Why when Kenya sneezes, Uganda catches a cold

With about 80 percent imports coming through Mombasa port, this places Kenya as major gateway for Uganda’s transit cargo.

As a result, any interruption in Kenya that affects flow of cargo, some of which are key raw material without which industries in Uganda cannot operate, has an adverse effect on Uganda’s economy. 

Additionally, Kenya is one of Uganda’s top three export destinations, according to Uganda Export Promotion Board statistics.

In 2023, Uganda’s export share to Kenya was in the range of  31.5 percent, followed by the Democratic Republic of Congo at 25 percent and South Sudan taking just above 23 percent, trading at a surplus to the tune of  $716m (about Shs7 2.6 trillion) with EAC partner states.

“Kenya is our biggest trade partner in the region currently,” Mr Isaac Shinyekwa, the head of Trade and Regional Integration, Department at the Economic Policy Research Centre (EPRC), says.

READ: Kenya braces for fresh protests despite president's tax climbdown

He continues: “Kenya is also the main route for Uganda’s imports and exports and so is for the other regional countries like Rwanda, Burundi and South Sudan. So any interruption on this route means prices of commodities, including fuel pump prices, will be impacted with, the consumers paying higher prices as a result.

“This effect also extends to tourism.  This is because for a tourist with a joint Tourist Visa allowing the traveller to travel to Uganda, Kenya and Rwanda, will not set foot in any of the regional countries on the basis of riots in Kenya.

READ: Lessons from Kenya protests

“And I don’t have to mention implications on regional investment. Serious investors hate chaos. They will begin to look at the region as volatile destination and, therefore, avoid it altogether. The impact on cross-border trade is also massive.” 

No need for the red flag

Although Kenya also stands to lose, given that last year alone, it fetched about $800m (about Shs3 trillion) from her exports to Uganda, the government believes the agitation that has seen about a dozen people killed during protests earlier in the week in Kenya, and part of Parliament being set ablaze as demonstrations against new tax proposals intensified, doesn’t call for panic yet, describing the situation as early days.

When contacted yesterday, the minister for ICT and National Guidance, Dr Chris Baryomunsi, said: “I am right now in Nairobi [Kenya]. We are watching the space, but as we speak, the situation hasn’t reached a level that necessitates raising alarm for our sector players to consider switching routes.”

He continued: “We hope the situation will not get worse as it was on Tuesday. But in case it gets worse, then we may have to resort to Tanzania route to deliver our goods.

“Again, it is too early to make an alarm right now, the situation seems calm compared to the previous day and we hope it continues to be even calmer.” 

Speaking on the sideline of EAC post budget dialogue in Kampala yesterday, the First Deputy Prime Minister and also Minister for East African Community Affairs, Ms Rebecca Kadaga, said there is no imminent danger to the economy because there hasn’t been any disruption on the flow of cargo destined to Uganda. 

She also promised efforts are in place to ensure no interruption on movement of cargo destined for or transiting through Uganda.

Daily Monitor has established that the Uganda Revenue Authority (URA) customs since the beginning of the week have been clearing between 1,000 and 1,200 cargo trucks every day without interruptions despite the protest in parts of Kenya  

Warning

The Kampala City Traders Association (Kacita) deputy spokesperson, Mr Denis Jjemba Mulondo, warned traders, particularly importers, that they shouldn’t move cargos at night. Any hours beyond 6am has been declared risky for now, according to what he said was information from Kenyan authority. 

Mr Herbert Kafeero, the programmes and communications manager at SEATINI Uganda, said the protests in Kenya are as a result of lack of enough consultation, urging the Parliament here to give more scrutiny of Bills that impact people directly. 

Mr Moses Kaggwa, the director of Economic Affairs at the Ministry of Finance, however, thinks otherwise, saying more time has been given for Uganda’s case to interact with the Bills, saying the issue with Kenya seems to have been flamed with the high unemployment rate.

Mr Julius Mukunda, the executive director of Civil Society Budget Advocacy Group, said both Uganda and Kenya face the same challenges, warning that the only way to avoid the Kenya protest here is by ensuring taxpayers’ money is invested in sectors that ensure returns on investment visible for all to see and partake.