, Mr Lowassa has been unable to hold a rally as President John Magufuli's administration has maintained a tight leash on opposition activities.

The endorsement, which is considered personal, may not affect diplomatic relations between the two countries as they are guided by bilateral agreements.

Mmari Chacha, a Dar es Salaam-based international relations consultant at business development firm Innovate, said, "The two governments will have to work together irrespective of the political differences between them. This second term will be interesting more so because of the Lowassa factor. Given that politicians and the economy run hand in hand, we expect the differences to also play out on the economic front, albeit subtly."

Trade disputes

Tanzania is Kenya's largest regional trading partner. A trade dispute in April led to a ban on margarines, tile products, milk, wheat and gas. Two weeks ago the two countries appeared to have lifted the ban, but this was not so.

"When we were told that the two governments had set aside the trade ban, our dairy products members tried to get to the Kenyan market but were told that access was still limited," the Tanzania Private Sector Federation (TPSF) said in Dar es salaam last week at a meeting between them and the Kenya Private Sector Alliance (Kepsa).

Last Sunday, speaking at the Tanga Fresh Milk Company Ltd, President Magufuli said, "Tanzania will not allow importation of processed milk from any country as this will cripple our local milk processors' efforts to produce and export.

"I closed the Arusha-based milk processing factory because it was just a raw milk collecting centre. How can I allow a foreign investor to purchase raw milk and process it in his country and then resell it to us at inflated prices?"

Last week, trade officials from the two countries led by Kenya's Trade permanent secretary Chris Kiptoo and his Tanzanian counterpart Adolf Mkenda held talks at the Namanga Customs border point on the trade dispute. They are expected to have a follow up bilateral meeting after Kenya's elections.

"This standoff has led to a drop in business transactions between the two states since 2015," said Dr Kiptoo.

In an interview with The EastAfrican, TPSF executive director Godfrey Simbeye said that his members are looking for continued and expanded business between Kenya and Tanzania.

"Kenya and Tanzania are the regional economic giants that depend each other for development. No matter who wins the presidential post in Kenya, these two neighbours should co-operate for economic prosperity," Mr Sembeye said. "What matters is the national interests."

The Tanzania Association of Tour Operators CEO Sirili Akko said the organisation remained optimistic that business relations would remain positive.

Tanzania

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