Trade wars cost Uganda $454m worth of exports

Monday January 27 2020
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Revenue drop: The Rwanda border blockade saw Uganda’s export revenue drop heavily. FILE PHOTO

Trade wars and border blockades within the East African region cost Uganda $454.7m (Shs1.6 trillion) worth of export revenue for the year ended December 2019, according to data sourced from Bank of Uganda, Uganda Revenue Authority and Uganda Coffee Development Authority.
The data indicates that Uganda lost much more revenue from Kenya and Rwanda compared to other EAC member states.
For instance, according to the data, Uganda’s export receipts from Rwanda declined to $173m (Shs640b) in 2019 from $250m (Shs925b) in 2018.
Uganda at last lost $75.6m (Shs280b) of revenue specifically due to a decline in exports from companies such as Hima Cement, Roofings and Movit, among others.
Exports revenue to Kenya, according to the data, declined to $535m (Shs1.9 trillion) in the period from $825m (Shs3 trillion) in 2018.
This means that at least export revenue worth $290m (Shs1 trillion) was lost mainly due to cautious purchase of Uganda’s maize, sugar, beef and poultry products.

Kenya, despite experiencing scarcity and low supply of maize on its market, cautioned against Uganda’s maize on claims that it contained aflatoxins, a poisonous substance that is produced by molds.
The country has also not fully embraced Uganda’s poultry products despite lifting a ban against the same in 2018.
Kenya and Uganda are currently involved in a milk export war, which by last week had at least cost Uganda about Shs1b worth of export revenue, according to details from Private Sector Foundation Uganda.
Rwanda continues to maintain a blockade at the Katuna border point, which was imposed in April last year.
Uganda also recorded a decline in exports to Tanzania in the period under review. Tanzania has to date refused to lift a blockade on Uganda’s sugar exports.
Export earnings from Tanzania declined to $83m (Shs307b) in 2019 from $91m (Shs336b) in 2018.
This was a decline of about 7.6 per cent. The continued blockades both in Tanzania and Kenya had by close of last year seen a surge in Uganda’s sugar surplus to about 150,000 tonnes.
Manufacturers under, Sugar Manufacturers Association, expect the surplus to grow further this year if the blockades are not lifted.
However, despite the blockades and trade wars, Uganda’s exports, according to data from Uganda Export Promotions Board, grew in the period to Shs13.8 trillion as of November 2019 from Shs13.4 trillion in the same period in 2018.
This was mainly due to opening up of new trading frontiers, especially in DR Congo, Asia and the Middle East.
Uganda also recorded improved export revenues from South Sudan, fetching close to $53m more than the $311m last year.
Dr Fred Muhumuza, a Makerere University economics lecturer at the weekend, said there has been growth in trading blockades against Uganda, which do not portend well for the country’s economy.
He also cautioned government against fighting political wars using sensitive trade barriers such as quarantines.
“Uganda has not done itself a favour. Talking of foot and mouth disease and putting quarantines even in areas where facts about the disease have not been established is causing problems. Such reports raise serious questions in countries that you want to export to,” he said.