17 February 2013

Uganda: Kenya Election Fears Leave Uganda With Headache

When Kenya slipped into chaos in early 2008, after a disputed presidential election, city businessman John Ssebalamu and other traders lost merchandise, which they say was worth about Shs 56bn.

The merchandise was lost after rioters intercepted Uganda-bound cargo, looted it and burnt the trucks in a spineless rage. It was not until last year that Kenya's government accepted to compensate all the aggrieved parties in Uganda. However, to this date, no compensation has been handed out.

After the expiry of the agreed date at the end of October 2012, traders, under their umbrella organisation, Kampala City Traders' Association (KACITA), threatened to stage a demonstration at the Kenyan high commission. It was simply a scary and desperate tactic. As Kenya prepares for its next election on March 4, with campaigns already polarized along tribal lines, Uganda's business community is taking precautions to avoid the trap they found themselves in five years ago.

Peter Muliisa from URA says they have established all the required facilities at the Mutukula border with Tanzania and urges traders to utilise this route. The 1700km route from Dar es Salaam in Tanzania to Kampala, via Mutukula, has been upgraded, reducing the transit days to five days from 29. The problem is that more than 90% of Uganda's imports come through Mombasa in Kenya.

KACITA spokesperson Issa Ssekitto says association members have been advised to try and stock more goods or use an alternative route during the election period. But some are reluctant to make these expenses when they are not sure whether they will sell their goods at higher prices.

For instance, a trader would need about $4,500 to transport a 20-foot container from Dar es Salaam to Kampala compared to about $3,300 for the same container through Mombasa, according to KACITA officials.

"It's a bit costly but if you are to weigh between losing all your merchandise and having it delivered safely at a higher cost, I think you would go with the latter," Ssekitto adds.

Trade Minister Amelia Kyambadde said government was working at making this route less expensive by improving on the infrastructure and reducing the stop points. Meanwhile, Gideon Badagawa, the executive director at the Private Sector Foundation Uganda, argues that in case chaos breaks out in Kenya, the central corridor route cannot be a remedy forUganda.

Badagawa says that for the country to safeguard its trade links, it needs to put the southern route to full capacity. This would need the reinstallment of the collapsed rail links, which used to transport cargo by rail from Dar es Salaam port to Mwanza port, then ferried to Port Bell and taken to Kampala by rail.

"This is a long-term project which needs a lot of time and capital investment," he says.

There is a risk of a fuel price hike in case things go wrong in Kenya. During the violence, the price shot to Shs 10,000 per litre of petrol. Uganda's government is yet to come up with a solution on fuel reserves.

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