Sunday August 10 2014

Trade with US just a dream - Ugandans

US Secretary of State John Kerry (C) addresses the African Growth and Opportunity Act (AGOA) meeting

US Secretary of State John Kerry (C) addresses the African Growth and Opportunity Act (AGOA) meeting on August 4, 2014 during the US-Africa Summit. The United States on Tuesday revoked South Sudan’s eligibility for a US preferential trade programme known as the African Growth and Opportunity Act (Agoa). FILE PHOTO  NATION MEDIA GROUP

By BRIAN MUTEBI

Kampala

It was a red carpet reception. One by one, they were ushered in the Mandarin Oriental Hotel in Washington, DC. African leaders were in the United States of America capital for a three-day meeting, a meeting of immense magnitude and significance.

More than 40 Africa heads of state and government, government ministers, business executives, representatives of civil society organisations had convened at Washington. Their host, President Barack Obama, was quick to put the gathering in perspective.

“So we are here, of course, as part of the US-Africa Leaders’ Summit – the largest gathering any American president has ever hosted with African heads of state and government,” he said. The Summit, seen as America’s deliberate endeavours to match or even outmatch China’s recent penetration of Africa’s world of business, was aimed at discussing trade and investment in and with Africa.

Africa magic
President Obama, like Xi Jinping his Chinese counterpart, knows very well why Africa is important. He said: “We all know what makes Africa such an extraordinary opportunity. [It has] some of the fast-growing economies in the world. A growing middle class. Expanding sectors like manufacturing and retail.” So in his lengthy speech, Obama declared, “The bottom line is the United States is making a major and long-term investment in Africa’s progress. And together, the new commitments I’ve described today – across our government and by our many partners – total to some $33b. And that will support development across Africa and jobs here in the United States.”

The $33b included the $14b Obama said is what American companies like energy company Blackstone, Marriot Hotels and others are willing to invest in Africa. The other monies would come in through US development arm, the United States Agency for International Development (USAID), the US trade and development agency, and other international monetary institutions like the World Bank.

Ugandan traders speak out
Obama received applause for his highly promising speech. But Abdul Kaweesa, a trader dealing in ladies shoes on Gazaland Arcade in Kampala, did not even know what was happening in the US capital. “They went to America, what is America telling our leaders?” he asked. “Are they again trying to impose on us homosexuality that we rejected?”

Mr Kaweesa’s colleague, Dunstan Muwonge, who imports jewelry from Dubai, United Arab Emirates, however, had a hint. “I heard that America wants to promote trade with Africa,” he said. That did not make Kaweesa, a businessman himself, optimistic either. “Trade with America? Forget!” he exclaimed. “Where will you get a visa to go to New York, or wherever shoes are manufactured in America? Those people will say you’re seeking aid or asylum that you simply want to escape poverty. Some of us don’t have enough money on bank accounts and America needs a ‘fat’ bank statement before you are given a visa. Our money can only buy goods from Guangzhou (China).”

A number of traders downtown Kampala that this reporter talked to expressed pessimism over Obama’s US-Africa trade dream. Hajat Zaituni Ayebazibwe who deals in Muslims attires noted that while President Obama may have good intentions for Africa, and clearly he has, US policies “do not directly benefit the local businessman.” “Ask any ordinary Ugandan what contribution America is making in Uganda and they will tell you efforts to combat corruption and providing HIV/Aids care and treatment, for which we are grateful, but not trade. Probably the kind of trade America does here is for the elites who sit in expensive hotels to discuss trade policies that our government never implements,” she says.

“How many traders here go to America to buy merchandise? I buy my stock from Thailand; many of my colleagues go to China and Dubai. Unless you want to tell me that the trade Obama is talking about will be one where Americans come here, set up businesses but we, Ugandans never go to America to buy merchandise,” Ms Ayebazibwe adds.

Mr Everest Kayondo, the chairman Kampala City Traders Association (KACITA), shares some of the sentiments of his fellow city traders. “It is very difficult to think that we can trade with a country with such stringent measures on visa and migration policies,” he said. Kayondo noted that in the country where traders’ mobility is limited, trade activities are limited too.

