011s
1,200 7,935 16.3 14.8 100.2
Suaer &
GU~r confectionary 6,744-6,011 15.2
11.289.1
'-rhea
t andcereals 8,802 5,998 19.9
11.268.1
Meat ~d live
aniilla1s 2,911 5,830 6.6
10.8200.3
Dairy products exc1. eGgs 3,8G8 5,298 8.1 9.9 137.0
Beans,
peas
and.lentils 1,919 3,069 4.3 5.7 159.9
Tea 2,707 2,870 6.1 5.2 106.0
Fruits .:.nd ve::'G-~.::.b1es
2,372
2~7175.4 5.1 114.5
~Tood and
timber
6681,606 1.5 3.0 240.4
FeedinE;
8t~f8 1,1101,404 2.6 2.6 126.5
Fish .:-.nd fish
prelk1.r:.tions 907 1,290
2.0 2.4 142.2Spices
370-~
~.!-~ 121.4
Total
44,27753,762
).00.0 1QQ.&.121.4
!J
Procluets aj.'l'anc,od according '\:;01967
va1L~e of intl~a-subreu"i')lla1tr.:.cle indescendinG
order.147.
The main commodity flows, i.e. those exceeding $200 thousand in1967,
are shown in Table 11-9. Live animals are traded from Madagascar and Tanzania to Mauritius and Uganda respectively. The main sub-regional meat and meat preparation exporters are Swaziland, Botswana and Kenya and the main importers are Zambia, Uganda, and Tanzania.In this connexion it should be noted that this commodity group is extremely broad, embracing fresh, chilled or frozen beef, mutton, pork, poultry meat, tinned meat, meat pastes, offals, etc. This explains the two-directional flows, i.e., from Kenya to Tanzania and also from Tanzania to Kenya. The only sub-regional wheat exporter is Kenya who supplies Uganda and Tanzania. Regarding beans, peas and lentils (apart from the EAC countries) Malawi and Ethiopia are involved in sub-regional trade, with the former supplying Kenya,the latter Mauritius.
148.
The main sub-regional flows with respect to sugar are from Uganda to Kenya and Rwanda, from Madagascar to Zambia, and from Malawi and Tanzania to Zambia. Sub-regional flows in margarines and vegetable oils involve only the EAC countries. The most important importer is Kenya. Tobacco goes from Zambia to MalaWi, from Uganda to Tanzania, and from Tanzania to Kenya. The only important sub-regional exporter of dairy products is Kenya who supplies Uganda, Tanzania and Zambia. Sub-regional trade with respect to other commodities involves mostly the EAC countries with the following exceptionsl fruits and vegetables from Malawi to Kenya; tea from Kenya to Somalia and from Malawi to Kenya; and fish from Tanzania to Zambia.149- Detailed trade matrices for the trade flows discussed above and summarized in
Table 11-9 appear in Appendix I tables 1 to
17.
These trade matrices have been established after a preliminary assessment of sub-regional trade in East Africa and cover only such commodities in which relatively important trade existed in1967.
All data concerning sub-regional trade in selected agricultural commodities and used throughout the preseat chapter are derived from Appendix I1/.
