Sudanese protestors burn tires during an anti-government demonstration on January 18, 2019 in the capital Khartoum. PHOTO | AFP 
The EastAfrican has learnt that the volumes of coffee exports from Uganda to Sudan have “dropped drastically” since June 2018.
Industry
sources said that the figures worsened in November last year when
Uganda exported only 700 bags of coffee to Khartoum, though in December
this figure improved to 10,500 bags.
“Perhaps the
figures will climb back this month, and they could double, but we cannot
be sure,” said Laura Walusimbi, the spokesperson of Uganda Coffee
Development Authority (UCDA).
The latest export
figures are a far cry from the average of 66,600 bags exported to Sudan
monthly in previous years, translating into 0.8 million bags annually,
making Sudan the leading importer of Ugandan coffee on the continent.
“They
are not buying from Uganda, primarily because of restrictions on
finances,” said Suresh Iyer, the branch manager of Olam Uganda Ltd, one
of the major coffee exporting companies.
“The
government has put restrictions on how much forex goes out, so the
importers are constrained on that side,” Mr Iyer said, adding that the
local currency has also depreciated, exchanging at 47.5 Sudanese pounds
to the dollar.
Big market
If economic woes
and the growing social unrest persist, Sudan — which accounts for up to
17 percent of Uganda’s coffee exports annually — could well determine
how the country’s leading commodity export fares this financial year.
“Sudan
is a big market for us, so technically no exporter in Uganda can say
they are unaffected by what is happening there, except small traders who
go in and sell small volumes quickly. But for the biggest exporters
with big volumes, this is a problem,” Mr Iyer explained.
Sudan consistently ranks second behind the European Union as Uganda’s big export markets for coffee.
Mr
Iyer said the coffee export industry is counting on the regime in
Khartoum to quickly resolve the situation to see that the country has
sufficient stocks of coffee as the Islamic holy month of Ramadan
approaches in three months’ time and later, Eid El Fitr celebrations mid
this year.
Last December, mass protests against
President Omar al-Bashir’s three-decade rule erupted in Khartoum over
the country’s spiralling economic woes that have over the past year seen
inflation rates spike to the third highest in the world.
Shortages
of basic commodities such as bread — the most consumed food item — are
reported to be critical, while petrol stations have also run out of
fuel.
Last month, Foreign Policy Magazine reported
that in response to the growing crisis, the embattled al-Bashir regime
responded by setting low upper limits on withdrawals from automated
teller machines and bank accounts, which disrupted businesses and
blocked workers from accessing their salaries and savings.
“There
is an immediate demand for bread, gas, cash and medical treatment, but
there is also an abstract need for reclamation of dignity and national
pride from a government that has provided neither,” Foreign Policy Magazine reported.
Exporters
from Uganda agree that with limits on how much money one can withdraw
and even forex running out, “exports to Sudan face an uncertain future,
unless the situation improves soon.”
The economic woes
facing Sudan are a result of sanctions imposed on Khartoum by the United
States in 1997, and only removed two years ago.
However, the regime managed to weather the sanctions largely because it had oil revenue.
But
with South Sudan getting Independence in 2011, and taking with it over
80 percent of the oil fields, Khartoum was starved of revenue, while in
recent years, its Gulf States allies have also not given al-Bashir
enough money to maintain his grip on power.
Options
Although
Uganda has worked to build new export markets like China, Russia, Japan
and North African countries in recent years, these have not grown to
overtake Sudan as its biggest coffee market in Africa, industry sources
reveal.
Exporters are now hoping that the European
Union can take up more volumes, but are also looking to new markets like
Morocco and Algeria.
If the new markets fail to take up large volumes in the near future, it could impact Uganda’s earnings from coffee exports.
A
UCDA report for December 2018 shows that the country exported 4.17
million bags, fetching $436 million compared with 4.77 million bags in
the previous year, which earned the country $555 million.
This
represents a 12.58 per cent and 21.30 per cent reduction in both
quantity and value of coffee exports respectively, a drop attributed to
low global prices on account of higher crop yields in Brazil which
affected export prices and high stocks at exporter and farm level, the
report explains.
Besides Uganda, South Sudan’s fragile
economy that is over 90 per cent dependent on oil, could also be hurt
by the protests and economic woes in Khartoum are a concern, although
for now they have not yet disrupted operations of the oil producing
companies.
“No impact but we are monitoring closely,”
says Rhadiff Talha, Strategic Communications Officer for Malaysian oil
giant Petronas upstream activities in South Sudan.
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