While there has been some positive news coming out of the African continent due to improved economic performance, that doesn’t mean everything is going well. This past week, what looks like a minor incident took place on the Kenya-Uganda border, but this occurrence exemplifies a much larger problem that has plagued African development for decades.
An article in The East African reported that about 30 trucks that were carrying potatoes were stuck at the Busia border due to the fact that the Uganda Revenue Authority (URA) reportedly raised a withholding tax on the goods by about 10 times the previous rate. This withholding tax was implemented in early April, and according to those who were importing the potatoes, they had to pay a tax of about 32 US dollars per truck as a result of this new piece of legislation. However, importers are now arguing that the URA has raised the tax to a whopping 315 US dollars per truck, a ridiculous increase that certainly makes it more difficult for Ugandan consumers to obtain potatoes.
Now, there has been some dispute from URA authorities, who reportedly note that while the withholding tax was increased, it was not increased to the amount that the importers had said.
Unfortunately for those of us who are not in Busia, it will be impossible to know for sure what exactly the increased rate has become, and who exactly is telling the truth about this situation. Nevertheless, Haji Mande, chairman of the Uganda Clearing Agents and Forwarding Association Jinja branch, argued that the tax itself, since its inception in April, has been too high for consumers. Mande also worries that Kenya could retaliate against Ugandan products, which has happened in the past.
Stories like this are depressing and far too common in Africa. There are fantastic reasons to believe that improved trade flows lead to better outcomes for the parties involved, but petty disputes, corruption, and government overreach make markets inefficient. Let’s hope that this situation gets dealt with soon and trade can flow easily across these borders. If that happens, both Ugandans and Kenyans will be better off.
Alexander Jelloian
Alexander Jelloian is the Research and Project Manager at the Initiative for African Trade and Prosperity.
While there has been some positive news coming out of the African continent due to improved economic performance, that doesn’t mean everything is going well. This past week, what looks like a minor incident took place on the Kenya-Uganda border, but this occurrence exemplifies a much larger problem that has plagued African development for decades.
An article in The East African reported that about 30 trucks that were carrying potatoes were stuck at the Busia border due to the fact that the Uganda Revenue Authority (URA) reportedly raised a withholding tax on the goods by about 10 times the previous rate. This withholding tax was implemented in early April, and according to those who were importing the potatoes, they had to pay a tax of about 32 US dollars per truck as a result of this new piece of legislation. However, importers are now arguing that the URA has raised the tax to a whopping 315 US dollars per truck, a ridiculous increase that certainly makes it more difficult for Ugandan consumers to obtain potatoes.
Now, there has been some dispute from URA authorities, who reportedly note that while the withholding tax was increased, it was not increased to the amount that the importers had said.
Unfortunately for those of us who are not in Busia, it will be impossible to know for sure what exactly the increased rate has become, and who exactly is telling the truth about this situation. Nevertheless, Haji Mande, chairman of the Uganda Clearing Agents and Forwarding Association Jinja branch, argued that the tax itself, since its inception in April, has been too high for consumers. Mande also worries that Kenya could retaliate against Ugandan products, which has happened in the past.
Stories like this are depressing and far too common in Africa. There are fantastic reasons to believe that improved trade flows lead to better outcomes for the parties involved, but petty disputes, corruption, and government overreach make markets inefficient. Let’s hope that this situation gets dealt with soon and trade can flow easily across these borders. If that happens, both Ugandans and Kenyans will be better off.
Alexander Jelloian
Alexander Jelloian is the Research and Project Manager at the Initiative for African Trade and Prosperity.