20 March 2019

Uganda: Winners, Losers in Uganda - Rwanda Row

Ugandans living in constituencies bordering Rwanda find themselves trapped in a catch-22 situation: their very existence is being threatened by the continued closure of the border, and yet some of their political leaders are reportedly telling them not to call attention to their plight by speaking out.

Such is the sensitivity of the matter that even when people's lives are at stake, few politicians feel comfortable publicly taking a stand on what has historically been a very delicate topic.

For Rogers Ishimwe, the row between Uganda and Rwanda that saw the closure of the Kyanika and Katuna border posts by authorities in Kigali is choking his livelihood. On Saturday, March 16, Ishimwe walked to The Observer offices together with his friend Thaddeus Irumba to voice their concerns.

"We have spoken to the area MPs but they have said 'no, don't talk about that.' What should we do?" Ishimwe wondered without naming the politicians they spoke to.

Ishimwe and Irumba hail from Kyahafi village, Murora sub-county in the western Kisoro district.

"It is absurd that even the small paths that we use have been blocked and bridges destroyed. They are telling us if you're crossing over to Rwanda, use Kyanika but people have never used it".

Both in their mid-twenties, the two gentlemen think the row is not just affecting cross-border trade but also their social life.

"We have families on either side of the border but now you can't even go for burial. Previously, we used shortcuts but now it is hard," Irumba said.

Wilfred Niwagaba, the MP for Ndorwa County East, told The Observer that the standoff is taking a heavy economic and social toll on his constituents.

"It is us [who have been] supplying foodstuffs and trading. We have also been getting some foodstuffs from there [Rwanda] like beans," Niwagaba said. "The Kabale economy alone has been supplying Irish potatoes worth Shs 4bn [annually to Rwanda]. They [the two presidents] must address the matter with urgency."

On the social side, he said there are intermarriages and people have families from either side of the line.

On whether border area legislators are doing anything to push for a solution, Niwagaba sounded rather resigned. He said: "It's very difficult. It is a matter that can only be solved by the two protagonists, the two presidents. As you may realize, it goes down to the two principals. If they feel for their people, they must resolve their problems for them. It is a matter of urgency."

But there is more damage from this row - from the East African Community integration project going forward to businesses to remittances across borders. Here we look at some of the losers and winners in this row.

LOSERS

Dr Isaac Shinyekwa, a senior research fellow at Makerere University's Economic Policy Research Centre, told The Observer that what started off as a political row between leaders of the two countries has now left business and traders as unintended victims.

Rwanda is one of Uganda's major export destinations and, therefore, the country will suffer if that market remains closed, Shinyekwa said. Uganda exported goods worth up to $212 million last year to Rwanda, which earned $18 million in 2018 from Kampala, according to Bank of Uganda records.

But also, Shinyekwa added, Rwanda gets some of their inputs from and through Uganda.

"If Uganda also said we are closing out anything [destined] for Rwanda; that nothing goes through Malaba, it would be hard for them," he said.

The impact on trade was seen immediately after the closure of the Kyanika and Katuna borders a week and a half ago. Ugandan exporters spent up to six days at the border with some carrying perishables like fish, saying their goods were rotting.

Those from the Rwandan side have majorly been mute although the little word filtering across is of serious food shortages. Many Rwandans depend on food from Uganda for their survival.

Dr Enock Twinoburyo, an economist, has published an article online saying that in Rwanda, "I have already witnessed an increase in prices on some products. Buses owned either by Rwandans or Ugandans have substantially reduced their scheduled travels across and even the buses [crossing] have substantially low traffic."

Twinoburyo argues that the impasse could slash Uganda's projected Gross Domestic Product growth by between one and two percentage points.

"Uganda, which exports more than 10 times what it imports from Rwanda, has seen its exports to Rwanda more than double reaching $260 million (one per cent of GDP or 11 per cent of Rwanda's total imports) in 2018 - of which $212 million were formal exports [goods and services]."

Also, Uganda at times uses Rwanda to reach Burundi which means another key market is affected. On trade, still, while Uganda's exports to Rwanda account for 11 per cent of the country's imports, Uganda is a key route for Rwanda for basic products from far markets like Kenya. If the impasse continues or Uganda shuts its doors, it means Rwanda will have problems accessing basic goods.

EAC INTEGRATION

Another victim of the impasse between Museveni and Kagame is the EAC integration process itself. A picture of normal progress had been painted with the leaders' speeches pronouncing grand infrastructure projects, a key feature at every summit. But this escalation shows deeper fault lines.

Dr Shinyekwa said: "There is a summit where heads of state meet. They should have discussed this issue.

"The integration is a rules-based system. If Rwanda thinks it has been offended, let it go to the East African courts. The issue to me is a political problem. Political scores are coming out and [this can only dent the integration]".

Already, the free movement of goods and people has been hampered despite the fact that it is guaranteed in the EAC common market protocol. Uganda's Foreign minister Sama Kutesa last week issued a statement in which he said Rwanda has, in effect, slammed a trade embargo on Uganda - an action which is contrary to agreed principles.

REMITTANCES

Money sent to Uganda is another element that might take a hit in this impasse. According Dr Twinoburyo, "remittances from thousands of Ugandans working in Rwanda as professionals and contractors are expected to dwindle."

He said the estimated value of remittances is five per cent of the total remittances received from the rest of world - which were $1.2 billion in 2018.

"The long-standing consequences could be job losses in Rwanda, and many at home inevitably would suffer losses as a consequence of lower remittances," he wrote in a blog recently. "Already, the cold gridlock from over the last couple of years has seen a number of professionals return home either, as a result of lost jobs or least not got contract renewals."

But there is also another twist that might affect Rwanda. A lot of officials in Kigali own businesses and farms in Uganda. Inability to access and guide their investments, because Kigali has stopped its nationals from travelling to Uganda, could have implications locally.

ORDINARY PEOPLE

Perhaps this is the group who are suffering the harshest brunt of the impasse. They are small individuals and humble families that depend on each other on either side of the border.

Their trade with each other is largely informal and hardly captured in the national statistics. Rwandans buy basic items, including a lot of food from Uganda while families at the border have their children cross over to attend school.

Health facilities in Uganda have also been offering services to Rwandans living near the border. In its National Cross-Border Trade Strategy 2012-2017, Rwanda found that informal exports to neighbouring countries were 51 per cent higher than formal exports in 2011. This underlines the significant economic and social implications this kind of exchange is to ordinary people.

Analysts and reputable organisations including the World Bank have shown that small-scale cross-border trade has a more direct impact on poor households than large-scale trade. Uganda's earnings from informal trade with Rwanda have been roughly estimated at $48 million in 2018 by trends watchers.

A more personal impact on ordinary people is the social breakdown. Many people in Kisoro and Kabale have relatives across the border in Rwanda. One of the residents told us they were finding it hard to even go and bury their relatives.

"People are annoyed with what is going on," Irumba said. "Some people are saying it is affecting Rwandans only. No, they are our relatives and we also trade there."

In a speech on March 9, Rwanda president Paul Kagame said this is a price local people will have to pay for the country to develop capacities to counter any threats facing their country.

Just before the row erupted publicly, Museveni handed over the leadership of the EAC to Kagame. Kagame is convinced that dissidents plotting against his government are operating from Uganda. But President Museveni on March 10 wrote a letter to his counterpart repeating past denials, noting that "there is no question of Uganda supporting anti-Rwanda elements... ".

amwesigwa@observer.ug

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