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For sure there’s silver line in the EAC cash bond ‘crisis’


With both the customs union agreement and the common market in force, one would have expected to see the end of tariff and non-tariff barriers to doing business in East Africa.But Kenya has now demanded a cash transit bond for Ugandan sugar and cars imported through Mombasa. The reason behind the Kenyan action was the suspicion that Uganda was reexporting to Kenya as local produce sugar that was actually imported through Mombasa.

The Ugandans decided to invite the Kenyans to prove to them that they had ample capacity to produce sugar for the local market as well as for export.So far, it appears, the Kenyans are not convinced and the cash bond remains in force. The previous practice was for the importers to simply execute an insurance transit bond.

Naturally, Ugandan importers complain that the move has made imports through Mombasa, their country’s shortest route to the sea, more expensive, with the burden finally offloaded to consumers.What the Kenyans are saying is that they retain the right to protect and advance national interests, the regional integration treaties and spirit notwithstanding.

They also underscore the fact that until this moment in time, sovereignty holds sway over any regional considerations. The Ugandan response has been intimation that if the cash bond issue is not resolved, then they would rather route their imports through distant Dar es Salaam.  There is nothing wrong with Dar es Salaam taking business away from Mombasa if the port were seen as a more efficient and safer route.
But the Kenyan hunch is also unsettling within the broader objectives and spirit of deeper integration in the East African Community (EAC).

If the Ugandans are indeed reexporting imported sugar to Kenya, would it not be better to address first the root problem of what appears to have made Kenya renege on efforts to eliminate both tariff and non-tariff barriers to doing business in East Africa as the Common Market Protocol entails?

This problem appears less severe because Kenya and Uganda share a common border. But the scenario becomes all too complicated where partner states do not share a border because alternative action such as re-routing imports through another country would make them too expensive, with the EAC consumers of course, as the ultimate victims.
So, the best way is for the partners to do business under an atmosphere of utmost faith and trust. Otherwise, lest we forget, it was mutual mistrust that led to the breakup of the former EAC.

I think EA needs to live and look to a prosperous future always mindful of that nagging spectre in its past relations and conduct. No one of course, is ready to be taken advantage of and I don’t think Dar es Salaam would react differently if faced with a similar scenario.

On the other hand, it is quite shameful for East Africa, to continue importing sugar and cooking oil. I think even the world fails to understand us given that we are the land of the great lakes and rivers.How come we do not produce, at least, enough sugar and cooking oil for our local consumption and export. As a region, I believe, the two would have been our core advantage commodities in the world.

But there we are, waging trade wars against each other even in an integrating environment and spirit!
Thus, if we were people who move forward in their resolve and actions, the cash bond “crisis” between Kenya and Uganda should only serve to awaken the region to its full potential in global consumption dynamics.

For, what tariffs and other duties do generally, is to guarantee jobs elsewhere and to keep East Africans perpetually bonded to assured export markets. We cannot be that less smart?

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