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EAC trade under threat from India and China

Cheaper imports from Asia, Europe and the US are eating into East Africa’s intra-regional trade, with Kenya — previously supplying 90 per cent of medicine in the EAC— losing out to India.

According to the 2017 report on EAC’s competitiveness, India is exporting mainly heavy petroleum and medicine to the region while China is selling a wide range of manufactured goods including clothes and footwear, and telecommunications equipment.

China, Japan, South Africa and India have taken up a higher market share in the region for iron and steel products than the EAC partner states put together.

Uganda has been the top export destination for Kenyan goods, followed by the Netherlands, US, UK, Pakistan and Tanzania. However, latest data from the Kenya National Bureau of statistic shows that Pakistan has taken the top position, followed by Uganda, the Netherlands, US, UK and Tanzania.

“We have lost the market but we are still important to each other as EAC member states” Kenya’s Trade Principal Secretary Dr Chris Kiptoo told The EastAfrican. “Countries outside EAC are more competitive in our markets.”

In the first eight months of 2017, Tanzania cut imports from Kenya to $134.2 million from $174.7 million in the same period in 2016, while Kenyan exports to Uganda fell to $323 million, from $327.9 million over the same period.

In 2016, Kenya’s exports to Uganda and Tanzania declined by 26.4 per cent and 46.7 per cent to $498.7 million and $252.9 million, respectively. Exports to Rwanda and Burundi declined by 10.8 per cent and 18.3 per cent to $146.5 million and $ 50.4 million, respectively.

The EAC Trade and Investment Report attributes the decline in Kenya’s exports to Uganda and Tanzania to increased manufacturing capacity in the two countries for products like iron and steel, cement, pharmaceuticals and sugar.

Other reasons include restrictions on export of goods manufactured in export processing zones and on imports of agricultural products like milk and milk products.

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