150. The total deficits or surpluses concerning trade in selected agricultural commo-dities are summarized and compared with sub-regional trade in table 11-10. The commodities listed in this table are intended to be a set of commodities which indicates (1) the relative current importance in trade within the East African Sub-region with respect to dollar volume;and(2) the role these commodities may play in future trade. Some important commodities such as coffee, cotton and sisal, are not listed because of their relatively minor role in sub-regional trade. The commodities in table 11-10 are listed in descending order with respect to the total world export balance for the sub-region. Column three of this table indicates that in
1967
the Bub-region had the highest surplus in value terms in sugar. tea. meat, fruits and vegetables, feeding stuffs, pulses, tobacco and spices. The commodities with the highest deficits were dairy products, wheat, fixed vegetable oils, cereals other than Wheat, fish, sugar confectionery, wood and timber, and margarines.!I
Similar trade matrices as those attached in Appendix I and relating to1967
have been worked out for1964
and could be made available to interested bodies on request. In this connexion it should be noted that many inconsistencies and difficulties were en-countered during the preparation of these trade matrices. While some of these in-consistencies were due to the'nature of the methodology adopted, most of the other difficulties were due to the nature and quality of available data. In view of this the data in the trade matrices can only be taken as approximate indic.tors of the direction and magnitude of the intra-sub-regional trade flows.Commodity .F rom T 0 Val u e
Live animals Madagascar Mauritius 1,052
Tanzania Uganda
262
Meat and meat preparations Swaziland Zambia
1,667
Botswana Zambia 802
Kenya Uganda
451
Kenya Tanzania
390
Tanzania Kenya
319
Uganda Tanzania
265
Wheat and wheat flour Kenya Uganda 2,)00
i\.enya Tanzania
2,195
Beanst peas and lentils Tanzania Kenya
m
Uganda Kenya
643
.~rgarine and shortenings Uganda Kenya
2,305
Kenya Uganda
586
Fruits and vegetables Kenya Tanzania
835
Kenya Uganda 691
Fish and fish preparations Tanzania Zambia
855
Source: Foreign Trade Statistics for Africa Series B. Trade by Commodity 19~7, No.
15
and16,
UNECA, E/CN.14/STAT/SER.B/15. East African Communit~,East African Customs and Excise, Annual Trade Report of Tanganyika, Uganda and Kenya,
1967.
Statistiques du Commerce Exterieur du ~~dagascar, ~mportation-Exportations. Fascioule No.2, Annee 1967 and other national sources.
!/
Other than wheat and wheat flour151. As far as coun try balance s in aub-re gional tra.de are con ce rrie d , agri eu I tural commodities cannot be sep~rated from manufactured products.
Kenya's exports to the sub-region exceeded her imports therefrom in 1967 by about US$44 million. Practically all this bal~nce is due to her surplus in trade in manu-factured products since Kenya's sub-regional imports of abriC'.J.ltural commodities practically equal her exports thereofo
Uganda had a surpl~s of sub-regional exports of agricultural commodities in 1967 of about US$5.5 million, but in manufactured products the contrary was the case, ioe.
imports exceeded exports by some US~12.4 million. Thus she imported fro~ the sub-region, mainly from Kenya, about US£6.9 million more than ~he exported towards ito Tanzania exported, in 1961, to the sub-region less than she imported from it with respect to bath agricultural and manufactured products, the excess of imports over exports being U5$3.6 and USS4.9 million respectively.
Zambia imported from the sub-region in 1967, more or less the same value of agri-cultural products as she exported to it. Her il:lports frof.'l the sub-reb"ion witn
re s pe ct to manuf s c tu re d products, howeve r, excee ded he r exports by some US$14.0 mil'"
liono
Ethiopia, Rwanda, Burundi and Somalia exported to the sub-re6~on approximately the same value of agricultural commodities as they imported fro~ ito All these countries, however, had a "de ra cf tit in sub-regional trade in manufactured products varying \Ii thin the range of USSO.5-3.5 milliono
Malawi's sub-regional imports and exports of manufactured products were almost e~ual
in 1967, but her imports of agricultural products exceeded her exports by U~$2.6
million.
Mauritius' sub-regional imports of both agri~~lturaland industrial commodities ex-ceeded her exports in 1967 by US$1.9 and US$2. 7 million respe ctively.
