Ugandan businessmen cry over heavy losses caused by political tension between Uganda and Rwanda

The Great Lakes Eye has learnt from the Private Sector Foundation-Uganda (PSF-U), the umbrella body for the private sector has that Ugandan traders have lost an estimated $48m during the “Uganda-Rwanda border closure” over a period of three months. According to the PSF-U on average Uganda gathered in roughly $16m monthly. After the border closure on February 28, Ugandan private sector players were getting an average of $2m per month.

The director of the East African Business Council, Mr Stuart Mwesigwa described “the border closure” as a big loss to Uganda since Rwanda was already a ready market for Ugandans, and one which is close to home.

“Opening new markets is costly, it’s a whole new process which can’t just be done now. We already spent a lot on creating new market with Rwanda. Going to start afresh with other markets is not the best solution as per now.”

Mr Stuart Mwesigwa

Several companies including Roofings, Hima Cement, and Uganda Breweries Limited (UBL) among others indicated they that registered severe losses due to this standoff. Roofings said that they have lost on average $4m per month; Hima Cement $3.5m and UBL £1.5m since the closure.

Relatedly, The Independent reported on 13 June 2019, that the tension between Uganda and Rwanda has also negative affected business at Katuna border (Ugandan side) as well as revenue collection for Katuna town council. The reduction in revenue collection has also led the town council fail to implement some of its programs. Eric Sunday, the Town Clerk for Katuna town council says that before the border closure, they would collect about Sh300million revenue in three months through, loading and offloading, parking and daily market.

Sunday says that as a result of revenue collection decline, they have failed to implement most of the programs which include garbage and plastic waste collection as well as water treatment. Sunday says that even up to date most of the shops are still closed due to lack of customers whom he says that they are mostly Rwandan nationals.

Nelson Nsangabasheija, LC3 chairman for Katuna town council says that the decline in revenue collection was worsened by the shifting of wholesale traders to Kampala, Busia and South Sudan due to lack of customers. Nshangabasheija says that hopes of having a booming business at the border are still low since Rwandan nationals are yet to be allowed to cross to Uganda.

Meanwhile Government of Uganda spending is set to rise 23% in 2019/20 compared to 2018/19 fiscal year. The Uganda national budget shows that Uganda will finance 74.5% of her national budget. The budget is shared as follows: (i) The Ministry of Works and Transport will take a lion’s share of 15.8%; (ii) Ugandan Ministry of Defense and Security 8.8%; (iii) Education and Sports 8.4%; (iv) Energy and Minerals 7.4%; (v) Health 6.4%; (vi) Local Government 6.9%; and (vii) Agriculture, Animal Industry and Fisheries 3.7%.

The ongoing row is also set to undermine the economic ties and regional trade in the long term, as Rwanda and Uganda are now actively seeking alternatives that will weaken bilateral economic relations. One would wonder if Uganda will sustain this budget if this political standoff with persists for long.

Watch this space and… Let’s wait and see!

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