What you need to know:
- With the election fever picking up momentum, this publication can reveal that the private sector leadership in Uganda is silently advising their members to route their shipments through Tanzania’s ports until the spoils from the August 9 poll are peacefully apportioned.
Local exporters and importers are rerouting Uganda-bound cargo through the longer and expensive Tanzania route until the heightened electoral activities in neighbouring Kenya quieten down.
With the election fever picking up momentum, this publication can reveal that the private sector leadership in Uganda is silently advising their members to route their shipments through Tanzania’s ports until the spoils from the August 9 poll are peacefully apportioned.
Kenya, bordering Uganda to the east, is a key transit route for both imports and exports as 90 percent of the latter’s inbound and outbound cargo is transported through the port of Mombasa.
Therefore any disruptions on the flow of Uganda’s import and export cargo can easily send landlocked Uganda into a full blown economic crisis within matters of days. And there is a precedent to that.
In 2007-2008, Kenya—which has East Africa’s largest economy—had to deal with a bloody and divisive election. Its ugly scenes badly disrupted business in most of the region, with Uganda bearing the biggest brunt.
As a mitigation measure, the leadership of the private sector in the country has cautioned their members against using the Northern Corridor (commencing from the port of Mombasa) in favour of the Central Corridor (beginning at the port of Dar es Salaam in Tanzania).
For weeks, businesses and livelihoods were adversely disrupted after the 2007-2008 Kenyan election. Uganda-bound cargo, including fuel imports, got caught up in the electoral violence. Vehicles carrying raw materials and important cargo were either burnt or looted and parts of the rail linking the two countries were vandalised.
Fuel supplies were particularly badly hit by the post 2007/2008 election violence. Prices spiked to over Shs10,000 per litre on the black market as several fuel stations helplessly waved away motorists.
Currently, the country’s capacity to manage an extended disruption to fuel supplies remains a matter of grave concern. The government pledged to build several new fuel depots following the disruption of 2007/2008, but this has never materialised.
The current fuel storage is only sufficient to meet two weeks’ fuel demand. This explains the private sector leadership’s caution to importers and exporters—including fuel dealers—to arrange for fuel imports through the longer and more expensive central corridor.
Short-lived as it were, the violence also resulted in an increase in the price of fuel and food, let alone taking a toll on custom revenue collection.
Further, to date, Kampala City Traders Association (Kacita) leadership, says their members who lost merchandise in the wake of the post-election violence are yet to be compensated. This remains the case despite a Kenyan court in 2018 ordering its government to pay 16 Ugandan and Rwandan companies $63m (Shs226billion) as compensation for trucks and goods lost during the post-election madness.
“The Kenyan government appealed the matter and we are now back in court waiting for final judgment,” Mr Isa Ssekitto, Kacita’s spokesperson told Sunday Monitor.
Although the subsequent two elections in Kenya didn’t see a repeat of 2007/2008 scenarios playing out, local manufacturers have since learnt not to put all their eggs in one basket.
“We know that the Northern Corridor is shorter and less costly compared to ferrying goods through Dar es Salaam. But instead of losing our properties and cargo, then taking over a decade trying to get compensated, our importers and exporters are better off using the central corridor…until the electoral process in Kenya is done,” noted Mr Ssekitto.
The average transport cost of a 20-feet container from Mombasa to Kampala is $4000 (about Shs14.4m), and from Dar es Salaam to Kampala is about $5000 (about Shs17.9m. Both costs contribute between 35 to 40 percent on the final product costs, according to a sector analysis report.
Whatever happens in Kenya has a huge impact on Uganda’s economic situation, according to Ms Ruth Biyinzika Musoke—a senior management member of the private sector apex body in the country.
ALSO READ: Rise in commodity prices is a good thing
“Disruptions during the previous elections have affected us economically and as Private Sector Foundation Uganda we are watching the space with a lot of interest,” she said, adding, “Our hope and prayers are that everything goes well. However, we are also looking at the alternative routes in Tanzania just in case.”
The Kacita Chief Executive Officer, Mr Abel Mwesigye, believes disruptions on the Northern Corridor (Mombasa Port)—famed for its efficiency, short distance, affordability and reduced number of border points—will further interrupt a supply chain pummelled by the pandemic and the geopolitics in Russia and Ukraine.
The government is, however, not losing any sleep over the upcoming election in Kenya. “This is not the first time Kenya is going into elections. Since 2008, Kenya has held elections twice, and there was no shortage or crisis of fuel,” Rev Frank Tukwasibwe, a commissioner at the Energy ministry, told Sunday Monitor.
He continued: “What happened in 2007 to 2008 was an unfortunate incident. So we cannot speculate that there will be chaos again although that doesn’t mean that we don’t therefore plan just in case something happens.”
He told this reporter that fuel companies have a responsibility of maintaining at least 10 days stock. They will rely on this buffer in August.
In another interview with Uganda National Oil Company Limited (UNOC) Chief Legal and Corporate Affairs Officer, Mr Peter Muliisa, it emerged that moves to ensure uninterrupted supply of fuel are ongoing.
“We are working with our partners to ensure we have stocks at Jinja depot ahead of the elections in Kenya. We are also working to ensure that lake transport usage continues to be utilised so that we don’t have logistical issues,” Mr Muliisa revealed to Sunday Monitor.
Top US spy agencies in a recent annual report of worldwide threats to the national security of the US expressed concerns over the political uncertainty around the August 9 Kenyan election. They described the electoral exercise as “potentially contentious.”