Fresh trade war brews in East Africa over Kenyan confectioneries

Tanzania and Uganda have placed a ban on the tax-free importation on confectioneries from Kenya citing the use of imported industrial sugar in the items as the reason for the ban. This act by both countries is against the East African Community (EAC) regulations on free importation from member states.

According to reports, Kenya’s neighbors said confectioneries from Kenya, which includes sweets, chocolates, ice creams and biscuit, cannot be deemed as locally produced when one of the ingredients used is imported. In view of this, the two nations have rejected the certificates of origin issued by the Kenya Revenue Authority (KRA) and chose to place an import duty of 25 percent on confectioneries from Kenya. Tanzania and Uganda revenue authorities have, however, accused Kenyan manufacturers of tilting competition in their favour by using industrial sugar imported under a 10 percent duty remission scheme.

It is worthy to note that industrial sugar is not produced in the region, hence Kenya imports the ingredient. Kenyan firms have also accused Tanzania and  Uganda of restricting trade in the region by imposing custom taxes.

“We are not supposed to pay duty when we sell in the region because our competitors in the region also rely on industrial sugar imported under the same remission scheme,” Phyllis Wakiaga, the Chief Executive of Kenya Association of Manufacturers (KAM) told Business Daily Africa.

While reacting to the brewing trade war, Julius Kihara, KRA export officer, said that confectionery products made of industrial sugar imported under the EAC duty remission scheme should not be subjected to customs taxes.

“We seek to clarify that upon records held by KRA, the products are not affected by legal notice No.4536 which applies to white sugar for home use,” Kihara says in an April 9th letter that separately addressed Tanzania and Ugandan revenue bodies.

This is not the first time a trade war is happening in East Africa. In April last year, Kenya enforced a ban on the importation of cooking gas from Tanzania after it had banned wheat flour from the country, citing low safety and quality standards. After several appeals by Tanzania were rejected, Tanzania also imposed a ban on Kenyan milk and cigarettes. However, both countries resolved the issue following discussions between President John Magufuli of Tanzania and President Uhuru Kenyatta of Kenya.

These trade wars usually have a huge effect on the countries. Last year, Kenyan firms lost Sh7.5 billion due to the trade war.