Logistics inefficiencies cost Uganda Shs3 trillion

Tuesday September 11 2018

Trucks belonging to a clearing and forwarding

Trucks belonging to a clearing and forwarding company parked in Kampala. Most businesses in Uganda require transport and logistics services. FILE PHOTO 

By Christine Kasemiire

What is the role of National Logistics Platform?
The National Logistics Platform (NLP) under the Private Sector Foundation Uganda has been implementing a project with UKAID support through Trade Mark East Africa since 2016.
NLP’s role is to develop a competitive logistics industry through advocacy, promoting collaboration among stakeholders, promoting public-private partnership and carrying out research to build knowledge base according to international best practices.

Describe the logistics landscape in Uganda.
The East African Community presents Ugandan logistics providers with a large potential market but also increases competition for the provision of domestic logistics services. A World Bank funded report by Matt Mac Donald, 2016 states that, currently imports of transport and logistics services make up 55 per cent of Uganda’s total service imports while Uganda’s transport and logistics exports are only 3.7 per cent of Uganda’s total services exports.
Improving logistics services will create employment opportunities. About 208,000 people are currently employed in the logistics sector in Uganda, a number that could rise to 522,000 by 2030.

What is the relationship between the transport and logistics fields?
While transportation focuses on the movement of goods from one place to the other, the logistics industry implies a broader spectrum and refers to the whole ‘flow’ management. This includes not only the transportation and delivery of goods but also storage, handling, inventory, packaging and various other aspects.

Who are the key stakeholders in this industry?
Uganda’s freight logistics industry comprises of: trade and transport infrastructure (roads, railways, inland and marine port facilities, storage and warehouse and bonded facility operators; customs and other border agencies; financial services and ICT service providers and infrastructure; and government.

What are some of the achievements in this sector?
The Government has prioritised infrastructure investment under National Development Plan II and Vision 2040. Some of the key projects that will impact the logistics sub-sector include: Standard Gauge Railway, Gulu Logistics Hub, development of the oil resources including construction of oil refinery and oil pipeline. upgrading of strategic national roads, National Backbone Infrastructure, construction of ICT incubation hubs/ centres and ICT parks, river and lake freight transport, air cargo, ICD and Bonded Warehouses.

What is this industry’s role to the growth of the country’s economy?
Given the structure of Uganda’s economy, logistics are very important. Agriculture accounts for 42 per cent, while manufacturing accounts for at 9 per cent and mining stands at 6 per cent (and set to grow with the discovery of oil). Combined these sectors account for 57 per cent of Uganda’s Gross Domestic Product. These sectors require transportation of large quantities of freight of low to medium value.


What are some of the opportunities vested in this sector for the public?
A more efficient logistics sector would offer Uganda increased potential for economic diversification and growth. Businesses in Uganda requiring transport and logistics services are in every sector of the economy, from producers of natural or raw materials, to manufacturers of semi-finished or finished goods, processors, exporters and importers, plus wholesalers and retailers.

What are some of the challenges in this industry?
In Uganda, and East Africa, logistics bottlenecks and inefficiencies are present at multiple stages in the supply chain, including loading, delivery and warehousing, packaging and waste management. Traffic congestion, along key transport corridors, roadblocks and checkpoints pushes up time and costs of logistics, which are passed onto the shippers. Such costs are borne by the consumers. The results of these inefficiencies are high logistics costs. In Uganda, logistics inefficiencies in import and export of goods are estimated to cost $827 million (Shs3.1 trillion) each year and logistics costs account for 18 per cent to 20 per cent of the sale price of goods sold in Uganda.
Inadequate infrastructure, lack of access to affordable finance, high costs of logistics services, lack of an agency within government that is responsible for logistics, creates uncertainty on legislation in the logistics industry.

There was a report about a warehousing challenge in Kenya. Could this affect Uganda?
Uganda also lacks modern warehousing facilities. Much of the warehouse capacity is rather dated, lacking computerised stock supervision systems or the ability to use multiply racking systems. Many warehouses have unsealed loading platforms which expose food products to ambient air temperatures during loading/unloading. It is estimated that Uganda loses 30 per cent of its major staple crops harvest which is damaged every year by the inability to store and move them appropriately.

What does the future hold for the logistic sector?
There is likely to be considerable employment growth within the Ugandan logistics sector. As Uganda shifts towards an efficiency-driven, middle income economy with more sophisticated manufacturing and service industries, the nature of its logistics sector will also evolve and become more sophisticated.