Eastern Africans will trade and visit each other Migingo or no Migingo

Thursday July 16 2009
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President Jakaya Kikwete of Tanzania welcomes Kenya's President Mwai Kibaki at the Julius Nyerere International Airport in Dar es Salaam, July 16, 2009. Eastern Africans are united by a web of historical, political and economic interests which render them dependent on each other. Photo/FIDELIS FELIX

Rwanda and Burundi joined the East African Community last week perhaps underscoring the folly that is the Kenya-Uganda border dispute over the Migingo Island on Lake Victoria.

Amidst the quarrel both sides kept on saying they were too inter-dependent to go to war or let the row continue because they would lose mutually.

Clearly, eastern Africans are united by a web of historical, political and economic interests which render them dependent on each other.

This can be best illustrated by a cash claim sent recently to Uganda by Tanzania. Tanzanians want $58 million compensation for their contribution to the 1979 war that liberated Uganda from dictator Idi Amin. The item was registered under Kampala’s foreign debt and Uganda is pushing for a waiver.

“Uganda is yet to pay because negotiations are still ongoing to request Tanzania to reconsider and write off the debt,” said Mr Hannington Ashaba of the Ugandan Parliamentary Budget Office.

In 1979, President Julius Nyerere ordered the Tanzanian army to enter Uganda and repel Amin’s soldiers who had invaded Kagera region.


Eventually, he threw his weight behind Ugandan exiles in Tanzania led by Yoweri Museveni and kicked Amin out of power.
Tanzania footed the bill for the invasion.

The East African neighbours have always come to the rescue of each other in case of trouble. Kenya’s post-election violence is the most recent.

Tanzanian President Jakaya Kikwete and his predecessor Ben Mkapa teamed up with former UN boss Kofi Annan to broker a peace deal between President Kibaki and Prime Minister Raila Odinga which pulled Kenya from the brink of disintegration.

For its part, Uganda is still host to nearly 1,000 Kenyans who fled the country during the violence last year.

But it is Tanzania which has, perhaps, sheltered the highest number of refugees of an East African nation in turmoil.

During the 1994 genocide in Rwanda, Tanzania hosted more than 600,000 Rwandese refugees. Due to the high Rwandese population at Benako in northern Tanzania, the place has been christened ‘Little Rwanda’.

Tanzania stills hosts a significant number of Burundian, Congolese and Rwandan refugees — some of whom have acquired local citizenship.

And the noisier the feuds among East Africans become, the more they are glued together by economics.

Kampala depends on the Kenya-Uganda Railway, which starts from Mombasa, for its exports and imports. The railway is also an important business link to Rwanda, Sudan, Burundi and the Democratic Republic of Congo.

If blocked, train wagons destined for Uganda and other countries in the Great Lakes region would be grounded in Kenya as happened during the Kenyan violence and when Nairobi youths uprooted sections of the railway recently over the Migingo issue.

Cargo operations were halted, hurting business in both countries.

It is also noteworthy that Tanzanians from Mwanza and Bukoba in the north-western part of their country travel to the capital, Dar es Salaam, through Nairobi by road. The journey from Dar to the northern parts through the Tanzanian mainland can take several days due to poor roads.

On the other hand, Uganda is the access point for other East Africans to South Sudan and the Democratic Republic of Congo.
And being a landlocked country, Rwanda uses the Northern Corridor— Uganda and Kenya— for its imports. In terms of transport, at least ten buses ply daily between Kigali and Kampala while RwandAir flies seven times a week to Uganda.

For its part, the Jomo Kenyatta International Airport in Nairobi is a major transit point for East Africans travelling to various European countries.

But trade is the major link between East Africans.

A survey by the East Africa Business Council on 12 border points in East Africa last year revealed massive informal and formal trade.

The total value of exports declared stood at Sh158 billion ($2.012 billion) while the total value of imports stood at Sh1 trillion ($13.39 billion).

