Faridah N Kulumba
Africa-Press – Uganda. The move followed the President of the Republic of Uganda H.E Yoweri Kaguta Museveni traveling to Kenya on 16th May this year for a state visit at the invitation of Kenyan President William Ruto. The Ugandan President’s visit to Kenya aimed at strengthening the longstanding bilateral relations between the two neighbouring countries and exploring new avenues for collaboration and mutual benefits. Uganda and Kenya’s heads of state meeting signifies their commitment to foster regional integration, enhance economic cooperation, and promote stability within the East African region.
The trade wars
In the past few years, the two African Great Lake countries have been having a cold trade war. This trade war between Uganda and Kenya was not only a threat to economic prosperity in the involved states but also a threat to free trade in the East African Community (EAC). The trade war between these neighbouring countries started way back towards the end of 2019 when then-president Uhuru Kenyatta’s administration refused entry of milk from Uganda, and the two countries lost billions and billions of money. In 2018, Kenya began complaining about Uganda’s cheap milk import to protect the local market. At first, Kenya raised its concern about Uganda’s milk production capacity but was debunked through a fact-finding mission in 2019. In the same year, Uganda’s exported dairy products were worth USD 135.9 million, according to Ugandan government statistics. In 2020 Kenyan government instituted a ban on Ugandan sugar and revoked all sugar import permits, some of which were held by Uganda manufacturers and exporters opting to solve challenges facing the country’s sugar industry. The authority in Kenya explained that the influx of imports in their country had negatively impacted sales on Kenyan sugar producers, leaving them with huge unsold stocks. In 2021, Kenyan went ahead and restricted the import of Ugandan eggs, chicks, and chickens saying that it was done to protect Kenyan farmers and enable them to recover from Covid-19 disruptions. But in December of the same year after bilateral talks were held between Agriculture ministers from the two countries Kenya lifted the ban. In March 2021, Kenya’s Director General of Agriculture and Food Authority Kello Harsama suspended any exports of maize into Kenya from Uganda, claiming that the test results for maize imported from Uganda and Tanzania revealed high levels of mycotoxins that are consistently beyond safety limits. Uganda exports at least 80 percent of its maize to Kenya with the rest going to South Sudan and the Eastern Democratic Republic of Congo (DRC). The recent trade war between Uganda and Kenya started in November 2023, when the Kenyan government declined to issue Uganda National Oil Corporation (Unoc) with a license to operate as a local oil marketer prompting Uganda to go to the regional court in a bid to compel Kenya to issue the greenlight. This time round the government of Uganda did not sit back but decided to sue Kenya to the East African Court of Justice. On 28 December 2023, the government of Uganda appealed to the EACJ seeking to compel Kenya to permit Uganda to use the pipeline.
How the trade war was resolved
During the recent meeting between Uganda and Kenyan heads of state, several Memorandum of Understanding (MoU) were signed. The two leaders signed a tripartite agreement on the importation and transit of petroleum products through the two countries. This agreement is intended to enable Uganda to import refined petroleum commodities directly from the producer countries. According to Kenya, the petroleum agreement will enable the Uganda National Oil Company Ltd to import refined petroleum commodities directly from producer jurisdictions thus bringing to an end the challenges faced by the sector in Uganda.
Is Kenya avoiding Uganda’s petroleum import axe?
In 2023, the Ugandan president complained that the country was losing billions by buying fuel through middlemen. He said that Uganda imports 2.5 billion litters of fuel per year worth USD 2 billion but noted without his knowledge, officials opted to buy it through middlemen in Kenya. Uganda revealed the plan to make changes in petroleum imports in a move that was intended to sideline Kenya. Uganda’s Energy Minister tabled the Petroleum Supply (Amendment) Bill 2023 which was presented in parliament. The tabled amendments Bill was handing over exclusive rights for the supply of all petroleum products to a unit of global energy trader Vitol and ending a system that sources the oil products through Kenya. The move was to empower the government-owned Uganda National Oil Company (Unoc) to be the sole importer of petroleum and related products, supplied by Vitol Group. Unoc will then sell to private oil marketing companies. According to Uganda’s Minister of Energy, Unoc and Vitol Bahrain E.C agreed on a five-year contract. Uganda imports an average of 2.5 billion litres of petroleum annually valued at USD 2 billion (Ksh302.34 billion), with KPC handling at least 90 percent of the cargo. This is one of the reasons why Kenya had to strengthen trade relations with Uganda by signing an agreement that enables the Uganda National Oil Company Ltd to import refined petroleum commodities directly from producer jurisdictions.
Will the two commits to the MoU’s
Kenya is confident that these agreements will consolidate the strong relationship between the two countries and anchor it on a “transformative trajectory according to President Ruto. Kenya assured that the two nations’ leaders are committed to implementing all their obligations in order for the two nations to reap the full benefits. President Ruto and his Ugandan counterpart Museveni directed the ministers of trade in both countries to meet and resolve any outstanding barriers affecting trade.
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