East African Affiars, Commerce and Tourism

Kenya- Uganda trade ties set to grow stronger courtesy of SGR

By Munyasya Musya (PSCU)

Efforts by Presidents Uhuru Kenyatta and Yoweri Museveni to optimize the northern corridor trade spine which also informs their singular desire to enhance free intra-regional trade for the six states and the integration of their markets under the East African Community have been hailed as a game changer.
Trade experts see Museveni’s February visit to Kenya and his historic ride on Kenya’s Standard Gauge Railway (SGR) passenger service christened Madaraka Express from Mombasa to Nairobi, the first of its kind by a foreign Head of State to travel on Kenya’s new railway line as a stamp of Uganda’s willingness to expedite movement of goods from Mombasa port to landlocked Uganda.
The ride by the Ugandan leader was not only a confirmation of the strong socio-economic ties between the two neighbouring nations but most importantly it was a demonstration of the crystallizing trade relations between Kenya and Uganda.
Of Museveni’s ride in the Chinese made train wagons to Nairobi from Mombasa, president Kenyatta remarked, “you have once again made history and showed the remarkable partnership that exists between our two countries,”
Kenya’s pivotal position in the intra- regional trade, according to regional trade experts was also given an added impetus by the revival of the East African Community.
The regional block, according senior government officials, thrashed Kenya and Uganda into the pivotal role of spearheading the regional integration particularly in trade due to their critical position in accessing landlocked nations of Rwanda, Burundi, eastern DRC and South Sudan.
Faced with this huge responsibility, Kenya and Uganda have invested in infrastructure linkages, information and communication technology and the advancement of favourable trade agreements that promote free trade and faster movement of goods, services and people.
This was actualized by President Uhuru Kenyatta’s administration after it initiated bold steps to fast track the implementation of the Single Customs Territory (SCT) Agreement signed by EAC member states in 2013.
The SCT allows free trade without charging any taxes on goods and services originating from member countries.
Goods entering their markets are charged a standard duty, the common external tariff thereby creating one market.
The agreement removed multiple weighbridges, police and customs checks along the Mombasa-Kampala-Kigali route and introduced computerized clearance and electronic tracking and other innovations that have eradicated hurdles to free trade or Non-Tariff Barriers (NTBs) that gave the Northern Corridor a bad reputation in the past.
“I am particularly pleased with the progress we’ve made in recent years in the areas of trade promotion, the free movement of goods, services and people across our borders, and the people-to-people interactions,” President Kenyatta said after Kenyan and Ugandan delegations led by President Museveni and himself held bilateral talks at State House Mombasa.
Mombasa Port is the gateway to the East African hinterland of Uganda, Rwanda, Burundi, South Sudan and the DRC.

Owing to this vital role, Kenya has improved efficiency in cargo handling at the port and movement of goods along the Northern Corridor by road and the Standard Gauge Railway (SGR) launched in 2017.

In 2014, the volume of cargo transported by rail was a paltry 2% of the total cargo handled at the Port of Mombasa. Today, out of the 70% of cargo that come through the port, 50% is transported through the SGR.
Most traders are therefore embracing the more efficient transport by SGR whose single cargo train caries 52 wagons translating into a reduction of over 50 trucks from the road.
In a further bid to increase efficiency in the flow of goods and to bring port services closer to customers, the Kenyan government has refurbished all the existing Internal Container Depots (ICDs).
Kenya has also given Ugnada an impetus by offering to avail land in Naivasha for construction of an Internal Container Depot.
This depot will help Uganda and other countries access port services at reduced cost, time, speed and efficiency without having to travel to Mombasa.
“I wish to express my Government’s full commitment to continue improving service delivery at the Port. I am pleased to report that the time taken to transport cargo between Mombasa and Nairobi has significantly reduced with the full operationalization of the Standard Gauge Railway (SGR) between Mombasa and Nairobi,” President Kenyatta said during president Museveni’s tour of Mombasa and Nairobi.
One of Kenya’s major exports to Uganda is petroleum products. Currently, refined oil destined for Uganda is transported from Mombasa to Kisumu through the Kenya Pipeline Company (KPC).
“For the first time since colonial days, we are utilizing Lake Victoria for transportation thereby reducing the cost of moving petroleum to Uganda and increasing potential for trade between the two countries,” said President Kenyatta.
To make transport of petroleum to Uganda easier and more efficient, KPC has built an oil jetty in Kisumu, from where the commodity will be shipped through Lake Victoria to jetties in Entebbe, Uganda, and then transported to Kampala.
“While we are still waiting for the railway (in Uganda), the Kenyan Government has already moved and is now constructing modern jetties and petroleum pipelines,” President Museveni said.
“That means that in the coming years, a lot of cargo will move from the roads to the railway and fuel will move from the roads to the pipeline and across the lake through tugboats which can carry the fuel across the lake cheaper, faster and safely,’ he added.
The Removal of non-tariff barriers to free movement of goods and services from Kenya to Uganda and other Great Lakes countries has also been hailed as a new impetus to intra-regional trade.
One of the highlights of the SCT agreement was the opening of various One-Stop Border Posts (OSBPs) which has been actualized through the establishment of these facilities at Busia, Malaba and Lwakhakha.
This One-Stop Border concept combines two national border controls into one thereby reducing the time taken to clear goods and people across the border.
Kenya and Uganda have enjoyed very deep and cordial trade ties since the construction of the Kenya Uganda Railway by the British colonialists from Mombasa to Kampala to exploit the vast trade resources in the East African hinterland from 1890 to 1901.

