The Kenya-Uganda dairy war continues

USAID Measuring Impact Conservation Enterprise Retrospective
Ugandan farmer Simeo Ntawuruhunga stands next to one of his dairy cows (via USAID)

For two countries nominally in the same free trade area, Kenya and Uganda spend a lot of time squabbling about agricultural exports.  The latest front is milk exports, where Kenya has been blocking Ugandan imports over claims that Uganda actually lacks the capacity to produce enough milk to export, and has been relabeling foreign milk powders instead.

David Ndii has an insightful take on this issue at The Elephant.  He notes that the real issue in Kenya is politics, not economics.  The country’s largest milk producer, Brookside Dairy, is owned by the family of the president, and has raised consumer milk prices by nearly 100% over the last decade. This has attracted the attention of Ugandan exporters.  As he writes,

More fundamentally, why the Kenyan market is attracting Ugandan milk has little to do with Uganda’s demand-supply balance, and everything to do with Kenya’s consumer price. As observed earlier, the retail price of processed milk has doubled from Sh65 to Sh120. In Uganda, a litre of processed milk retails at between USh2,800 and USh3,000 which translates to an average of Sh80, i.e. Sh40 per half-litre packet, compared to Sh60 in Kenya. Ugandan producers are not obliged to satisfy their domestic market when a more profitable market is available across the border. If consumer prices had increased at the rate of inflation faced by Kenyan manufacturers, as measured by the producer price index (2.5 per cent per year), the retail price in Kenya today would be in the Sh70-75 range, which is well below the Uganda retail price.

Political business cycles across Africa

A crowded political rally

An APC rally in Nigeria ahead of the recent election (via Quartz)

Another of my favorite African news sites is Quartz Africa, which has consistently insightful reporting on relatively underdiscussed issues.  This recent piece on political business cycles across Africa is a great example.  As authors Abdi Latif Dahir and Yoni Kazeem note,

It’s a recurring theme across Nigeria, Kenya and many other African countries where elections and the accompanying political uncertainty have usually had adverse effects on big and small businesses—impacting short-term growth

Having contracts stalled and major projects abandoned is “very common” in Nigeria leading up to the polls, the Lagos consultant tells Quartz. “Election becomes a priority, and all money goes into that,” he adds. In the months leading up to polls in several African countries, governance is practically deferred with politicking largely taking over at significant expense. This holdout has even made phrases like “after elections” a colloquial mainstay during voting periods. Amid the uncertainty, businesses and investors also often adopt a wait-and-see approach—dampening economic activity.

The ambiguity over regulatory and policy direction during elections can also have an adverse effect on economies. In election years, governments can either be parsimonious or generous, depending on their desire to complete legacy projects. This affects how companies and investors, working directly with the government (through public-private projects) or indirectly (sourcing, from say, farmers who receive government funding), make plans, says Kenyan angel investor Stephen Gugu.

Read the whole piece, and don’t miss out on their weekly Quartz Africa Brief email as well.