Kenya: How Can Uganda Get Out of the Cycle of Relying On Kenya Buying Its Milk?
This seems to be a cyclical problem that continues and will continue to occur untill a sustainable solution is found.
Ugandan milk was banned from entering Kenya the other year and again last year.
It had to take both Ugandan Ministers for East Africa and that of Agriculture who took a somehow combative approach of even threatening the possibility of potential retaliatory actions against Kenya that the Kenyans caved in and reluctantly rescinded the ban.
Surely, there must be a lasting solution or a mechanism found for addressing this cyclical problem that always borders on bringing the two neighboring countries to an ugly diplomatic and trade spate?
The solution is in growing our own consumption capacity which wouldn’t necessitate us to export much of the milk that our farmers produce.
Our own enhanced ability to consume our locally produced milk is essential.
There seems to be no convincing rationale in us continuing to rely on the consumption of our milk by our neighbour.
Yes, it is true that there is currently ready market in Kenya for our milk, but as all countries try frantically to grow their own production in a bid to address the prevailing trade deficits, we need to be aware that soon or later, Kenya will no longer be an infinite market for our milk.
Secondly, we need also to interrogate and find out how Kenya has managed to grow over time its consumption market for milk and eggs, the two products that Ugandan businessmen and traders find profitable to take to Kenya.
It starts with their feeding policy in schools. While we have continued to maintain that feeding of children in schools is a luxury which remains an option for parents depending on their ability, the Kenyans made it mandatory for the children to feed at schools.
This opened up the schools to be the guaranteed primary consumers of such nutritional food items such as milk, sugar, bread and eggs.
No wonder these are the very items that Ugandans rush to trade with our neighbors because there is sufficient and demanding consumption market in Kenya.
The Kenyan government knew that while there are still gaps in the consumption capacity of such goods by the ordinary wananchi, there was need to increase this uptake by the government providing funding to the school feeding of children program. It must have been a calculated and deliberate policy.
This has tremendously helped to ensure that whatever capacity is produced locally in Kenya of those items is taken up.
This helps to create demand for more production while helping to stabilize the sectors involved.
Ofcourse because the local demand isn’t sufficiently met by what is produced locally in Kenya, the inevitable thing is for them to import from Uganda and probably elsewhere in order to supplement their local capacity.
However, as I have pointed out as above, this window of opportunity for Uganda exporters may not be available for ever.
Most importantly it must be noted that whenever there are such arbitrarily actions for example of not renewing licenses or banning entry of our products into Kenya, it is the local farmers here who suffer adversely.
An abrupt disruption in the export or sale chain renders farmers in the chain line to face untold losses.
Since we are dealing with economically very sensitive areas of production engagement, any such abrupt and unexpected disruption ends up not only causing losses but also causing most farmers to abandon the production trade all together. Business close down as we have already witnessed what happened last year when a similar ban was made.
This hurts the economy severely to the extent that even if the ban is eventually lifted, the damage will have been felt and done. The farmers who will have been pushed out of production will have had their businesses shut down and inevitably jobs lost.
What becomes more dire is that the badly needed taxes revenues by the Uganda Revue Authority critical to the funding of the country’s national financial budget also disappear with the closing down of these enterprises.
As experience is currently showing, we are in an economic situation where we can’t have the luxury of foregoing tax revenue. We need this revenue much more now than ever.
Therefore, for going forward, we need to be innovative on how we can grow our own local consumption capacity of these basic items like eggs, milk, sugar and bread.
Increased capacity of local consumption will not only help to absorb what we produce, but it will also serve to grow and expand the economy as more investments will be attracted due to our propensity to consume and spend.
An economy with low consumption capacity will always find it hard to attract meaningful investments.
It doesn’t matter how much investment campaigns that are made. An investor whether local or foreign, is much interested in knowing who and the size of those that will be able and willing to consume what he produces.