Kenya-Tanzania trade relations: What next under new leadership

According to the Kenya H igh Commission in Dar es Salaam, Kenya and Tanzania have maintained close relations over many years founded on similar ideas in areas such as the rule of law, fundamental freedoms, social and economic order, and good governance, and with a special focus on economic and financial market issues.. According to Trading Economics, Kenya n…

Unification is the key to success in the 21st century. This can be seen with the advent of development pacts across the world, particularly the G5, G20, and SADC (Southern African Development Community) to mention a few.

According to the Kenya High Commission in Dar es Salaam, Kenya and Tanzania have maintained close relations over many years founded on similar ideas in areas such as the rule of law, fundamental freedoms, social and economic order, and good governance, and with a special focus on economic and financial market issues.

“Kenya and Tanzania pursue similar foreign policy objectives in a variety of international forums, including the United Nations, the AU and the East African Community.”

More notably, the two countries are important to each other as trading partners —trading for years since they attained their independence and have close economic ties.

Over the past few years, the volume of trade and benefits between the two countries has been interesting. The two exchange a variety of commodities, lubricants, machinery, pharmaceutical products, plastics, animal, electronic equipment, etc.

According to Trading Economics, Kenyan exports to Tanzania amounted to around $329.56 million during 2019, while Tanzanian exports to Kenya was $338.83 million during 2018.

The trading partners are rather fierce competitors at the same time, as the two have featured in trade battles, which erupt from time to time; for instance, the border restrictions of goods from Tanzania to Kenya (maize) and the 2017 chicks burning event that sparked a lot of controversy.

Despite these frequent trade disputes, these two countries possess great potential for a fifty-fifty win, as each exhibits the necessary requirement to develop their respective economies.

Kenya and Tanzania have been working on settling several trade disputes since 2017. By 2019 at least 19 out of 37 non-tariff barriers were managed, according to a June 2019 publication by The East African.

It is important to consider the flow of trading relations, as these two countries have experienced the positive and the negative consequences of the disagreements. The 2017 chicks burning incident executed by Tanzanian officials led to a chain of events that proved detrimental to the regional business landscape.

Late Tanzanian president John Magufuli referred to Kenya as a close collaborator and partner to Tanzania within the realm of pan-Africanism. Yet, despite his remarks and the great potential these two countries have, trade relations have remained rocky.

In 2018, Tanzania imposed a 25 per cent import duty on Kenyan confectionery, including ice cream, juice, sweets, chewing gum, and chocolate—which was argued for Kenya using zero-rated industrial sugar imports to produce them.

Then, Kenya banned Tanzanian tour vans from accessing the Masaai Mara National Reserve, which was backed by Kenyan officials to be in retaliation to Tanzania banning Kenyan operators from accessing the Serengeti National Park.

Sadly, the dispute went further, and extended to fisheries, wherein in February 2018 stringent fresh quality verification standard was set for Kenyan products.

The last trade spat under the presidency of the late Magufuli was in March 2021—when Kenya decided to ban maize imports due to the presence of levels of mycotoxins that exceed safety limits imported into Kenya from Tanzania and Uganda.

These trade issues mar the ability of these two nations to perform other trade pacts across the continent and the world, as they consume time and energy to resolve, but leave political scars that hinder effective and trustworthy business relations between the two.

The newly-installed Tanzanian President Samia Hassan has already aligned her strategy towards building partnerships with all parties that wish well for Tanzania’s prosperity, including investors and neighbouring countries.

President Hassan’s political tone suggests Tanzania is looking forward to increasing a cordial and non-controversial approach in handling trade relations with her counterparts.

Tanzania and Kenya are among the fastest-growing economies in Africa. Kenya is ranked among the top innovative country in Africa by Sartupblink, while Tanzania is touted to become the most connected country with its high-end transport system. The two neighbours need to collaborate rather than dwell on constant trade conflicts.

Trade flow between the two countries has been in surplus over the years. The value of Kenyan exports to Tanzania in June 2014 amounted to $13.99 billion, equivalent to an increase of 8.5 per cent over the previous period.

The Citizen June 2020 publication reported that Tanzania Revenue Authority (TRA) and Bank of Tanzania (BoT) computation provisional data shows that Tanzanian trade with Kenya recorded a deficit of $35.8 million in 2018, which is down from a surplus of $90.2 million in 2017. This is after recording trade surplus for three consecutive years.

“The last trade deficit between Tanzania and Kenya was recorded in 2014, showing a deficit of $208.7 million before jumping into a surplus of $491.7 million in 2015. However, trade surplus dropped to $46.1 million in 2016 due to a dramatic fall in exports to $313.8 million, down from $731.4 million in 2015,” according to The Citizen.

More on that angle, the computations of the agencies also pointed that in 2018, Tanzanian exports to Kenya were valued at $213.7 million, which is lower than the $291.5 million recorded in 2017.

Further, Kenya is currently the leading destination and major source of Tanzania’s intra-EAC exports and imports.

Across the business and economic development aisle, these two countries present valuable potential to levitate the hard-working traders from all sectors, especially small-holder farmers, and entrepreneurs who move goods and services across the region.

Kenya and Tanzania are better off working and trading together harmoniously; hence Tanzania has ample room to salvage the trading potential and move forward.

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