Uganda, Rwanda trade drops sharply despite open border

Gatuna border crossing

People milling around the Katuna/Gatuna border crossing after the Rwandan side reopening on January 31. PHOTO | AFP

What you need to know:

  • And now both countries may face uncertainties as to the alternative market they planned to conquer in the eastern Democratic Republic of Congo goes up in the smoke of violence blamed on external players.

Rwanda’s full reopening of its border with Uganda has not yet yielded the positive expected results of more flow of goods, even as there persist unresolved contentious issues between the two sides.

And now both countries may face uncertainties as to the alternative market they planned to conquer in the eastern Democratic Republic of Congo goes up in the smoke of violence blamed on external players.

It had been hoped that bilateral trade between Uganda and Rwanda would improve in 2022 after the re-opening of their common land border, and easing of Covid-19 restrictions.

However, the latest export data from Uganda’s Ministry of Finance shows a sharp drop in the value of exports from Kampala in the three months ending March 2022.

The data shows Uganda’s exports to Rwanda averaged Ush826.2 million ($220,000) monthly, a sharp drop from the Ush62.6 billion ($16.6 million) monthly average in 2019.

According to the Finance ministry, Uganda posted trade surpluses with South Sudan and Burundi while deficits were recorded with Tanzania, Kenya and Rwanda.

The data further shows South Sudan recorded the highest trade surplus of $63.19 million given its largest uptake of Uganda’s exports, mainly food products.

Talks exclusion
Ugandan exporters blame the situation on their exclusion from the government-to-government trade talks.

Muzamil Mabirah, a policy analyst at the Uganda Manufacturers Association (UMA), says whenever they seek answers, government officials tell them to wait a little longer as they iron out the remaining differences with Rwanda.

“The members have not exported to Rwanda since the border was opened in January,” said Mr Mabirah.

“It is only people that are moving across but not goods.”

In a desperate move, he says Ugandan manufacturers have sought interventions from the East African Business Council as well as the World Trade Organisation, but their efforts have not yielded results.

“We have made clear the effects of this trade standoff, but nothing has yielded,” said Mr Mabirah.

The Rwandan government agreed on the reopening of the border based on a recommitment to addressing previously raised political matters.

MoU terms
One of the commitments from both governments was to refrain from supporting rebel opposition in either country as covered in the memorandum of understanding signed between the two states in 2020.

Mr Mabirah noted that the factors that severed the Rwanda-Uganda relationship were never trade-related, but political.

“These matters are beyond any of our comprehension. We don’t participate in any of the negotiations to resolve the issues surrounding the closure of the border,” he said.

Private Sector Foundation Uganda (PSFU), an apex business lobby, also raised uncertainties about doing business with Rwanda. Chief Executive Stephen Asimwe said members are worried the standoff is taking long.

In Rwanda, Prime Minister Edouard Ngirente told a press briefing in Kigali that his government was reviewing the list of goods to be traded, and that they will soon be allowed in the market subject to quality checks.

The review, according to Dr Ngirente, was necessary because Rwanda wants to enforce quality as well as protect local manufacturers who had started producing some of the goods that were previously imported from Uganda.

“Ugandan products,” the PM said, “must comply with the set standards of the Rwandan market.”

“What I can possibly say is that trade between the two countries will resume very soon,” Dr Ngirente said.

While the trade standoff takes longer to be resolved, both countries as well as Tanzania and Kenya had explored the 95 million-people-strong market in DR Congo. It is unknown, for now, however, how the latest violence in the eastern DR Congo will affect the trade overtures.

Kinshasa last week accused Kigali of supporting rebel groups in DR Congo, a charge Rwanda rejected. Nevertheless, the DR Congo parliament suspended a ratification debate of trade deals initially reached with Rwanda.

Uganda is the second largest exporter to DR Congo after Rwanda. In January, trade between Uganda and DR Congo hit an all-time high, as new markets opened up.

According to January 2022 data from the Bank of Uganda, Kampala’s exports to DR Congo were $74.3 million that month, up from $29.9 million in December 2021, representing a 44 per cent growth.

A business summit held recently by Uganda’s Private Sector Foundation was meant to enhance Uganda’s status, and the foundation CEO Stephen Asiimwe had said that over 500 deals were concluded in their visit to Kinshasa and Goma. It came after Kenya held a similar mission to Goma back in April, heavily sponsored by some corporate bodies seeking to expand into DRC.

Earlier this year, Kampala had launched the construction of Mpondwe/Kasindi-Beni road, Bunagana-Rutshuru-Goma road and the Beni-Butembo road.

And before the current tiff, Kigali had also constructed cross-border markets on Lake Kivu and was also constructing four ports on Lake Kivu’s western shores to facilitate its export trade and the transportation of goods delivered from Mombasa and Dar es Salaam ports. The Rwf22 billion ($21 million) project, planned in the four districts of Rubavu, Rusizi, Karongi, and Rutsiro of Western Province, was slated for completion by 2022.

By Thursday it was unclear whether Kigali would still pursue these projects but contractors were already on the proposed port sites according to Kigali.

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