Kampala. At least 19 trucks carrying powdered and UHT milk have been returned to Uganda or diverted by Kenyan authorities, according to an internal memo by the Uganda Revenue Authority (URA).
The milk truck loads worth more than Sh27 million, URA details show, were directed to return on varying dates or let in and the goods later seized by Kenya.
This, together with the sealing off of the Pearl Dairies depot in Kisumu, western Kenya is expected to spark a trade war with far-reaching implications. Uganda has already demanded that Kenya stops hostilities on its exports or face reciprocal measures.
According to the memo seen by Daily Monitor, Uganda is already targeting a number of goods, key among them juices, assorted household items and roofing materials.
URA sources that requested anonymity said that although Ugandan goods, specifically milk, are cleared by the Kenya Revenue Authority, Kenya Bureau of Standards and Kenya Plant Health Inspectorate Service, they are later seized by Kenya's inland police once in the country.
"Police are removing milk from the market and stopping new supplies. No one is providing an explanation," the source said.
Dicksons Kateshumbwa, the URA commissioner for customs, told Daily Monitor in an interview that whereas he has been able to engage his Kenyan counterpart Kevin Safari, he has been informed "the matter is beyond customs."
Daily Monitor on Monday published a story in which Mr Bijoy Varghese, the Pearl Dairy general manager, which produces Lato Milk, said that Kenyan authorities were not providing sufficient explanation on why Lato milk products were being seized.
"You see the Kenya authorities have continued to do what they were doing [seizures]. Unfortunately, we don't know why this is happening," he said.
In the same measure, he confirmed that their depot in Kisumu had been sealed off and nobody allowed to access the premises.
Yesterday, Emmanuel Mutahunga, the Trade Ministry commissioner for external trade, said that Kenyan authorities had informed Uganda that they were going to send back the milk.
However, he noted that the matter had reached the political level where it will be handled diplomatically.
The war against Lato Milk exports started at the close of last year.
Yesterday, Mr Gideon Badagawa, the Private Sector Foundation Uganda executive director, said that whereas he was not aware of the milk diversions, there was a breakdown in communication between Ugandan and Kenyan authorities.
"We see a breakdown in the communication to the relevant technical authorities and this could be the reason why all this is happening," he said while expressing his disappointment over how Kenya has treated Uganda yet it is one of the country's major trade partners.
Retaliation will be bad for East African Community
Uganda may be tempted to retaliate on a number of Kenyan goods, but experts have expressed concern on the damage such a move would bring to the East African Community. The EAC treaty bars any form of non-tariff barriers by member states in order to ease trade.
"We are seeing an increase in NTBs [non-tariff barriers] among the member states. This is not good for trade and the region," Mr Badagawa says.
The way forward right now, he says, is for member states to go back to Arusha, Tanzania and look at the issue of sovereignty where it was agreed to open markets.
Story by Dorothy Nakaweesi