Tuesday, 15 May 2012

Uganda is Kenya’s top export Market in the world


  UGANDA IS kENYA'S top export market in the world, we can report. The country absorbs more Kenyan exports than Britain and the US combined. While Uganda absorbed US$904 Million worth of Kenyan exports, the UK-US duo absorbed only $862million in 2011.

This development shows that contrary to initial fears, intra-east Africa Common market trade is growing significantly. An analysis of trade data reveals a marked growth in trade within the region. Even weak countries like Burundi also export to her partners in the region.

A report published by the Central Bank of Kenya shows that , Uganda is the world’s leading export destination for Kenyan exports, way ahead of Britain, the second leading export market for Kenya.   While Uganda consumed US$904 million worth of Kenyan exports in 2011, Britain consumed US$557 million worth.

Tanzania came in third ahead of Netherlands and the US. Tanzania, having absorbed US$496 million worth of Kenyan exports is the second largest market in the East Africa common market bloc.  In east Africa Rwanda is the third largest market although lawless Somalia absorbed some US$ 198 million worth Kenyan goods. Rwanda absorbed US$161 million.

Generally Africa absorbed US$2947million worth of Kenyan exports in 2011. East African common market absorbed an estimated 60 per cent or US$1.7 billion.

On the other hand, a report by the East Africa common market, EAC, shows that Kenya is the leading export destination for manufactured exports by her neighbours.  The EAC publication, dubbed facts and figures 2011, shows that Kenya absorbed more than US$500 million worth of exports from Tanzania and Uganda combined in 2010. Uganda exported US$284.4 million worth to Kenya while Tanzania exported some US$210.5 million worth in the same years.

Trade data for 2011 is not readily available on exports volumes by the two countries last year. However, extrapolation by the author, based on recent growth rates, estimates Tanzania exports to have reached $230million last year. Uganda’s exports on the other hand are estimated to have hit the US$300 million mark.

The EAC report shows that Ugandan exports to Kenya rose 481 percent between 2002 and 2011. She exported a paltry US$59 million worth in 2002 which rose to US$ 284.4 million in 2011. On the other hand Tanzania's exports rose by 554 per cent over the same period from US39 million to US$210 million in 2010 going by the official data.

Both documents show that intra-EAC trade has been rising since 2002 dealing a death blow to fears that some weaker countries will be swamped in. Analysts say that although intra-EAC trade is in favour of Kenya, there are encouraging signs that all partners are gaining from integration.  

The data shows that both Tanzania and Uganda, once considered underdogs in the regional export market, have registered huge growth in export to Kenya. Kenya, the regional economic powerhouse, it was initially feared, would force the closure of the manufacturing sector in Tanzania and Uganda.

This fear was the cause of resistance to lower taxes by Tanzania. But with the initial fears overcome, trade between the five member countries is picking up. Ugandan and Tanzania are now the leading destinations for Kenyan manufactured exports. Kenya in turn, is nudging the manufacturing sector in Kenya and Uganda to grow by consuming some of her goods.

This means that, although their export base is small, both Tanzanian and Ugandan manufacturing sectors have a high potential market in Kenya. Kenya is a high consumption market that the manufacturing sectors in the common market should seriously target in order to grow.

The east African countries began their integration process way back in the 1990s. They began the process began in 1995 with East African co-operation thereby opening trade and economic co-operation between the neighbouring countries. The co-operation was deepened to a Customs union in 2005 resulting in further expansion of trade and economic integration. In 2010 it was deepened into a common market with freedom of movement of goods, Capital and Labour.

Though some aspects of the common market are still contentious, the regions integration is forging ahead with cross-border investments growing.

The reports indicate that Kenya’s export to Africa have also been growing US$141.4 million in 2002 to US$518 in 2011. This is an encouraging situation especially as Africa faces a declining demand for her traditional exports to Eurozone, which is going through a sovereign debt crisis.  The rise in intra-Africa trade, says the Economic report for Africa 2012, will cushion the exporting countries from the negative effects of the chaos in Eurozone.

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