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Uganda: Invest at home to promote a deeper regional market

Rachel K. Sebudde's picture

“Uganda might lose the market in South Sudan, if deliberate efforts aren’t put in place to sustain it”, said Uganda Investment Authority Chairman, Patrick Bitature during a hard-talk discussion at the February 14th launch of the Uganda Economic Update – Bridges across Borders: Unleashing Uganda’s Regional Trade Potential.
Bitature argued that Uganda’s supplying of South Sudan was more circumstantial than strategic.
 
“Food items like rice, matooke [green bananas], maize and sorghum that Uganda is exporting to South Sudan will soon be grown there, once stability returns. Uganda instead needs to add value to these exports”, he said.

This viewpoint echoes the Economic Update’s findings that while Uganda has the potential to feed the region through more food exports, it must improve productivity to remain competitive. It must also move beyond food exports to emphasize trade in manufactured goods and services.
 
Over the last five years, South Sudan became the main trading partner for Uganda, consuming 38 percent of its exports, in grains, processed foods, iron, steel, cement, paints, plastics, cosmetics and pharmaceuticals. However, Uganda’s reliance on natural advantages and insecurity of its neighbors is dangerously unsustainable.
In the food sector, for example, other competitors include Zambia, Mozambique and South Africa, all food surplus producers. Tanzania also often produces a food surplus. In 2011, Tanzania exported 100,000 tons of maize to the region.

Uganda can remain competitive only if it modernizes and diversifies its agricultural sector. Raising productivity on the farm must be accompanied by improved storage, better and cheaper transport, and connectivity to markets. The largest constraint to getting goods to the markets remain the high transport costs. Currently, many producing areas are connected via seasonal roads. Furthermore, to link to the regional markets, a Ugandan trader pays 30% more in transport costs, than their counterparts in Southern Africa. The costs are 70% higher when compared to traders in America and Europe.
 
Over 84% of Uganda’s trade relies on poor road infrastructure because of a dysfunctional rail and water transport system. Transport costs are exacerbated by bad logistics including high berth and yard congestion at ports, excessive dwell times for ships, low operating efficiency, ineffective regulation, and non-tariff barriers.  For Bitature, a functioning railway system would reduce the number of commercial trucks on the road by 500 cars per day. This would result in huge savings from lower congestion and road maintenance costs.
 
Overcoming these constraints requires steep investments.   Uganda must therefore do its own homework, and do it quickly, to be able to tap more regional trade. While deeper regional integration is the gateway to unlocking greater trade opportunities, the message for Uganda remains the same: raise productivity in key strategic sectors and get products to the market at a competitive price.
 
Deeper regional integration will support Uganda’s own development by allowing for development of regional public goods and policies that support free flow of products, capital and labor. Quick gains can be made in adopting more efficient modes of road, rail and water transport; eliminating non-tariff trade barriers; and exploiting service exports in tourism, transport and logistics, education, and professional services.
 
In-depth discussion of these issues can be found in the World Bank’s First Uganda Economic Update – “Bridges across Borders – Unleashing Uganda’s Regional Trade

Comments

Submitted by Bsutay on
It is good idea to encourage local people and those living in abroad to invest at home in areas such as infrastructural development and communication as we have seen in kenya mobile banking which link the local people. Improvement in transportation of local produce within the country could have positive impact economic development and growth.

Submitted by Emmanuel Acuc on
Uganda needs to have its railway infrastructure restored. This mode of transport is as inclusive as inclusive can get and would benefit the whole country in getting goods across the country to the markets. This would help spur economic development evenly accross the country. I believe if we fix the railway there will be far reaching effects on the inclusive growth agenda in uganda.

