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Is it just economic Ban or plans for Tanzania to outsmart Kenya as East Africa’s powerhouse?

The ongoing sour relations between Kenya and Tanzania were felt in the month of July as Kenya banned gas and wheat export from its neighbor, Tanzania.

Kenyan media reported that president Magufuli wrote to Uhuru Kenyatta to complain about Kenya’s ban on its gas and wheat exports and other trade barriers.

“The Tanzania presidency has officially complained to Kenya. However, we have received communication from them banning our exports of tyres, margarine and fermented milk products. We hope this trade war is nipped in the bud before it gets out of hand,” a source said.

Kenya is maintaining its stand by saying it will only allow wheat flour and other products that are milled from grain wholly produced in Tanzania, or whose full Common External Tariff (CET) rate has been applied.

“The conclusion that wheat imported at a reduced rate of 10 per cent within Kenya, Tanzania and Uganda can be subjected to a preferential regime is not accurate. Not all importers in Kenya are allowed to import wheat at 10 per cent and millers are also subjected to restrictions on the limit they can import under the duty remission scheme,” a brief prepared in response to President Magufuli’s reads.

President Uhuru was expected to study the brief before responding to his Tanzanian counterpart. The trade spat comes just days after Kenya started enforcing work permit rules along its border, with Tanzania, rendering many workers jobless.

Dar es Salaam in a statement protested Nairobi’s move to totally ban gas and wheat imports from its territory despite an agreement reached between the two countries. Kenya said it would effect the ban in July month because of safety concerns over the gas coming through from Tanzania.

Trade Principal Secretary Dr Chris Kiptoo said Kenya would not allow Tanzanian wheat if a 25 per cent CET tariff is not paid.

“We import our wheat under duty remission at 10 per cent instead of the 35 per cent. Our neighbours were granted a stay of application on the CET rate and therefore import theirs too at the same percentage as ours. The reason they got a stay was to allow them to plug their deficit, but we are seeing their traders trying to sell the same to us at no duty cost. That’s against the EAC rules,” Dr Kiptoo said.

Tanzania cited the same trade rules in its protest.

“We believe that decisions made in the official meetings between EAC member states must be implemented by concerned parts,” Permanent Secretary in Tanzania’s the Ministry of Industry, Trade and Investment Adolf Mkenda said.

“We believe that decisions made in the official meetings between EAC member states must be implemented by concerned parts.”

Permanent Secretary in Tanzania’s the Ministry of Industry, Trade and Investment Adolf Mkenda

The EAC Secretariat has written to Kenya over the trade dispute.

“The reason Tanzania asked for a stay is because they have a deficit. If then you don’t have enough supply, then how can you have enough to export? They were told that goods under remission of CET cannot be profitably traded,” EAC Principal Secretary Betty Maina told the media during a press briefing.

Tanzania and Uganda have a stay of application of CET rate and import wheat at 10 per cent instead of 35 per cent while Burundi and Rwanda were last year granted stay of application of the CET.

Tanzania argues that even Kenya applies the 10 per cent CET stay but the governance structures for the two countries under this programme are different.

In Kenya it’s a requirement for millers to stack up all the domestic wheat before applying for any import but Dar on the other hand does not.

Mr Mkenda said that Kenya’s decision was against the East Africa Community agreement reached between the two countries.

“We have expressed concern over Nairobi’s refusal to allow Tanzanian exporters to transport cooking gas to Kenya through Kenya-Tanzania land border. We decided at the EAC sectorial meeting, which brought together ministers of trade, industry, finance and investments from the EAC that Kenya should lift the ban. During the meeting, Kenya agreed to lift the ban on importation of cooking gas and wheat through Tanzania-Kenya borders,” Mr Mkenda said.

Liquid Petroleum Gas

Kenya’s Petroleum Principal Secretary Andrew Kamau said that it will not allow the imports of gas via trucks starting July this year over safety concerns.

“We have designated Mombasa as the only point of import for LPG. So if you want to play in this game, come and invest in Kenya, import through Mombasa and then we can follow up who is supplying unlicensed dealers. But now this whole thing about Tanzania is a thing of the past,” Mr Kamau said.

Ms Maina noted that Kenya will be purchasing LPG testing facility to be stationed at the border Custom points of Namanga and Voi but in the meantime, the ban will stay in effect.

“Until the testing facility is installed in these Customs border points, Mombasa will remain as the only entry point for gas for the country to track the quality of LPG imports into the country. This is not a ban but an issue of the point of entry of the product.

What we have told Tanzania is that they should pass it through our designated gas facility in Mombasa where we will be able to test the product on its quality and safety, rather than through Namanga where we don’t have facility to test the product,” Ms Maina said.

The Safety and quality of Tanzania’s LPG

According to the Council of Ministers meeting, Tanzania insisted on its traders trucking their LPG products through Namanga back into Kenya, with the latter arguing that given the region imports its LPG products through Mombasa, it made no sense in trucking it from Mombasa into Tanzania, then Dar re exporting it via Namanga.

“We have recently promoted the use of gas, and we would like to champion safety and quality of the same product. Unfortunately, we cannot vouch for the same product that is being trucked because we don’t know how it was handled and repackaged.

That’s the reason we aren’t allowing the gas imports through our inland ports,” Ms Maina said.

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