Kenya is mulling new measures to stop “smuggling” of coffee into Uganda, according to media reports. Kenyan coffee farmers are attracted by instant payment across the border in Uganda. In Kenya, they wait as long as eight months to get paid.
Reports also had it that Uganda offers far better prices, with Kenyan coffee fetching as much as Ksh250 ( $2.5) for a kilogramme of cherry, while the highest paid farmers in Kenya receive about Ksh133 ( $1.3) for a kilogramme at home.
Kenya faces an uphill task here because the main reason why its coffee farmers get a better deal across the border is that the Ugandan market is highly liberalised in ways that Kenya’s might not be for a while. Ultimately, it is a structural, not price, issue as such.
Last week the industry regulator in Uganda, the Uganda Coffee Development Authority (UCDA), reported that the country’s exports soared by 82 per cent in October, compared with the same month in 2016. Kenyan beans probably had a hand in those eye-watering numbers.
That very liberal approach has its drawbacks though, with some rogue Ugandan coffee farmers reportedly throwing in chicken droppings, pebbles, and drying their beans hurriedly to spice the weight of their product. Sudan, the largest buyer of Ugandan coffee, at one point had enough and suspended imports until the Ugandans cleaned up.
With tighter controls, some real coffee has to replace the pebbles, and in comes Kenyan coffee.
This, though, should be a good, not bad, thing.
As the aroma of the Kenya-coffee-in- Uganda dust-up was still hanging in the air, President Yoweri Museveni came to Nairobi for a one-day meeting with President Uhuru Kenyatta. Museveni told us on his Twitter page that the meeting was at the invitation of Uhuru, and that they talked about the smooth running of the East African Community, troops in Somalia, peace initiatives in South Sudan, progress on the Standard Gauge Railway and that troublesome Economic Partnership Agreement (EPA) with the European Union.
It seems odd then that coffee should be an issue between these countries.
If the region had worked faster and smarter on economic integration, it should not be possible to “smuggle” any Kenyan anything to Uganda and vice versa.
We saw some promising shifts away from the narrow nationalist view of markets recently when Uhuru announced that East Africans would soon not need a permit to work and live in Kenya.
The real change will come from a more fundamental transformation in the old statist view of who owns what in a country. The people, or the state?
If coffee belonged to the Kenyan farmer, it should not be the business of a state agency and the border police who they sell it to. However, there are industries and sectors where this is not the case because they are still captured by the state, whose produce boards, cooperatives and other middle men extract rent from the producer.
These parasitic agencies are galore in Kenya. Then the politicians too enter the picture. As long as they can use the announcement of better prices for coffee – and things like maize – they will want to hold on, not for economic reasons, but vote mobilisation.
Where there is no capture and rent, magic happens – even in the most unlikely places. A while back, a friend in Kampala who had bought a fancy car called to say it had broken down and he had been told it would be best fixed in Nairobi.
He put it on the back of a lorry, sent it over and I had it delivered to a clever garage in Nairobi which fixed its complex system. When I went back to the garage later to take in my own less glamorous ride, I was pleasantly surprised to find it littered with nearly a dozen high-end cars with Ugandan number plates. Word had got out in Kampala after my friend’s car had been fixed, and the Nairobi garage was doing a roaring business.
In 2007 the Commonwealth Heads of Government Meeting (CHOGM) was held in Kampala. It was really a big deal. One day a naughty item in the newspapers caught my eye. The prostitutes of Kampala were complaining that sex workers from its EAC neighbours had invaded the city and “flooded the market”.
The bishops must have been scandalised, but the bigger message was clear: for East Africa, the market always wins.
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