Submitted by Emmanuel Acuc on
I do believe that the restoration Rail mode of transport in Uganda would have a direct impact on Agricultural production and the inclusive growth that we seek. This is because it will allow farmers\farmer groups to reach the markets and earn decent incomes thereby making agriculture an attractive and viable option. The future of Agriculture and Railways in Uganda are completely intertwined. The rail tracks should be extended to Eastern DRC and South Sudan

Submitted by Ronald Lumu on
The government lacks the will to invest in the agricultural sector, despite all statistics showing that over 80% of the population depend on it. In 1986 when they came to power through the Gun, there was a vibrant coperative movement that played a major role in empowering farmers, helping out to mechanise extensively and bridging the production, transportation, marketing and selling of the produce. The railway was operational, connecting different areas and providing the cheapest means of transport for farmers' produce. Cooperative societies ignited self motivation among grassroot farmers, they were a source of farming advice, financing, mechanisation, marketing, price control, transportation, research, etc. Community participation in meaningful agricultural practices was lost when cooperative societies were closed. The corruption that has engulfed all the sectors in the Ugandan economy has left the poor farmers at the mercy of the capitalists who aim at maximising their profits. Farmers have no access to cheap loans, since all government commercial banks were privatised under mysterious circumstances - Cooperative Bank, Uganda Commercial Bank, etc. This has pushed the prime lending rate to over 27%. Uganda is Home to two biggest fresh water sources in the world; River Nile, and Lake Victoria, and a good weather that supports agricultural activities year round. However, there is no single irrigation scheme in the country, and children are dying of malnutrition.

Submitted by Rachel on
Thank you very much Ronald. Your views about the status of agriculture in Uganda are to the point and largely factual. Now that we know the past, the future has to be defined differently. Government has to re-cultivate the will to invest in agriculture. It is not enough to talk about the potential, without investing to exploit it. What the cooperatives achieved in empowering farmers in the past, can still be achieved by farmers coming together today, to access advisory services, transport their produce through load consolidation, and to sell their produce. The cheap railway transport must be restored, but this cannot serve the scattered farmers, some of whom require as simple as a well maintained 4 meter marrum road that does not wash away with the next season rain. to get to the collection stores or nearby market. Even the larger regional market will only be tapped if these domestic constraints, including corruption, are addressed.

Submitted by épandeurs d’engrais on
Very informative post and have got detail information about Uganda’s trade .

It is so sad that Uganda contributed immensely to the freedom enjoyed in Southern Sudan but the private sector in Uganda reluctantly failed to tap into the vast investment opportunities. Nevertheless, in Southern Sudan there more Ugandans foreigners than its East African counter-part but they are only running mediocre businesses like bodaboda, street vendors while as Kenyans and Tanzanians are running big businesses like banks, breweries etc. I believe the private sector can't do it alone, Uganda government needs to come in and support eligible SME's by giving them access to finance and needs to foster entrepreneurship and innovation through skills development and business support services, just to mention a few. Red tape and unnecessary bureaucracy at Uganda government institutions is also an obstacle for the privates sector to exploit available structures. Uganda needs to focus on agriculture to become the food basket for the region, it is suitable to feed the region if the government has the will to help this industry.

Submitted by Hellena Kasujja on
Thank you Rachel and Ronald.If Uganda was a company it would be in the annals of history.What is stopping Uganda from moving forward is lack of strategic focus.We make wonderful National development plans and their resultant sectoral Investment and strategic plans but do follow them.How far have we gone in as far as the last NDP is concerned. The CEO and line managers of Uganda have to wake and not blame Ugandans for being lazy and fun loving as the source of their misery. Back to Agriculture well aware that its the back borne of our economy how much of the budget goes to Agriculture? less than 10%. How much do farmers lose no matter that they are scattered in post harvest handling losses?,actually how much land is opened for agriculture? Any irrigation scheme beyond Kibuku that i learn't about in primary geography? We here of the low nutrients in the soils.Has the government done any comprehensive tests on the soils? If not what was their basis of crop zoning.Have we done as a nation any massive work in as far as tree planting is concerned to preserve our climate? We only say the problem is rain fed agriculture and what is our solution.We want promote Genetically Engineered crops to help "improve incomes of the poor farmers". How much Cotton have we harvested ever since we started taxing the farmers with a levy? Farmers are as prudent as any other investor,they make a loss once and they will retreat by planting less the next season hence ensuring a profitable season.Go to government programs like NAADs, you give a person who is food insecure 2 piglets and maize bran.What do they do first,eat the maize bran and the piglets follow and then when you come to ask they will say the NAADS pigs died.They are not theirs.This tells us that citizens have to be engaged for meaningful development processes.As for corruption i cannot say much its nauseating and my bet is that its not about to abet! I think Uganda needs an overhaul not just kick starting.

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