Since the construction of the railway line, the Kenya-Uganda trade umbilical cord has remained intact, growing in leaps and bounds over the years despite isolated challenges.

Today, Uganda stands out as Kenya’s biggest trading partner beating traditional giants such as Pakistan, the US, Netherlands and Britain.

Statistics available indicate that Uganda’s imports from Kenya rose to Sh61.9 billion last year while those exported to Pakistan stood at Sh59.39 billion, the US at Sh47.34 billion, Netherlands at Sh46.36 billion and UK at Shs40.19 billion respectively.
In 2008, Kenya exported to Uganda goods worth Shs 42 billion. Ten years later, she exported goods worth Shs61.9 billion, a whooping Shs 20 Billion increase over the 10 year period.
On the other hand, Kenya’s imports from Uganda stood at Shs 5 billion in 2008 and rose to Shs 50 billion in 2018.
Uganda largely relies on the Port of Mombasa for her import and export trade therefore making Kenya a vital strategic partner for Uganda.
Over the years, optimization of trade between Kenya and Uganda has been slowed down largely by non-tariff barriers key among them being delays in clearing and processing of goods at ports and border posts.
To settle these challenges sustainably, the two governments have been implementing a raft of measures that have seen the efficiency in the clearance, evacuation and movement of goods between Mombasa and Kampala greatly enhanced. d in eradicating themultiplicity of documentation previously processed at border entries.
“If you are importing goods worth less than US dollars 2000, you are not required to go through the rigorous Customs declaration as before. You just fill a form and you are cleared through”, said Mr Michael Watii, Kenya’s Malaba One-Stop Border Post Station Manager.
Ordinarily, cargo destined to Kampala from Mombasa Port by road took 21 days. Today, it takes only 6 days.
“At the OSBP, goods coming in and out are jointly handled by the Kenya Revenue Authority (KRA) and the Uganda Revenue Authority (URA) in one place. Travellers are also handled in one place”, said James Malinzi, the Station Manager of the Ugandan side of the Malaba OSBP.

To further ease trade, KRA and URA jointly adopted the Regional Electronic Cargo Tracking System (RECTS).
The automated system, which is satellite based, enables the two countries to jointly track cargo from the point of loading to the point of delivery.
The system has improved security, reduced revenue leakage, as well as improved resource utilization through enhanced cross-border cooperation, resource and intelligence sharing.
“We monitor goods from Mombasa into the hinterland all the way into Uganda, Rwanda and Burundi. We’ve total visibility of all goods as they move. We don’t need to escort goods using many officers”, says Kevin Safari, a Commissioner of Customs.
Through free movement of persons, Kenya also opened her doors to all East Africans owing to her belief that an inflow of talent, energy and investment is good for everyone.
“I am particularly pleased with the progress we’ve made in recent years in the areas of trade promotion, the free movement of goods, services and people across our borders, and the people-to-people interactions,” President Kenyatta said.
Ugandans and other East Africans can therefore cross into Kenya, work and live freely using their national identification documents. Uganda has followed suit.
“There is a lot of change these days. There was a time one was required to produce documents before crossing the border post. Today we go to Uganda and Ugandans cross over to Kenya without being bothered”, said Mr. Omasaja Lokakisa, a resident of Malaba.

Multiple weighbridges were blamed for long traffic jams, delays and corruption on the highways. Kenya has now automated her weighbridges by embracing ultra-modern High Speed Weighing in Motion Sensors.
“In 2013, we introduced the High Speed Weighing in Motion Sensors. Where we have automated the weighbridges, the corruption and delays that were previously witnessed have been eradicted”, says the Deputy Director for Road Resources at Kenya National Highways Authority (KenHa) Mr Muita Ngatia.
The automated service is currently in use at the Mariakani, Mlolongo, Gilgil and Webuye weighbridges and will be replicated in all the remaining weighbridges in the next three years.