Madagascar's sub-regional exports of manufactured products nearly balance d her imports in 1967. Her sub-regional exports of agricultural commodi ties, however, were higher than imports by some US$2.1 million o
152. From the comparison of
1964
and1961
data on sub-regional traue, the following conclusions may be drawn.Kenya: ~lmost maintained the active balance of her exports towards the sub-region in spite of the fact that the surplus of her exports to Uganda and Tanzania over her imports from these countrie s dropped by about US$24 million, becau se ehe considerably increased her exports towards other East African countries of the sub-regiono
Ug~da and Tanzania: substantially increased essentially their exports to Kenya and other countries of the sub-cregaon (from US$44.4 million in 1964 to US$68.7 million in
1967)
anQ thus cut the excess of their sub-rebional impo~ts over their sub-regional exports fro~USS39.5
million in1964
to US$15.4 ~illion in19670
All other East African countries increased their sub-regiolJal trade ti.rnover-s but at a higher rate on the siae of imports than on the side of exports. Their aggregate suo~regional imports of all commodities exceeded their exports thereof, in
1964
b.Y US-stl2.9 million and in 1967 byussas.s
nn Ll.Lon ; Most of this "defici til was due toinc~eased imports of industrial products since agricultural sub-regional imports of East African countries outside the EAC were higher in 1964 than imports by only US$2.4
mi~lion and in
1967
by US~4.1 million.'labIa II - 10: Tota..!...!!!.d Sub-ne~t~a1 Tra.2:.~_~.l}_S~~£.9ted Abricul-tu~~.Q£!!Lrnodi ties
(Thousands
USS:1961)
- . _____-___1
'~--2- - -
!rorId To3"{1:?1 .
tal4 (1+2) -'---
Sub-rG{S1.onal6
Exports Imports&
Ex~o~tBcommo..c!it~
Exp0rts IUlnorts....
Im1)(')rts!Iinus I,:lportsPlus
Value(5:4) fl>
SU[;i..r
86,125 13
j550
+12,515 99,615 10,684 10.7
Tea
52,541 7,097 + 45,444 59,638 5,140 9.6
r':ea
t &: meat pre par.),ti ons4
0,00310,693
+29,310 50,696 8,626 17.0
Fruits
& veJetab1es 42,189 ' 15,431
+26,158 57,620 5,434 9.4
Feedi:~g stlti'fs
22,158 4,608
+18,150 21,366 2,808 10 3
Beans, peas
&: IGnti1z
18,3674,017
+14,350 22,3 84 6,138 27.4
Tobacco
28,714 14,397 + 13,811 43,611 18,570 42.6
Spicee 5,140 2,069
+3,071 7,209 898
12.5Li ve animals
3,280 3,361 87 6,647 3,034 45.6
1~r~ar1neB
& shorteninas 3,731 6,088 - 2,357 9,819 7,406 75.4
Hood Be timber
4,692 1,324 - 2,623 _12,016 3,212 26.7
Sugar confectionary
688 3,509 - 2,821 4,197 1,338 31.9
Fish
&
fish prepar~tionB3,154 6,936 - 3,182 10,090 2,580 25.6.
Ce~eals
except
,meat31,995 37,685 - 5,690 69,680 2,984 4.3
Fixed ve .etable oils
6,623 14,393 - 7,770 21,016 8,464 40.3
"Theat & trheat flou.r
4,504 19,688 - 15,184 24,192 9,012 37.3
Dairy products e:::o1. eGgs'6
2 1 6 1 2G,853 - 20,092 33,S14 10,596lh2.
Tott-..l 361,20;
198,205 +163,060 .lliJ..17° 107,524 .!2.d
aJ
Comncdd,ties lis"bed accor:::L.gto
the cc Luun3
values in dencending order.Source:
1961
Ea.st }.i':.~ica ~r,.'.d.e riat :i:ix. (Appendix 1)B.
Main factors impeding intra-sub-regional trade in agricultural commodities153.
In the previous chaptert current patterns of Bub-regional ~rade in agrioulturaloommodities were analysed. In general, it may be observed that both total and agricultural intra-sub-regional trade are relatively low. The question therefore arises, which factors are primarily responsible for this situation. In the sub-chapter which follows, the most important of these factors are briefly disoussed and Some are analysed in more detail as they concern development forecasts for intra-sub-regional trade in agrioultural oommodities covering the Second Development Deoade.
