Traders offload eggs from Uganda at a whole sale shop in Kakamega. FILE PHOTO | NMG
Foodstuffs dominated Uganda’s exports to regional markets in
2018, with farmers enjoying improved yields due to favourable weather.
However,
manufacturers faced weak demand for their products even as recent
political developments in the Democratic Republic of Congo and South
Sudan give hopes of stronger demand for industrial products this year.
According
to Bank of Uganda data, total exports to Kenya rose to $719 million by
the end of December 2018 compared with the $551.06 million recorded in
2017 with maize grain topping the exports.
In addition to maize, Uganda exported beans, simsim, pineapples, watermelons and eggs in the second half of 2018.
But
exports to the Democratic Republic of Congo fell by 10 per cent to $450
million last year, a declined partly attributed to the prolonged Ebola
epidemic and election uncertainty dating back to 2016.
Fresh conflicts, especially in eastern DRC — a traditional entry point for Ugandan products compounded the problems.
Total exports to South Sudan increased by five per cent to $405
million by close of December 2018, a trend partly attributed to slight
increases in global oil prices and higher government spending in
Africa’s youngest country.
The return of relative peace
after signing of a pact and a symbolically significant handshake
between political rivals President Salva Kiir and former vice president
Dr Rieck Marchar helped reopen the market.
South Sudan
relies on oil revenues to finance more than 90 per cent of its budget
but current efforts aimed at diversifying its resource base are yet to
yield significant results.
Exports to Rwanda increased
from $180.8 million in 2017 to $212 million in 2018 while total exports
to Burundi dropped from $42.94 million to $40.69 million over the same
period.
Maize exports
Overall,
maize exports grew from $95.91 million in 2017 to $106.81 million in
2018, while beans brought in $99 million up from $84 million during the
same period.
Simsim exports rose from $17.3 million in 2017 to $26.6 million in 2018, the data shows.
“Uganda’s
exports to South Sudan increased by about five per cent partly because
of modest growth in oil revenues and higher government expenditure but
the bulk of these exports were food items.
“Similarly,
Uganda’s exports to Kenya increased to more than $700 million in 2018
due to huge volumes of maize and other cereals imported by Kenya,” said
Dr Adam Mugume, BoU’s executive director for research.
Challenges
Declining
demand for manufactured products in the regional markets complicated
matters for Ugandan industrialists, who are struggling with falling
consumer demand in the local market too.
Changing
business trends that favour big, politically connected firms in key
regional markets are likely to lock out small businesses seeking to
exploit cross border trade opportunities.
“Much of the
export volumes directed to South Sudan, DRC and Kenya were composed of
food items while hardware products and other items registered low demand
in those markets last year.
“But local farmers are
getting cheated by Kenyan traders who are buying immature crops in the
gardens instead of waiting for harvest time. Many farmers are usually
cash strapped before harvest time and are willing to take any cash that
comes their way.
“However, this approach to business
tends to compromise the quality of our farm produce. Business conditions
in Uganda are still tight and our cashflows are getting thin as we
struggle to remain afloat,” said Deo Kayemba, chief executive of East
African Roofing Systems Ltd, a manufacturer of iron sheets and steel
bars.
“As a result, we have scaled down on our
manufacturing operations and suspended new bank borrowing for two years
to enable us steer the company towards recovery
“In
spite of those challenges, I feel optimistic about economic recovery in
South Sudan and DRC this year after the return of Riek Machar to Juba
and the peaceful transfer of power from Joseph Kabila to Felix
Tshisekedi in DRC,” Mr Kayemba added.
According to
company records, East African Roofing Systems exported goods worth $2
million to South Sudan in 2018 while exports to DRC are estimated at
$600,000 during the same period. The company exported barbed wire valued
at $100,000 to Burundi last year.
“The political
uncertainty in DRC, the Ebola epidemic and fresh fighting in eastern
Congo severely affected our sales turnover in that market. Most of South
Sudan’s imports from Uganda were made up of food items but we saw less
demand for hardware products last year.
“This forced
us to focus more on Rwanda but rising production of local steel products
in that market has affected demand for imports. We are seeing more
steel manufacturing plants being set up in Uganda this year and we
believe our export volumes need to grow to about 50 per cent of total
output so as to enable us contain new rivals in the industry,” argued
Stuart Mwesigwa, business development manager at Roofings Group Ltd.
High lending rates also affected some manufacturers last year alongside declining consumer demand experienced in many sectors.
“The
South Sudan trade window has been captured by some big political
interests that have pushed most of the small traders to the sidelines in
recent times. However, demand for stationery products from South Sudan
has dropped sharply since 2018, largely because of the persistent war
situation,” noted Edward Kigongo, chief executive of Ken Group Limited, a
supplier of stationery materials.
“Trade between
Uganda and Rwanda has also slowed down because of sensitive political
concerns held by Rwandan traders towards Ugandan products during times
of hostile bilateral relations.
“Though the exchange
rate was largely stable during the second half of 2018, falling consumer
demand and fairly high interest rates of more than 18 per cent have
made life difficult for many of us,” added Mr Kigongo.
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