How Ugandans can tap into Dubai’s food export market

When a high profile businessman but also a government official of the United Arab Emirates visited Uganda last year, staying in one of the five star hotels in Kampala, his host, a Ugandan, who wanted to dazzle him with the quality taste of Uganda’s fruits made sure he was served with a cluster of sweet bananas (bogoya).
The trick worked because he could not believe what he was eating. The taste was too good to be true. The visitor exclaimed, “You must be adding sugar to these bananas because I have never tasted bananas as sweet as these.”
For the next three days of his stay, he could have eaten in total a bunch of these bananas. No wonder the United Arab Emirates is partly interested in Uganda’s food with a special skew towards fruits and vegetables. A visit to any hotel in the UAE will attest to the type especially the taste of fruits served. They are nowhere near the taste of any Ugandan fruits.
In that foregoing lies the food proposition of the United Arab Emirates in which if body language was the single indicator, the Emiratis are very inclined to work with Uganda first by establishing an agricultural free zone, a not very common phenomenon globally speaking.

The proposition
The United Arab Emirates imports market is almost $11 billion annually and yet Uganda is no where near tapping in just 1 per cent of this market exporting. She exported only $14 million worth of food exports in 2017 with just $5 million of these in fruits and vegetables.
A visit to UAE by food importers reveals two things. For old timers in this space, they wonder what happened to Uganda’s exports to UAE especially food because they once existed. But the newer players do not even know about Uganda’s potential because their argument is that the product has to first come to the market consistently for it to be appreciated and consumed.
“The people in this country are ready to buy fresh agricultural products like fruits and vegetables. I was amazed that some of the products are imported from USA, China and Brazil which are almost 18 hours away by air from UAE,” according to Hood Katuramu, the chairperson of the Parliamentary committee for internal affairs on a recent market excursion to the UAE.
While addressing Agriculture minister Vincent Ssempijja during talks in Abu Dhabi, the UAE minister for food security Mariam Al Mehairi said, “[Uganda] has what we need and we also have what you (Uganda) need.”
Mariam Al Mehairi sees a lot of potential waiting to be unlocked from Uganda’s agriculture with the UAE eying underutilised land in East and Central Africa. Since the Emirati authorities see the potential here despite the slow response on this end, they have plans to set up a $20m agricultural free zone to export to UAE. A delegation is expected here early next month to finetune this.

Solutions
“Considering that Uganda is only five hours away, if government re- established the national air carrier and started with a cargo plane, the country would benefit enormously in a very short time,” Mr Micheal Kawooya, head of the CBS Pewosa Sacco, recommends.
The other proposal that would help Ugandan exporters would be an Export Support Fund directed at invoice credit.
According to Mr Ntangaaza, “A Ugandan export SME is worth $50,000 (Shs187m). Imagine they get an order of $300,000 (Shs1.1b), what are they going to do to send the order?”
This is where the Export Support Fund under the trade minister or Export Promotion Board would do. Once the invoice is presented and due diligence is done, they fund the supply of the order, pay the exporter and then the fund deals with the company that made the order say in Dubai. They would charge a fee for this at as low as 1 per cent or 2 per cent until a number of companies start to stand on their own.
It is not clear if this is what the government has in mind because, “We have some companies that have been exporting on their own, struggling and falling, then rising. As government, we intend to give some support to them because this market is very important to us as a country,” Mr Sempijja who was recently in Abu Dhabi meeting the UAE food security minister, said.
On the question of tonnage, all proponents agree that mobilising the small holder player among other things is important to generate the tonnage that makes business sense.
“There are areas that the private sector will find hard to invest like park houses, cold storage and enhancing product certification and financing. This is where government needs to hand hold the private sector to take advantage of this market,” says Micheal Kawooya head of the CBS Pewosa Sacco.
While 91 per cent of Uganda’s $444m exports to UAE is gold and other minerals, food exports will affect more people and households.
“We have seen a lot of beans, for example, in the Dubai market, the same as what is produced in Uganda. We need to organise our farmers to do contract farming, growing for a guaranteed market here,” says Mr Katuramu who was part of the delegation in Abu Dhabi.
Like for any other business, acquiring market information is crucial to break through. This includes among other things, reducing the layers of middlemen most of whom are Asians who sometime make the orders. This will also help identify those whose payment cycles are more favourable than others.

The Ugandan export hurdle

For Uganda, tonnage, quality and freight charges are the glaring challenges that should be addressed to successfully harness the UAE market. The smallest tonnage expected would be at least a tonne per week and upwards for it to make business sense.
According to Mr Francis Ntangaaza, the consultant handling the Dubai-Uganda export convention project, reasonable tonnage has a lot to do with the relatively small return – averagely 10 per cent - on any delivery. This is because that market is stiffly competed for by the US, China, Brazil and many other countries, which already have capacity to export in bulk and with consistence.
The second issue is cost of freight for the perishable fresh produce. Mr Ntangaaza says through Entebbe International Airport to Dubai, currently the cost of airfare ranges from about $1 to about $1.1per tonne, which is uncompetitive. For a Ugandan to make the 10 per cent profit on a shipment, freight charges should fall to half a dollar per tonne or at most 6 US cents for a tonne.

Top 5 import markets

United Arab Emirates is among the top five countries from which Uganda imports her merchandise. These include; India, China, Kenya and United Arab Emirates. Ginger is among the products that the UAE market demands and Uganda produces.

Agriculture free zone

The free zone, which is expected to occupy 2,500 hectares will attract investment from companies, especially from UAE in agricultural processing and packaging for export.