A road under construction in Kampala. Demand for cement and steel in
Uganda has reduced exports to DR Congo and South Sudan. FILE PHOTO |
NATION
South Sudan and the Democratic Republic of Congo offer export
opportunities for Uganda’s food
items and construction materials, but local demand for cement and steel driven by large infrastructure projects has somehow reduced export appetite.
items and construction materials, but local demand for cement and steel driven by large infrastructure projects has somehow reduced export appetite.
But
experts say the risks of civil war in South Sudan and DRC have
complicated matters for Ugandan exporters, who are now confronted with
problems of lost supply orders, unpaid invoices and attacks on buses and
cargo trucks by militia groups along major trade routes.
Refugee
inflows from South Sudan and DRC to Uganda have put pressure on social
services in border areas, with government officials and United Nations
High Commissioner for Refugees (UNHCR) mobilising funds to buy food,
medicine, blankets and mattresses for new refugees.
Official
data shows refugee arrivals from South Sudan hit a peak of 3,000 per
day last year while the total number of refugees received from both
Sudan and DRC is currently estimated at 1.3 million.
Nevertheless,
economists argue the two markets still offer growth potential for
Uganda’s economy, particularly for processed food products and
construction materials on account of low agricultural production in
South Sudan and poor manufacturing capacity in the countries.
Revenues
Export revenues registered in the two markets show relatively
steady gains posted since 2014 but the growth outlook remains unclear.
Data
published by Bank of Uganda (BOU) indicates that Uganda’s exports to
South Sudan generated $309.66 million and $225.28 million in 2014/15 and
2015/16 respectively.
Total exports to South Sudan
yielded $297.99 million by end of 2016/17. In comparison, total exports
to DRC amounted to $160.16 million and $159.74 million in 2014/2015 and
2015/16 respectively. Total exports to DRC fetched $190.36 million by
close of 2016/17, the data revealed.
Uganda’s cement
exports to the Common Market for Eastern and Southern Africa (Comesa),
of which DRC is a member increased from 255,512 tonnes in 2014/15 to
381,455 tonnes in 2015/16.
Total cement imports to the
Comesa region fell to 314,552 tonnes, BOU data shows. Total maize
exports to the Comesa region grew from $74.19 million in 2014/15 to
$81.97 million in 2015/16. Uganda’s maize exports to Comesa region
dropped to $72.26 million in 2016/17.
The total value
of beans exported to Comesa countries rose from $37.62 million in
2014/15 to $49.05 million in 2015/16. The value of bean exports to
Comesa amounted to $49.11 million by end of 2016/17.
Other
grains exported to the Comesa market generated $5.20 million in 2014/15
and yielded $3.06 million in 2015/16. This product segment grossed
$5.81 million in export revenues earned from the Comesa market during
2016/17.
“Food processing and the construction industry
provide a lot of growth opportunities for Uganda in relation to
regional markets such as South Sudan and DRC.
“Lack of
supporting infrastructure in both countries makes it more attractive for
Uganda as a production hub based on proximity, substantial supply of
raw materials and a slightly better labour pool.
“These
sectors are labour intensive and could generate more jobs for and lots
of backward linkages,” noted Prof Paul Collier, an Oxford University
economist who visited Kampala recently.
Fresh foreign capital will be required to expand local production capacity to meet future export demand in these markets.
“We
have rice, maize, milk and cassava, which are attractive in the South
Sudan market. There are still persistent challenges in the agricultural
value chain including high electricity costs and poor feeder roads that
need to be addressed,” said Isaac Shinyekwa, a research fellow at
Makerere University.
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