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- The current president of Tanzania is actively pursuing a foreign policy distinct from the one pursued by the late Magufuli, who served as president before her.
- Kenya and Tanzania agreed to boost their bilateral ties during the visit of President Samia, marking the conclusion of a challenging chapter marked by trade barriers and border tension.
- One year after President Samia Suluhu took office, a “softening” of Tanzania’s borders with Kenya, a reduction in non-tariff hurdles, and resolution to bilateral issues have resulted in higher commercial growth in both countries.
Previously strained relations between Kenya and Tanzania
Owing to their strained relationship, Kenya and Tanzania have not realized their goals of establishing a free trade zone for many years. The problems originated from several sources, including the closing of borders, the restriction of collaboration and the free movement of goods and services, the introduction of additional taxes, and the denial of work permits.
Kenya has already made efforts to mend relations, with Mr Kenyatta travelling on a charm offensive to Mr Magufuli’s rural origins to win him over. Despite these efforts, not much had been achieved.
Ideological differences that have contributed to the mutual distrust between the two countries led to the collapse of the first East African Community in 1977. Tanzania and Kenya resumed diplomatic relations in 1983. Still, the following year, President Julius Nyerere closed the borders, resulting in a loss of almost $11 billion in only one year for both countries.
Read: EAC: Tanzania’s exports to Kenya hit highest recorded levels since independence
It was necessary for a delegation of Kenyan traders to travel to Tanzania so that trade could be heightened. After that, the amount of trade between the two countries more than doubled.
However, a few years later, Tanzania imposed unforeseen charges on meat products, which resulted in Kenyan companies losing around half of their primary export market. The two neighbours have lost a significant amount of money due to misunderstandings like this one.
Paradigm shift under new governance
In January of 2021, Kenya and Tanzania were embroiled in a diplomatic dispute around the outbreak of COVID-19. Before President Samia took office, the two countries engaged in a string of commercial disputes, which resulted in Dar es Salaam turning inward and erecting trade barriers with Kenya.
The diplomatic dispute between the two nations began shortly after the pandemic appeared in East Africa. At that time, Kenya barred Tanzanian truck drivers from entering the country out of fear of spreading the disease. Tanzanian officials retaliated by saying that Kenya had no right to make such a decision.
After Kenya included Tanzania on a list of countries whose citizens would not be able to enter Kenya when commercial flights resumed in August 2020, Tanzania forbade Kenya Airways from entering its airspace. President Magufuli referred to this action as a “retaliatory step” with Tanzania preventing Kenya Airways from flying into its territory.
The current president of Tanzania is actively pursuing a foreign policy distinct from the one pursued by the late Magufuli, who served as president before her. These East African Community (EAC) neighbours realized that collaboration would help make greater strides forward under Presidents Samia and Kenyatta’s direction.
The President of Tanzania, Samia Suluhu Hassan, was invited for a state visit to Kenya’s capital Nairobi, by her Kenyan counterpart soon after taking over the reigns in Tanzania early last year. During this trip, President Uhuru Kenyatta asked President Hassan to focus on mending broken ties between the two countries, her top priority.
Kenya and Tanzania agreed to boost their bilateral ties during the visit of President Samia, marking the conclusion of a challenging chapter marked by trade barriers and border tension. By announcing that her administration would work closely with Kenya, President Hassan gave the impression that she would move away from her predecessor’s uncompromising stance.
The stance taken by President Samia indicated the start of a re-energized partnership between Kenya and Tanzania that would tackle concerns relating to business, health, and the fight against terrorism.
‘Softening’ of borders.
One year after President Samia Suluhu took office, a “softening” of Tanzania’s borders with Kenya, a reduction in non-tariff hurdles, and resolution to bilateral issues have resulted in higher commercial growth in both countries. This growth has been attributed to increasing tourism.
According to the Kenya National Bureau of Statistics Economic Survey 2022, the number of goods that Tanzania shipped to Kenya increased by more than four times in only ten short months, hitting the greatest levels since the country gained its independence. The figures suggest that Kenya’s second-largest export destination was Tanzania in the past year despite the pandemic. During the lockdown imposed because of the Covid-19 virus, Kenya’s agricultural sector shrunk, opening a market for Tanzania’s surplus goods to be sold in Kenya.
In May of the previous year, President Samia and her counterpart in Kenya, Uhuru Kenyatta, agreed on several targets, one of which was the elimination of more than 14 identified non-tariff hurdles within six months. When this was happening, the leaders told business lobbying organizations in Nairobi of their intention to increase commercial activity.
At a meeting of prominent businesspeople held at the Serena Hotel, President Samia, in her address, said, “The only way we will make genuine progress is if we advance together. Contacts between businesses make it possible for companies to capitalize on shared interest areas and develop collaborative relationships that are beneficial to both parties. The economic well-being of our people is improved as a result of such partnerships since they result in the creation of new employment.”
