South Sudan chaos sees local production fall by 60 per cent
What you need to know:
Negative effects. Uganda’s earnings from trade with its neighbour have reduced from about Shs271b to Shs54.2b.
The production level of local manufacturing firms and industries that export to South Sudan has dropped by nearly 60 per cent, Uganda Manufacturers Association (UMA) has revealed.
Due to the ongoing political chaos, UMA says its members who produce for the South Sudan market have been left counting losses given that the costs incurred for goods meant for export are normally planned and spent ahead of production.
The manufacturers’ leadership is also concerned that should the clashes drags on, the country’s earnings out of exports, particularly for the first quarter of the year, will decline to unprecedented levels, impacting on the health of the economy.
According to Bank of Uganda statistics, the country is currently earning about Shs54.2 billion from exports to South Sudan down from about Shs271 billion the country used to earn from the trade on a monthly basis.
This indicates that Uganda’s trade with South Sudan has declined by 80 per cent in the last two months thus exerting pressure on the country’s foreign exchange earnings from exports. And with the ongoing clashes, analysts predict even worse declines in export to South Sudan.
“By close of the year, when we did the estimates, productions level had fallen by between 42 per cent and 52 per cent. But with the ongoing clashes the estimates are now nearly 60 per cent,” UMA policy analyst, Godfrey Ssali told the Daily Monitor last Friday.
He continued: “South Sudan is one the biggest destinations of Ugandans goods. And if the situation (clashes) drags on then that will be bad news for the industry.”
A cross section of business community players have been suggesting that a safe corridor be created through which local manufactures can keep supplying the war-torn country.