These are considered in Chapter
lv/E
of the present study.(i) Cost and price levels
154.
In Chapter I, it was suggested that in several East African countries ecolo-gical conditions concerned with production of various agricultural commodities do not differ too drastically, and in this sense t it ~as pointed out that the ecological complementarity between many East African countries was comparatively limited. In such circumstances, when other factors having an effect on production costs are not widely different, similar ecological conditions have, as a logical corollary, similar cost of production levels. If two countries with similar ecological conditions are able to produce enough to supply domestic demand for a given commod1tYt and if production costs in the sense described above are somewhat similar, then it beoomes obvious that prospects for trade in such commodities between such oountries must be limited.155.
Certain economic conditions which includ~for instance,levels of wages and prices of inputs may play an important role in bringing production costs in two countries to different levels. even though the ecological conditions may be basioally similar. High wage levels in a given country could well have the effect of pricing certain commodities out of a market where low wage levels prevail.156. Difference in cost and price levels, whether based on the effect of differences in ecological conditions or on other conditions, tend to encourage intra-sub-regional trade. Such a situation, however, is often outweighed by other factors which equate final price of the imported product from low cost sources to the same level as
locally produced high cost sources. Such factors might include the effects of trans-port oosts, storage and handling costs, duties, taxes etc. In Chapter I it has been indicated that comparatively limited yet significant ecological complementarities may exist, and in spite of this situation, intra-sub-regional trade in commodities may still be comparatively low and on occasi~n may even tend to decline. That is true for
instanc~for a commodity such as sugar. An explanation of this phenomenon may stem from a desire on the part of governments to achieve self-sufficiency. In such circum-stances certain criteria may be counted on to supersede the importanoe of other
considerations based perhaps more realistically on cost and prio&. A tendency to strive to achieve self-sufficiency, however, is understandable, because it is motivated tOward saving foreign exchange, to generating employment opportunities for local people, to the achievement of diversification of local production, and to a lessening of dependence on both imports and exports. Later on in the study it will be shown, however, that in the long run, specialization and mutual co-operation and exchange of commodities may be more in line with the vital interests of East Afrioan countries rather than "self-SUfficiency at a.ny price".
(ii) Transport and storage
157.
Inadequacy of transport and communication links between countries of the sub-region reflects firstly the unsatisfactory state of transport and communications within many individual countries, and secondly ~ lack of adequate links between East . African oountries arising out of the traditional orientation of the transport network tovard overseas outlets rather than towards neighbouring countries. The latterphenomenon is evident in virtually all countries of the sub-region, with the exception of the countries of the East African Communi ty where posi t·ive efforts have been made to integrate the transport network of the three member states. ~1thout such integra-tion, the present comparatively high level of trade among these States could scarcely have developed. It is clear, therefore, that more intensive transport links among the countries have to be developed if the potential for trade among them is to be realized.
158.
In addition to inadequate transport links, the considerable distances involved and high import costs which exist between some of the countries of the sub-region have also inhibited trade. In this connexion the three East African States which geographically are situated in the centre of the sub-region, appear to be well placed to trade with many other countries of the sub-region. In contrast, little tradeexists between countries which are remote from each other, for example, between Zambia and Ethiopia, or between Somalia and Malawi.
159.
Although transport links represent a significant barrier to East African sub-regional trade, it should be stressed that transport costs, handling costs and the like are also of vital importance. Even where transport links are available, trans-port and handling costs may be so high as to make extrans-port from low cost producing countr:.es to high cost producing countries uneconomic. Such situations indicate the necesstty of developing low cost transport facilities in East Africa. Reducing trans-port costs and imprOVing communication systems would certainly facilitate sub-regional trade. Many agricultural products are bulky and the unit transport costs tend to be high. Trading agricultural commodities in processed or semi-processed form results in lesn bulk and thereby reduces the unit value of transport cost. Promoting the trade of agricultural products in processed form would therefore appear advantageous as far as enhancing intra-sub-regional trade is concerned.160. Intra-sub-regional trade is also impeded by lack of modern storage facilities that would enable a producing country to preserve its products in good condition before they reach their final destination. ~here high quality products are o~
paramount importance, efficient storage facilities are essential to permitting the assembly of products in sufficient quantity at different points in the distr~bution
channel and to enable traders to bold stocks for transhipment to distant markets.
