What the Museveni-Kenyatta trade deal tells us about Uganda and Kenya

Now there is this small argument between President Kenyatta and opposition Cord leader Raila Odinga about, of all things, Ugandan sugar.

Kenyatta says it makes business sense to import Ugandan sugar, because Uganda is reciprocating and will import diary and beef products from Kenya, as per the trade pact he just signed with President Yoweri Museveni in Kampala.

That is better than importing sugar from Brazil, which is not buying Kenyan goods in return, and Uganda is, after all, a fellow member of the East African Community.

Raila’s concern is that this will result in cheap sugar being dumped into the Kenyan market, and cane farmers will suffer. His position, though, is understandable, because the stronghold of his Cord is in the sugar-growing areas, and he is doing the right thing by them.

But as an East Africanist, I am with Kenyatta on this one. First of all, just like not every country needs to make its own cars or aeroplanes, not every country needs to produce its own sugar — even if they could do it more inefficiently than Kenya’s.

Thus, airlines in the Middle East and Asia, which don’t make aircraft, are using American and European planes to run more successful airlines than European and US carriers.

CAPITALISM

But sugar is also a metaphor for some of the surprising differences between Uganda and Kenya.

If you came of age in the 1980s, there were only three “capitalist” countries in Africa: South Africa, Malawi, and Kenya.

However, South Africa was an apartheid state, and Malawi was a tiny economy ruled by a strange old dictator who wore bowler hats called Hastings Kamuzu Banda.

The rest of Africa professed some version of socialism. The popular view then was that Kenya was alone out there as a capitalist economy.

In the late 1980s, something changed in this region. Uganda embarked on one of the most extreme privatisation and economic liberalisation programmes the continent, some claim the world, had ever seen.

A chunk of the army was sent home; the civil service was virtually dismantled; the cooperative movement and its bank were dissolved; everything was put on the table. It hurt a lot, but perhaps, in the end, it was for the better.

The result is that unlike Kenya today, there is no acre of land farmed in Uganda by a company or parastatal in which the government has a stake. There is no state control of any farm prices, nor does it even own a garage where it keeps a bag of maize the way Kenya’s National Cereals and Produce Board does.

All that is in the hands of private business. Thus a Ugandan born in the 1990s simply has no context for understanding that a government-owned company can grow sugarcane.

This spreads the risks differently, and affects the politics. Thus for Museveni, unlike a leader in Kenya, he does not have to worry about thousands of people who grow or work in sugar cane. He only has to deal with the chiefs in sugar companies — and they are two big private ones.

At that level, it is easier to sort them out with policy and tax breaks if need be. They can worry about the outgrowers.

MARKET SHARE

But in the specific deal Museveni inked with Kenyatta, the two men stand on interesting ends of the trade stick.

Museveni is one of, if not the largest, cattle owners in Uganda and boasts about how he makes a fortune selling beef and milk. Kenyatta’s family controls over 50 per cent of the milk industry in Kenya.

By inking that deal, he is happily allowing Kenyatta to come in and take away his market share. The equivalent of that would be if Raila were a sugarcane farmer, but he loudly supported the deal to give Ugandan sugar free access to the Kenyan market.

These differences in how the two countries have reorganised their public and private sectors was all too evident in April when Kenyatta announced the very long list of appointments to parastatals.

It was a whole book, and when I studied it, there were more parastatal top positions in Kenya than there are in the whole of the Uganda government.

The point being that in East Africa today, Uganda is the true capitalist economy. Kenya, with its humongous parastatal sector, is like an enlightened communist state. How did this happen?

The author is editor of Mail & Guardian Africa (mgafrica.com). Twitter@cobbo3