KAMPALA – Ugandan manufacturers have described as a daunting nightmare, the poor state of transport infrastructure connecting to the continental markets – listing as a leading bottleneck blocking Uganda’s ability to leverage the African Continental Free Trade Area (AfCFTA) market opportunities.
The implementation of AfCFTA is projected to increase intra-African trade significantly, especially in manufacturing.
The share of intra-Africa exports to total global exports is expected to increase in Tanzania by 28 percent, Uganda by 29 percent, Rwanda by 33 percent, and Kenya by 43 percent.
“Connectivity to various parts of Africa from Africa remains a daunting nightmare. Such is the status for roads, railways, air and water transport. Consequently, it is cheaper to import forty feet containers from China to Uganda than exporting from Uganda to Nigeria since the cost parameters for exports into Nigeria can at the minimum be double the cost to China,” Mr. Richard Mubiru, a board member of the Uganda Manufacturers Association said.
Mubiru was speaking at a private sector dialogue on harnessing opportunities presented by AFCFTA organized by the Uganda National Chamber of Commerce and Industry (UNCCI), Private Sector Foundation Uganda (PSFU), the Ministry of Trade and Cooperatives, Uganda Manufacturers Association with the support of United Nations Development Programme.
He said that the poor state of infrastructure is the bane of Africans doing business within Africa, noting that despite decades of common market agreements such as the East African Community, Economic Community of West African States (ECOWAS), and COMESA among others, poor transportation continues to impede market access.
Other areas of concern, Mr. Mubiru listed financing gaps for SMEs, Political volatility, and inadequate market information, especially for goods and services tradable under the AfCFTA pact.
“Affordable finance is a major impediment for existing local exporters as well as those interested in joining the trade. At least 90% of private sector credit [average 22% per annum] in Uganda is from commercial banks while for Asia, the biggest competitor on exports, 100% [less than 7%] of such export credit is from development finance institutions that result into super competitiveness of imports relative to local production. M/s AFREXIM Bank is trying to bridge the gap. However, it also has structural limitations of not being tailor-made for SMEs who are the majority exporter,” he said.
Mr. Mubiru also urged that Governance challenges in The Democratic Republic of the Congo (DRC) Somalia, South Sudan, and recently Sudan still bedevil Africa resulting in uncertainties. “Much of Africa is still challenged and this affects business”.
Mr. Stephen Asiimwe, the PSFU Executive Director noted that Uganda’s exports to Africa hit $ 1.77 billion in 2021, increasing by 26 per cent from $1.4billion in 2020, while imports stood at $2.47billion in 2021.
Uganda has great potential to export coffee, milk, sugar, beverages, iron and steel, cooking oils, and cement.
“We’ve been given an opportunity as a continent to trade together, to invest together, to sell to each other. We need to create an export-ready environment, especially for small and medium enterprises, to make the most of this opportunity,” said Mr. Asiimwe.
The Secretary-General of ACFTA, Wamkele Mene maintains that AfCFTA must be primarily for Africa’s goods, services, and products. “We want to foster industrialization in Africa to create jobs in Africa. Uganda is one country that is very well positioned to benefit from the AfCFTA,” he said.
Mr. Wamkele said the private sector has a critical role to play to feed the continental market.
“It is very important that we engage the private sector. It is not the government that trades; it is the private sector that trades. We must work together to create opportunities for the private sector to engage in intra-African trade.”
Currently, Uganda’s exports of sugar to the continent is valued at $99.8 million and there is an untapped export potential of an additional $53 million of sugar exports to the continent, he said.
During the dialogue, Ms. Elsie Attafuah Resident Representative of UNDP Uganda urged the private sector to take a proactive role by trading under the continental deal.
“Intra-Africa trade has the potential to catapult Africa’s development, especially in an era where development is being defunded in part due to, escalating geopolitical tensions, wavering geoeconomic interests and resultant shifts in trade and foreign direct investment; and potential ramifications for certain decisions that sovereign States in Africa, including Uganda, are taking,” she said.
She noted that the focus should be on key areas of concern including developing focused and complementary specific policies and strategies to attract export-oriented foreign direct investment, investing in connectivity, and high-quality infrastructure that delivers goods and services among others.
“Turning Africa into a real single market — a market where goods, services, and people move freely from Cairo to Cape Town, or from Accra to Kampala — requires us to close the regional infrastructure gaps,” she said, revealing that the Government of Uganda and UNDP are designing a Digital Transformation Road that will among others, boost Uganda’s participation in electronic commerce, facilitate the efficient and secure flow of money across borders and foster investment and the creation of virtual employment markets.
The signature of the Agreement Establishing the AfCFTA on March 21, 2018, marked a historic milestone for economic integration in Africa with the intention of creating a market of 1.3 billion people with a combined gross domestic product (GDP) valued at $3.4 trillion.
The Agreement envisages boosting intra-African trade through the gradual elimination of tariffs on over 90 African goods, and the removal of non-tariff barriers and trade restrictions on goods and services, respectively.
UNCCI President, Ms. Olive Kigongo said the reduction in trade costs relating to trade facilitation, Non-Tariff Measures (NTMs) and Non-Tariff Barrie’s (NTBs) will help grow trade.
“Much of Uganda’s exports are concentrated within East Africa’s markets. AfCFTA presents an opportunity for Uganda to expand to new markets. These opportunities bring increased competition and require us to improve our quality of produce,” said Kigongo.
A fragmented internal market has long hampered trade among African nations. That has prevented the continent from fully sharing in the economic benefits of international trade, which has helped raised more than a billion people worldwide out of poverty in recent decades. But the AfCFTA promises to be a game changer. It would create a single market that unites 54 countries with a combined population of 1.3 billion and GDP of $3.4 trillion. It promises to boost intra-African trade and investment by reducing tariffs and other barriers and harmonizing regulations in areas such as e-commerce and intellectual property rights.
