{{Uganda’s long-held position as Kenya’s top market weakened further in the first five months of the year after export earnings dropped in a period that saw significant increase in shipments to Netherlands.}}
Kenya earned a total of Sh19.8 billion from exports to Uganda in the period to May, a 15.4 per cent drop from the Sh23.4 billion earned from the landlocked State in a similar period last year.
The decline in exports to Uganda which began nearly 30 months ago has significantly narrowed the gap with the Netherlands which romped to second position in the first quarter of the year after overtaking UK.
The exports to Netherlands increased by 22.8 per cent to Sh18.3 billion by May compared to Sh14.9 billion recorded in a similar period last year, data prepared by Kenya National Bureau of Statistics (KNBS) indicate.
In Kenya, traders and policy experts hold varied views on the shift.
“We have had fleeting market access issues with Uganda but not on the scale that should cause decline in exports,” said Mr Anthony Weru, a senior programme officer at the Kenya Private Sector Alliance.
“There is a general feeling that the East African Community’s common external tariff locks out goods of most Kenyan companies,” he said.
Kenya has signed market integration pacts with Uganda, Tanzania Rwanda and Burundi to open up borders for goods and services. The pact has, however, been dogged by power implementation at national levels.
The KNBS data indicate that drop in exports to Uganda has defied the depreciation of the shilling against regional currencies which makes Kenyan goods cheaper in East Africa.
The shilling continued to weaken against regional currencies, exchanging for an average of USh28.97 in May 2014 compared to 30.74 at a similar period last year.
In May, the Kenyan shilling depreciated against most major currencies, except the Tanzanian shilling.
“We find it very strange that Kenya’s exports to EAC have continued to fall in the last two years,” John Randa, the World Bank Kenya economist said about the release of June Economic Update.
Within government circles, officials have been quick to link the drop in exports to EAC countries to growing preference by firms to set up business units in the same states.
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