East Africa: We Shall Retaliate, Govt Warns EAC States Blocking Uganda's Exports

(file photo).
15 January 2020

Kampala — Government has warned East African member states, saying it will retaliate with similar measures against countries slapping taxes on Ugandan exports.

The warning comes amid a deadlock on some of Uganda's exports to East Africa Community member states key among them sugar and milk.

Tanzania, according to information obtained by Daily Monitor, has to date denied entry for Uganda's sugar while Kenya's Trade Ministry has already proposed a 16 per cent duty on Uganda's milk exports.

Kenya is currently having run-ins with particularly Lato Milk on claims that Ugandan companies are dumping cheap milk on its market.

Speaking in an interview at the weekend, Mr Emmanuel Mutahunga, the Trade ministry commissioner for external trade, told Daily Monitor they had already agreed in the Joint Financial Commission that in the event that a member country blocks Uganda's exports, government will have no alternative but to retaliate.

"We have already agreed in the JFC [Joint Financial Commission] ... to reciprocate ... treat them [member states] the way they treat you," he said, noting Uganda will implement decisions of the Joint Financial Commission if other member states refuse to remove blockades on its goods.

Sugar blockade

Mr Mutahunga was responding to Daily Monitor's inquiry on the progress of negotiations between Uganda and Tanzania in regard to lifting the blockade on Uganda's sugar.

In 2018, Tanzania blocked Uganda's sugar exports from entering its market on claims that the commodity did not originate from Uganda.

It was claimed that Ugandan companies were importing and repacking the sugar, which was then dumped on Tanzania's market.

Early last week Kenya also said it would retaliate if Uganda does not abolish a 13 per cent Excise Duty on the country's pharmaceuticals, beer and spirits exports.

Some of these taxes, experts have said, are against the spirit of the East African Community Protocol

Late last year sugar manufacturers expressed concern over the growing stock piles that had created a huge surplus. The surplus, sugar manufacturers said, had grown as a result of blockades by Tanzania and Kenya and failure to export to other markets such as Rwanda, South Sudan and DR Congo.

At the weekend Mr Jimmy Kabeho, the Uganda Sugar Manufacturers Association chairman, told Daily Monitor sugar stockpiles had increased because exporters are still locked out of regional markets in Tanzania, Kenya, Rwanda and South Sudan.

"You can imagine we are suffering with stocks ... Kakira alone has stocks worth or more than $25m, so are the other companies," he said, noting that the situation has not been helped by the low local consumption capacity.

Mr Kabeho also noted that Tanzania has not responded on a number of commitments including a promise to see how much sugar Uganda would be allowed to export to the country.

"We had agreed that Tanzania comes to us to see how much sugar they would allow Uganda to export by end of November ... this [had] been agreed in a bilateral summit in Dar el Salaam in June. Up to now they have not come back to us," he said, noting that Kenya had told Uganda that they would first verify originality of the sugar before increasing the export quota from 36,000 to 90,000 tonnes.

EAC caught up in various tax issues

EAC member states are caught up in various tax issues with partner states, levying duty and preventing some goods from accessing certain markets.

For instance, Tanzania has blocked Ugandan sugar from accessing its market. The same restrictions are also being considered for Ugandan milk products exported to Kenya.

Kenya's Trade Ministry has already proposed a 16 per cent duty on milk products that enter the country from Uganda to protect dairy farmers who have raised concerns over the influx of cheap Ugandan milk.

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