Kenya’s East Africa Community Minister Amason Kingi has told parliament that due to the customs union, the volume of regional trade has increased from $750 million in 2003 to $1.5 billion in 2007.

Perhaps unknown to the now-silent warmongers is the fact that Uganda is Kenya’s biggest trading partner.

Mr Kingi says that Kenya’s earnings from exports to the EAC has been rising from Sh45 billion to Sh62 billion.

In 2007, for instance, Uganda imported goods worth $500 million from Kenya, up from 400 million the previous year, while its exports to Kenya increased from $88 million to $118 million.

According to the Central Bank of Kenya, the value of exports to Uganda rose to Sh33.5 billion in 2007 from the previous year’s Sh27.5 billion mainly due to a strong performance of malt beer shipments.

A report by the council released in October last year shows that Kenya’s exports to the region are evenly distributed among Uganda, Tanzania and Rwanda at about 26 per cent of the total to each of the destinations.

And 44 per cent of Tanzania’s total exports land in Kenya while Uganda absorbs 28 per cent of them.

Rwanda is the main export destination for Ugandan goods.

For Rwanda, Kenya is the largest export destination within the union, accounting for 56 per cent of the total.

Among other benefits, a number of businesses have set up branches across the region due to the union.

For instance, Uganda is host to Kenyan supermarkets Uchumi and Nakumatt and financial institutions such as Equity Bank, Kenya Commercial Bank, Fina Bank and Diamond Trust Bank.

Other Kenyan firms which have made inroads into Kampala are Kenyan Airways, the Sameer Group, East African Cables and cooking oil manufacturer Bidco.

East Africa media giant Nation Media Group, too, has substantial investments in Uganda where it runs newspapers, radio and TV station.

Industries in Uganda say the union has increased their turnover by 48 per cent.

Others firms have spread their wings to Kigali.

For example, Kenyan cement companies and East African Cables have established a strong presence in Kigali to tap into the country’s fast growing construction industry. Further, Nakumatt has a store in Kigali. Nearly 2,000 Kenyans live and work in Rwanda, especially in the IT and the hospitality industry.

When President Kibaki visited Rwanda recently, he abolished work permits for Rwanda nationals working or carrying out business in Kenya.

He said owing to Rwanda’s investment-friendly policies, over 30 Kenyan companies had received approval from the Rwanda Investment Export Promotion Agency.

Mr Kibaki noted that entry of Kenya Commercial Bank in the Rwandan market was testimony to the attractive investment conditions and encouraged Equity Bank to spread its wings there.

Within three weeks after the opening of the Rwanda Stock exchange, Kenyan stockbrokers — African Alliance, Dyer and Blair, Faida Investment Bank and Tsavo Securities had already obtained operating licences.

Besides, Kigali has become an attractive designation for professionals after President Paul Kagame scrapped the requirement for work permits for EAC citizens.

Ugandan professionals are the major beneficiaries of the move.

The Great Lakes Centre for Strategic Studies estimates that 7,000 Ugandans living in Rwanda are professionals working with institutions of learning and international agencies. Others are artisans working in service industry, like hotels and schools. Indeed, the bigger East African market has provided more opportunities for businesses.

Today, Dar es Salaam is not only host to Ugandan and Kenyan professionals, but also firms which have decided to go regional such as Athi River Mining, East Africa Cables, Brookside, Kenya Commercial Bank and Diamond Trust Bank.

Kenya Airways owns considerable stake in Tanzania’s Precision Air while the Nation Media Group has made forays into the Tanzania media market through its subsidiary, Mwananchi Communications Ltd. Kenyan companies have recorded 86 per cent growth since the launch of the EAC customs union in 2005 while those in Tanzania and Uganda registered 78 per cent and 60 per cent respectively.

In addition to trade, education has become a critical convergence point for East Africans.

This has seen Uganda grow into a hub for education in the region with some of its institutions solely dependant on the influx of foreign students, the highest number being Kenyan.

Africa Insight is an initiative of the Nation Media Group’s Africa Media Network Project