EAC crisis: Despite open borders, trade between Uganda and Rwanda has dropped dramatically.
Even if there are still unresolved disputed problems between the two sides, Rwanda’s complete reopening of its border with Uganda has not yet brought the favorable anticipated benefits of increased commodities movement.
And now, both nations may confront uncertainty if the alternative market they wanted to win in the eastern Democratic Republic of the Congo goes up in flames as a result of violence blamed on outside actors.
Bilateral commerce between Uganda and Rwanda was expected to increase in 2022 with the reopening of their shared land border and the relaxation of Covid-19 limitations.
However, the most recent export figures from Uganda’s Ministry of Finance reveal a significant reduction in the value of Kampala exports in the three months ending March 2022.
According to the statistics, Uganda’s monthly exports to Rwanda totaled Ush826.2 million ($220,000), a significant decrease from the Ush62.6 billion ($16.6 million) monthly average in 2019.
Uganda has trade surpluses with South Sudan and Burundi, but deficits with Tanzania, Kenya, and Rwanda, according to the Finance Ministry.
According to the statistics, South Sudan had the greatest trade surplus of $63.19 million due to its strong consumption of Uganda’s exports, mostly food goods.
Ugandan exporters attribute the crisis on their absence from government-to-government trade talks.
According to Muzamil Mabirah, a policy analyst with the Uganda Manufacturers Association (UMA), whenever they seek answers, government officials encourage them to wait a little longer while they iron out the remaining disagreements with Rwanda.
“The members haven’t exported to Rwanda since the border opened in January,” Mr. Mabirah said.
“The only thing traveling over is people, not commodities.”
In a desperate attempt, he claims that Ugandan manufacturers sought assistance from the East African Business Council and the World Trade Organization, but their efforts were futile.
“We have made plain the consequences of this trade impasse, but nothing has changed,” Mr. Mabirah added.
The Rwandan administration agreed to reopen the border in exchange for a recommitment to resolve previously expressed political issues.
According to the memorandum of understanding agreed between the two countries in 2020, one of the obligations made by both governments was to avoid assisting the rebel opposition in either nation.
Mr. Mabirah pointed out that the issues that strained the Rwanda-Uganda relationship were never commercial in nature, but rather political.
“These are issues beyond our understanding.” “We are not participating in any of the conversations to settle the concerns surrounding the border shutdown,” he stated.
The Private Sector Foundation Uganda (PSFU), the country’s leading business organization, has expressed reservations about doing business with Rwanda. Members are concerned about the length of the impasse, according to Chief Executive Stephen Asimwe.
In Rwanda, Prime Minister Edouard Ngirente told a news conference in Kigali that his administration was evaluating the list of items that may be sold and that they will be permitted in the market shortly, subject to quality inspections.
According to Dr. Ngirente, the study was important because Rwanda wanted to ensure quality while also protecting local businesses that had begun manufacturing some of the commodities formerly imported from Uganda.
“Ugandan items must conform with the specified requirements of the Rwandan market,” the PM said.
“All I can say is that commerce between the two nations will restart very soon,” Dr. Ngirente remarked.
While the trade dispute takes time to settle, both nations, as well as Tanzania and Kenya, have investigated the 95 million-person market in DR Congo. However, it is unclear how the recent violence in eastern DR Congo would hinder trade talks for the time being.
Kinshasa accused Kigali last week of assisting DR Congo rebel groups, which Rwanda denied. Nonetheless, the DR Congo parliament halted a ratification discussion on commercial agreements signed with Rwanda.
After Rwanda, Uganda is the second biggest exporter to the Democratic Republic of the Congo. Trade between Uganda and the Democratic Republic of the Congo reached an all-time high in January, as new markets opened up.
According to Bank of Uganda figures from January 2022, Kampala’s exports to DR Congo were $74.3 million that month, up from $29.9 million in December 2021, signifying a 44 percent increase.
A recent business conference conducted by Uganda’s Private Sector Foundation was intended to boost Uganda’s standing, and the foundation’s CEO Stephen Asiimwe said that over 500 transactions were finalized during their tour to Kinshasa and Goma. It followed a similar trip to Goma in April, which was extensively supported by several multinational entities looking to grow into DRC.
Kampala began building of the Mpondwe/Kasindi-Beni route, the Bunagana-Rutshuru-Goma road, and the Beni-Butembo road earlier this year.
In addition, prior to the present dispute, Kigali had built cross-border markets on Lake Kivu and was building four ports on Lake Kivu’s western banks to enable export commerce and the transfer of products transported from Mombasa and Dar es Salaam ports.
The Rwf22 billion ($21 million) project was to be completed by 2022 in the four districts of Rubavu, Rusizi, Karongi, and Rutsiro in Western Province.
It was unclear if Kigali will continue to pursue these projects as of Thursday, but contractors were already on the potential port locations, according to Kigali.