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Politics interfering with trade in East African Community

Frank Yiga
September 12, 2018

The deal to improve trade within the six-member East African bloc is being thwarted by bilateral political disputes, traders and analysts say.

Uganda Kampala
Image: DW/F. Yiga

Aisha Inshuti holds dual Rwandan-Ugandan citizenship. Having completed university, the 24-year-old ventured into a cross-border business of selling women's hair products. She buys them in Uganda and sells them in Rwanda.

"Crossing the border is sometimes difficult especially with politics these days," she tells DW. "Many Rwandans have dual citizenship. You can have both Rwandan and Ugandan nationality, but these days we hear there is a problem with the Ugandan and Rwandan government," she said. Nowadays, she claims, Ugandan immigration officials even go to the length of confiscating the Ugandan identity cards of people with dual citizenship. "It will take you ages – if not forever – to get it back, so we have resorted to only using the Rwandan national ID," Inshuti says.

At a bus terminal in Uganda's capital Kampala, Joki Wanjeri, a 27-year-old Kenyan trader, waits for her bus back home to Nairobi. She deals in women's footwear and shares Inshuti's sentiments. Ugandan officials create obstacles that impede free trade between the two countries, Wanjeri says. "Once you reach the border on the Ugandan side they want money [bribes], otherwise you cannot cross," she laments. "It's easy for the Ugandans to cross from Kenya with our goods, but when it comes to us it's a different story."

Read more: Second-hand clothes, smuggling and the US-China trade war in Africa

Political wrangling to blame

While Akol Amazima, a Ugandan political analyst cannot confirm the traders' experiences, he does believe that the root of problems lies in intra-regional politics. The problems at the borders are often the result of political differences between the countries. "When the political situation between leaders is not good, it affects traders," he says.

Amazima points to the current "bad blood" between Uganda's President Yoweri Museveni and Rwanda's President Paul Kagame. "So traders who go to Rwanda, some of them are mistaken for spies and that affects their performance."

The East African Community (EAC), comprised of Uganda, Kenya, Tanzania, Burundi, Rwanda and since 2016 South Sudan, wants to improve trade relations. The bloc has ratified a common market and a customs union. In 2013 the countries signed a protocol to implement a monetary union and single East African currency within 10 years. The EAC was first called into life in the late 1960s. It collapsed in the 1970s and was revived in 2000. Regional heads of state have since emphasized the need and urgency for the EAC to work harder, to fast-track the development of the bloc. Over the past few years, however, political wrangling has again hampered much needed progress.

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Tanzania and Kenya have experienced similar cross-border disputes as Uganda and Rwanda. "When President [John] Magufuli of Tanzania and his counterpart in Kenya, Uhuru Kenyatta, were not seeing eye to eye, it affected the traders in the Namanga [border town],” says Amazima.

"Whenever somebody was going to Tanzania they would strictly scrutinize him, so much so that even the cows that had crossed to Tanzania were auctioned off." The incident in in late 2017 saw the Tanzanian government confiscating over 1,000 cattle which Masai herders had brought over the border from Kenya for grazing. Masai from both Kenya and Tanzania, who claim historical ownership of the land, had been crossing the border for years.

Kenya, Tanzania and Uganda have also been blaming each other for exploiting the low import duties on sugar. The trade dispute resulted in Tanzania slapping Uganda with a 25 percent import duty on sugar, and Uganda and Tanzania taxing Kenyan sweets and sugared drinks.

Border Problems between Tanzania and Kenia Kenya-Tanzania spat

Revenue bodies receive a boost

One company which is trying to improve the regional cooperation is TradeMark East Africa, a private donor-funded initiative working with EAC governments. It focuses on bottlenecks that affect trade, particularly imports and exports.

"One of the key things we have done is to support the revenue authorities in East Africa to implement customs management systems," says Damali Ssali, director of TradeMark East Africa's Ugandan office. "If you are importing or exporting, customs will take about 80 percent of your transaction time." The company helps governments in the region to implement customs management systems that take only 24 hours and can be accessed from anywhere in the world. "You don't have to waste your time in Mombasa port, you can just come straight through to Uganda," says Ssali. 

Ugandan car importer Michael Odida told DW that he is one of the traders who has profited from the EAC common market and customs union. "Regarding the single customs territory – it has improved. If I need a vehicle cleared in Mombasa my team will have the whole process done from Kampala. As much as it has its shortfalls, overall I think it is a good innovation," Odida says. 

Uganda Revenue Authority spokesman Vincent Seruma explains that the protocol on the establishment of the East African common market has greatly improved trade among member states. "We have our staff in Mombasa, we have Rwandan staff in Mombasa, we have Tanzanian staff in Mombasa, so if there is any kind of decision to be made between the different revenue authorities, it is much easier to resolve an issue because we are working a little closer," Seruma says.

The three presidents pictured together
Rwanda's President Paul Kagame (left) greets Tanzanian President John Magufuli (right) in 2015, while Uganda's President Yoweri Museveni (center) looks on.Image: Getty Images/AFP/D. Hayduk

Dream of a single currency

Another underlying factor that has affected regional trade, according to Amazima, is the fluctuating value of local currencies against the US dollar and the fact that there is no common East African currency. "At times the dollar affects these currencies differently, so by the time you reach the border you want to change your money you end up losing some money," he says.

Read more: EAC's vision of a single currency

An EAC monetary union, which would pave the way for a single currency across the six countries, could ease trade within the region. Players in the region have been divided about this however, arguing that more time is needed. 

The International Monetary Fund has long been saying that truly integrated markets are key to economic productivity and growth, not only in East Africa but Africa as a whole. Intra-African trade stands at an estimated 16 percent. The recently ratified African Continental Free Trade Area (AfCFTA) deal is expected to boost that figure to 52 percent among the 55 African Union members by 2022.