‘Easy’ China
While there are Ugandan traders or companies that have penetrated the US market like Good African Coffee, the US market may not easily be accessible by small scale traders. Mr Kenneth Bukenya, who has for the last five years traded in men’s jeans from China, says on his first trip to China in 2009, he carried with him $3, 000 (about Shs7.5 million) as capital. His business has since expanded. He says today he goes with more than $100, 000 (about Shs250 million) to China to buy jeans. Bukenya doubts if one can take with him to the US $3, 000 to trade.

Mr John Walugembe, the Executive Director of Uganda Small Scale Industries Association (USSIA), says history may not be on the American side. He says: “America does not have a history of trade with Uganda.” That might be true for much of the successful business ventures that can easily be traced between Uganda and America is more of American companies coming here to do business not Ugandans going to America to trade and come back.

US successes and failures
One success example is the American company, Coca-Cola that established a successful franchise with Century Bottling Company in Uganda. The company has built a soft drinks plant at Namanve and employs thousands of Ugandans.

One failed example on the other hand is the Africa Growth Opportunity Act (AGOA) that had been designed to promote, in this case, Uganda’s exports to the US. US may not be responsible for the failure of AGOA but local factors. Coca-Cola on the other hand is doing well in Uganda as everywhere in the world. In his speech President Obama envisaged Coca-Cola in his US-Africa trade dream. He said: “Coca-Cola will partner with Africa to bring clean water to its communities.” Then he said Marriot “will build more hotels”.

These, no doubt, are good projects but as Hajat Ayebazibwe noted, the trade dream local Ugandan traders may want to see is one where American businessmen come to do business here and Ugandans easily – and the word here is easily, go to America to do business. That is what would translate into equal trade partners.

Indeed Obama emphasised US and Africa being equal partners. He said: “As president, I’ve made it clear that the United States is determined to be a partner in Africa’s success a good partner, an equal partner, and a partner for the long term.”

This dream, it seems, has many impediments cardinal of which are the low levels of awareness among local Ugandan businessmen and women about America’s trade opportunities, limited capacity (quantity and quality) to supply the American market like the case for AGOA and America’s stringent visa requirements and migration policies. While the former can, over time, be fixed by both parties – Uganda and America, the latter is solely America’s job to do. Yet America may be reluctant to relax the nuts on entry requirements to the US surely because there will be individuals, non business persons, who will want to exploit the opened window. Complex situation, isn’t it? But something must be fixed before Obama’s US-Africa trade dream is realised.

Foundation?
If Mr Walugembe’s assertion that America does not have a history of trade with Uganda is to go by, Uganda and America will first have to build a foundation for a kind of trade where Americans come here and Ugandans go to America to do business. How will that be possible? In our next issues, we explore what the Ugandan business community may have to do to embrace Obama’s US-Africa trade dream.

US-Uganda’s relations
The United States established diplomatic relations with Uganda in 1962, following Uganda’s formal independence from the United Kingdom. In the post-independence period, the country endured despotism and near economic collapse. The human rights abuses of several Ugandan governments strained US relations with Uganda.

Under Museveni, Uganda has experienced relative political stability and economic growth. The country has made strides in reducing HIV/Aids, experienced economic growth, and stabilised its north, where the Lord’s Resistance Army (LRA) operated for 20 years. Uganda faces numerous challenges, however, including population growth, power and infrastructure constraints, corruption, underdeveloped democratic institutions, and human rights deficits.

Uganda is eligible for preferential trade benefits under the African Growth and Opportunity Act. US exports to Uganda include machinery, optical and medical instruments, wheat, and aircraft. US imports from Uganda include coffee, cocoa, base metals, and fish and seafood. The US last year committed to signing trade and investment framework agreements with the East African Community and with the Common Market for Eastern and Southern Africa. Uganda is a member of both organisations.

bmutebi@ug.nationmedia.com

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