Ugandan traders catch the cold from Kenyan sneezing

Although the government has reassured that the protests in Kenya over will not affect trade between the two countries, there are concerns that the protests could worsen, leading to increased prices of goods in Uganda.

Protesters in Kenya have pressured President William Ruto’s government abandon plans to sign the Finance Bill 2024 and have vowed to continue with demonstrations today.

The Finance Bill, after being passed by MPs, was submitted to Ruto’s office for signing into law. Kenyans, including industry groups, have widely criticized the legislation, saying it imposes punitive new taxes and raises existing ones on a wide range of goods and services, thereby escalating the cost of living.

The protests, which began in Nairobi last week, have spread to other major towns and cities such as Kisumu, Nakuru, Eldoret, Nyeri, and Mombasa, and were witnessed in more than half of the 47 counties on Tuesday.

Experts have noted that the situation could affect not only Uganda’s economy but also those of other neighboring countries if the protests continue.

Issa Sekitto, spokesperson for the Kampala City Traders Association (KACITA), said imports coming through the Mombasa port place Kenya as a major gateway for Uganda's transit cargo.

Any interruption in Kenya that affects the flow of cargo, including key raw materials essential for Ugandan industries, will have an adverse effect on Uganda's economy.

“The truth is that when the Mombasa port is affected, it impacts 70 percent of Uganda's exports and 75 percent of its imports,” Sekitto stated.

Kenya is one of Uganda's top three export destinations and its biggest trade partner in the region.

Richard Sserwadda, from the Regional Lorries and Drivers Association, urged traders to avoid rushing, especially those with non-perishable goods, due to fears of potential losses.

“Even a slight disturbance can cause significant losses. Those in these trucks need to eat and drink, and their families may require assistance. There is a lot to lose in this situation,” he said.

Sekitto, however, warned that if the situation in Kenya does not improve, the prices of goods in Uganda could increase, worsening the situation.

“Whenever there is a supply shortage, our economy, which relies on demand and supply to determine prices, will see a price increase,” he said.

He recalled the 2007-2008 post-election violence in Kenya, which claimed more than 1,100 lives and severely impacted cross-border transporters.

During that chaos, trucks were set ablaze, cargo looted, and scores of drivers killed. Sekitto said some of those who suffered losses were never compensated, urging the government to develop a clear strategy to support traders.

“It is very dangerous when people lose trust in their leaders. The consequences could be worse than what happened in Kenya," he said.

"I don’t wish such events to occur in Uganda. The President was supposed to meet the traders, but the meeting was postponed. I request that he does not keep postponing, as the situation may get out of hand. If protests start, the damage will already be done."

Uganda, being a landlocked country, largely depends on its eastern neighbor for imports and exports through the port of Mombasa.

Kenya is Uganda's main supply route for essential goods, including fuel. Kampala is also Nairobi's main trading partner and importer of its goods.

In the first half of 2022, exports of Kenya-made goods to Uganda amounted to Ksh36.2 billion ($277 million), only second to the US at Ksh38.8 billion ($297 million). Other countries that depend on Nairobi for imports include Rwanda, DR Congo, Burundi, and South Sudan.

The recent riots disrupted business in the capital Nairobi, parts of the Rift Valley, and western Kenya, affecting the movement of goods on the Northern Corridor, which links Kenya to the rest of Eastern Africa.

Reports indicate that the protests that paralyzed operations in western towns of Kisumu, Homa Bay, and Busia also affected business in Busia, a border town on the Ugandan side.

As the chaos unfolded, Ugandan roads leading to Kenya remained deserted, with public service vehicles, cargo trucks, and fuel tankers cutting short their journeys for fear of being caught up in the riots.

In 2023, Uganda's export share to Kenya was around 31.5 percent, followed by the Democratic Republic of Congo at 25 percent, and South Sudan at just above 23 percent, trading at a surplus of $716 million (about Shs2.6 trillion) with EAC partner states.

The leadership of different traders in Kampala has also warned its members, many of whom are importers, to avoid moving cargo at night.

Those importing from Kenya, particularly from Nairobi, and with goods in Mombasa, should proceed slowly due to the directive in Nairobi against nighttime cargo movement.

The Uganda Manufacturers Association reported losing around $15 to 20 million worth of imported goods per day during the protests in Kenya. An additional $5 to 8 million worth of export goods were also lost each day, according to association.