Adequate storage facilities also help to minimize seasonal price fluctuations, and hence :~rice risks, in the production and trade chain.
(iii) Tariff barriers
161. Even if production costs and prices based thereon in various countries
associated with transport links and storage facilities and their related costs enable a flow of a given commodity from one country to another within the sub-region, tariff barriers may disallow such a flow. The trade regimes of the East African countries have net 60 far been designed to facilitate sub-regional trade. In terms of tariffs, tte countries in the Sub-region are often further discriminated against by preferen-tial arrangements. Thus in the Commonwealth countries imports from other Commonwealth countries usually enjoy favourable treatment. The three column system operating in M&lawi accords most favourable rates to the United Kingdom, British possessions,
including presently independent Zambia, East African community countries and ~~uritius;
less f~vourablerates apply to other former British possessions, and least fabourable
rates to all other countries. Mauritius also applies preferential rates to Common-wealth countries, so that imports from other countries of the sub-region are usually subject to higher import duties.
162. Countries associated with the European Economic Community have granted
"reverse preferences" to the developed European countries outside EEe. Madagascar and Somalia apply two sets of import duties, one levied on all imports for fiscal
purposes. the other exempts members of the European Economic Community. Rwanda on the other hand effects an initial reduction of
15
per cent of the customs duty in favour of imports from the EEC, while Burundi exempts the EEC imports from payment of entry fees. The Association Agreement between the European EcoDOmiC Community and the East African Community (signed at Arusha in September,1969)
stipulates the elimination bythe latter of customs duties and charges haVing equivalent effect for a specified list of items covering about one-tenth of its imports from the European Community.
In
addition. Botswana, Lesotho and Swaziland are members of a Customs Union with South Africa. The new agreement, however, opens up Some possibility of special proteotion against South African imports.163. A major difficulty in the unification of tariffs is the wide disparity in existing regimes. Although no single figure prOVides an adequate picture of such disparity, a rough indication is provided by the ratio of import duties collected relative to imports. Table II-II shows that this ratio may range between
6.5
per cent in Zambia to over 20 per cent for a number of other countries in the sUb-region.164. At the same time, it is evident that a high tariff rate does not necessarily imply collection of a high level of tariffs. Indeed, a very high rate for a particular commodity may be so prohibitive to imports that little or no duty is oollected.
Furthermore, inaSMUch as rates vary as applied to different commodity groups,
differenoes in the ratio may reflect different oommodity structures of imports rather than different rates. This 1s illustrated by the signifioant differenoes in the ratios levied among the East Afrioan Community oountries, although they have a oommon external tariff'.
165.
The absolute levels of import duties and exoise taxes vary signifioantly among the countries of the Eastern Afrioan Sub-region. Most of the countries tend todepend 1n considerable measure on customs duties for public revenue, and while these levies may not be intended to restrict trade, they may in fact do so. Table II-II indicates that as regards most countries of the sub-region
(1968),
the share of import and excise duties contributin~to recurrent revenue of governments in seven oountries varied around 40 per cent (Burundi, Kenya. Malawi, Mauritius, Rwanda, Somalia, Uganda) and in three countries amounted to about 25 per cent (Botswana, Ethiopia, SwaZiland). The highest share, about 50 per cent, was recorded fordepend 1n considerable measure on customs duties for public revenue, and while these levies may not be intended to restrict trade, they may in fact do so. Table II-II indicates that as regards most countries of the sub-region