The ongoing impasse between Kenya and Tanzania threatens this symbiosis between the two countries and drives a wedge that will negatively impact both economies in the future, a manufactures’ umbrella body has said.
Tanzanian Authorities’ refusal to comply with the EAC Preferential Treatment Code has barred Kenyan goods from accessing the Tanzanian market. In a statement, the Kenya Association of Manufacturers (KAM) has said that the refusal by the Tanzanian government to allow entry of Kenya’s products into Tanzania has impacted business negatively.
There has been reduced trade business between the two countries, severe losses to businesses in the value chain due to lack of goods and the move is undermining of efforts towards EAC integration.
The Tanzanian authorities are demanding for full Common External Tariff (CET) duties of 25% on Kenya originating products instead of the free access granted to products that meet the EAC origin criteria. The affected products include confectionary, Cerelac, juice, ice cream and chewing gum.
Tanzania is Kenya’s second most important market in the East African region. Kenya’s exports grew from Sh16.9 billion ($168.57 million) in 2004 to Sh42.7 billion ($425.9 million) in 2014 before declining to Sh33.7 billion (336.15 million) in 2015; while imports from Tanzania grew from Sh2.1 billion ($20.95 million) to Sh18.4 billion ($183.6 million) in 2014 and only marginally declining to Sh16.9 billion ($168.66 million) in 2015. Kenya is also the second leading African investor in Tanzania, with total investment outlay of USD. $1.54 billion, in over 455 projects and employing over 50, 000 people. These investments are spread across various sectors of the economy – manufacturing, tourism, financial services, agriculture, real estate, construction, transport, petroleum, extractive resources, human resources and telecommunications.
Tanzania cites EAC Legal Notice number EAC/70/2017- where Kenya was granted duty remission on raw sugar of HS Code 1701.14.90, at a duty rate of 0% for one year to manufacture sugar for industrial use – as justification for its actions.
“However, these actions would only be permissible if the product being exported to Tanzania is industrial sugar made from the raw sugar under remission. This is not the case. The exports into Tanzania as cited above, are manufactured using industrial sugar imported under the EAC wide duty remission, attracting 10% duty. This scheme applies to all EAC partner states including Tanzania.” Reads a statement from KAM, in part.
The denial of entry for Kenyan goods into Tanzania continues despite Kenya Revenue Authority’s intervention to clarify the matter to its Tanzanian counterpart. Kenya Revenue Authority (KRA) has provided detailed information with evidence that manufacturers of above affected products, import industrial sugar for tariff number 1701.99.10. They have additionally provided sample paid entries that demonstrate that companies producing these goods have been subjected to the 10% duty as they fall under EAC duty remission scheme, as does Tanzania. Further, KRA confirmed to Tanzania Revenue Authority (TRA) that, legal notice no. 4536 applies to sugar for home use not white industrial refined sugar.
KAM is a Business Member Organization representing value-add companies and associate services in Kenya. Its members’ significant contribution to the economy is estimated at a quarter of the country’s Gross Domestic Product. The Association provides an essential link for co-operation, dialogue and understanding with the Government and other key stakeholders by representing its members’ views and concerns through fact-based policy advocacy.
The Authority has clarified that, notice 4536 affects 14 companies whose goods are not part of those being denied entry. To this end, a letter from Kenya National Treasury, listing the 14 companies who have imported table sugar, has been provided to TRA in the spirit of transparency.
Despite these and other multiple attempts, Tanzania has continued to bar Kenyan products and has additionally denied the delivery of these goods under bond.
