6 August 2017

Uganda: Importers, Families Stock Up Fearing Losses Like in 2007

Despite government assurances that Kenya's General Election on August 8 will cause no major disruptions to supplies to landlocked Uganda, jitters triggered by the ghosts of the chaotic 2007/8 post-election violence remain high.

Messages circulated on social media are urging Ugandans to stock up, especially on fuel, even as the government says the country has sufficient reserves for the election period and expect a quick return to normalcy.

The government's confidence is largely rooted in the fact that the Central Corridor through Tanzania is now fully operational, and improved infrastructure and policies like the Single Customs Union have led to a significant reduction in lag time on the much longer route compared with the traditional Mombasa route.

A strike by workers at the Uganda railway concessionaire Rift Valley Railways, and reports that Uganda-destined cargo has been stranded for days at the Mombasa port have not helped matters. In addition, fears that speculators keen to exploit the election may cause artificial scarcity has fuelled the jitters.

Multiple inquiries by The EastAfrican have established that Ugandan importers have stepped up restocking amid fears of possible violence in the aftermath of the polls.

However, weak economic activity has constrained emergency stocking measures by some businesses.

The post-election violence in Kenya after the December 2007 polls left many Ugandan traders counting heavy losses from damaged and stolen cargo, burnt vehicles and a few incidents of killing of drivers along the Mombasa-Nairobi-Malaba route.

Compensation from the Kenyan government is still outstanding almost 10 years later.

Reports of armed attacks by local militias against some rural communities, and the murder of Christopher Msando, the ICT manager of the Interim Electoral and Boundaries Commission early last week, have triggered strong fears of a repeat of the 2007/08 violence.

Though he was reportedly tortured to death, those responsible for his murder remain at large.

Slow business

"We have already stocked up for about 14 days. The challenge we anticipate lies in the possibility of other local manufacturers failing to restock sufficiently and buying raw materials from us. Such a situation would pile more pressure on local product prices over the short term, and scare away buyers.

"Business is slow these days, and some businesses might be unable to restock adequately. In addition, Tanzanian business people on the longer Dar-es-Salaam route have selfish attitudes," said Stuart Mwesigwa, the business development manager at Roofings Group Ltd in Uganda.

The Kenya Pipeline Company assured Uganda of steady supplies of fuel in a pre-election statement: "We have put in place adequate measures to ensure that all our depots continue to operate normally during the election period.

"Due to rising demand for fuel around this time, our Eldoret and Kisumu depots will be operating 24 hours so as to serve the country and the region adequately," said KPC's managing director Joe Sang, adding that an additional 253 million litres of super petrol, 311 million litres of diesel, and 197 million litres of jet fuel are expected to be delivered into the country this month.

"It is hard for many of us to put aside money to restock our warehouses for two weeks. Those who made sales of Ush6 billion ($1.6 million) last year have realised only Ush2 billion ($547,697) this year. Taxes are high and this makes the cost of doing business prohibitive for small players.

"Recent changes in the Customs system have caused delays in clearing cargo and have led to higher operating costs for importers. For example, I paid import duties for four trucks carrying hardware products two days ago, but the trucks are still stuck in Nairobi because the Uganda Revenue Authority has not cleared them and therefore they cannot leave the internal container depot. Each driver requires about Ush104,000 ($28.5) per day for accommodation in Nairobi, for a waiting period of four days," said a hardware dealer and government employee who requested anonymity.

According to Peter Lokeris, Junior Minister for Energy and Minerals, Uganda has fuel reserves for just over two weeks.

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