A rise in the global market for exports
According to the KNBS report, Uganda remained Kenya’s most important market for exports despite trade disagreements. The value of exports to Uganda increased from $627.8 million in 2020 to $797.4 million in 2021.” This rise in value was primarily attributable to increased domestic exports of cement clinkers, palm oil, flat-rolled iron and non-alloy steel products, and re-exports of machine tools for drilling, borehole sinking, milling, threading, and tapping.
As a direct consequence of this, Uganda continued to play a significant role as the country’s primary market for exports, accounting for 12.3 per cent of total export receipts. As per the KNBS report, more demand for sugar and milk increased expenditure on Ugandan imports.
The exact period also saw a decline of 26 per cent in exports to South Sudan, which resulted in a fall in domestic food supplement exports and re-exports of dried leguminous vegetable products. The total amount of these exports was $148.7 million. Kenya’s overall exports to Africa reached $2.69 billion in 2021, up from $2.14 billion in 2022, and accounted for the bulk of the country’s total exports.
The majority of the increase may be attributed to an increase in exports to Uganda by 26.9 per cent and exports to the country of Tanzania by 43.1 per cent. “An increase significantly helped this progress in exports to the East African economic bloc,” Kenya’s Treasury cabinet secretary Mr Yatani explained, “which increased from $1.38 billion to $1.67 billion, accounting for 54 per cent of all exports to the African continent.” The East African economic bloc shares a standard economic and political system.
The volume of imports is growing.
The continent of Africa had an increase in the value of its imports, from $1.61 billion in 2020 to $2.01 billion in 2021. In 2016, imports from the EAC accounted for 40.1% of total African imports. It was anticipated that this percentage would climb to $804.3 million in 2021, representing an increase of 64.5%. Increased by 23.2% compared to the previous year, the COMESA region’s export revenues in 2021 were $1.08 billion.
The results also demonstrate that Kenyans are developing a taste for cuisine from surrounding areas. However, the Kenyan shilling depreciated against the currencies of significant trade partners in 2021, as measured by the Trade Weighted Index, which increased by 5.4 per cent from 115.37 in 2020 to 121.60 in 2021. This change occurred because the Trade Weighted Index grew from 115.37 in 2020 to 121.60 in 2021.
Read: EAC: From the Indian Ocean to the Atlantic Ocean!
Heightened commercial activity
Following the visit of Tanzania’s President Samia to Kenya in the previous year, President Kenyatta gave orders to the authorities in charge of agriculture to allow the importation of Tanzanian maize, which had been prohibited. In addition to this, he urged that all work permits be standardized and that the restrictions placed on business visas for merchants be relaxed.
President Kenyatta issued instructions to concerned ministers who need to visit Taita Taveta and Namanga to ease traffic congestion at the borders so that vehicles can continue to transfer commodities between the two nations. This was necessary so that trade may continue. Those who had Tanzanian Covid-19 health clearance certificates were required to be granted permission to enter Kenya and vice versa.
Kenya had a critical need for the products. The overall amount of maize produced dropped from 42.1 million bags in 2020 to 36.7 million bags in 2021, as stated by the KNBS report. The output of coffee had a decline within the same period, going from 36,900 to 34,500 tonnes. The consumption of tea has also decreased, with officials blaming the weather and the control measures for Covid-19 as the reasons. As a result, Tanzanians could better supply the Kenyan market due to the agricultural imbalance that existed between the two countries.
In 2021, Tanzania increased the amount of food that it ships to Kenya. “Kenya’s imports from Tanzania nearly doubled from $242.6 million in 2020 to $473.9 million in 2021,” said Kenya’s Treasury Cabinet Secretary Ukur Yatani, reflecting on the previous year’s gains. This increase was partly due to an increase in maize and rice imports from this Tanzania.
In a similar vein, Kenya’s exports to Tanzania and the Democratic Republic of the Congo dramatically climbed from $276.5 million and $124.3 million in 2020 to a total of $396.5 million and $212.2 million, respectively. A rise in domestic exports of tea, cut flowers, and coffee to the Democratic Republic of the Congo and soap shipments to Tanzania was cited as the cause of the increase.
It is no doubt that the softened stance has benefited the economies of both Kenya and Tanzania. If the last year’s results on trade, imports and exports are anything to go by, then the excellent relationship between the two EAC neighbours needs to be protected at all costs. With elections looming in Kenya, the next government needs to maintain the tempo of economic growth by nurturing the bilateral association with Tanzania.
Read: Tanzania: Railway lowers freight costs, increases exports in EAC
Source of original article: Investing – The Exchange (theexchange.africa).
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