Ugandan Traders Hit Hard By Coronavirus Fears

An aerial view of commercial buildings in Kampala.
25 February 2020

Last year in December, Mr William Kikabi, the proprietor of Footsteps furniture confidently ordered for goods and raw materials from China for the production of furniture for some clients.

Under normal circumstances, this would take about a month for a consignment to dock at Mombasa and a few days on transit to Kampala.

But two months later, no goods nor materials have been delivered because China, Kikabi's source country, is grappling with the deadly coronavirus.

Being the world's second largest economy, China is a source of products which are produced in bulk for different economies around the world. As production suffers, Chinese remain confined in their homes with no hope of going to work.

Traders feel pinch

As China struggles to cope with this health crisis, importers like Kikabi are not certain of when their products will eventually be shipped to Uganda.

Sharing his ordeal with Prosper Magazine Kikabi said: "We ordered for goods from China in December but they have not been delivered. Information we get from our suppliers is that they may go into production in May."

Ideally when orders are made, delivery takes about two months. This means if the May projection Kikabi's suppliers told him will go into production is to go by, it will take another two months to be delivered.

"This means my goods will be delivered in July, nearly over half-year. I am worried about my business' survival. The company is at the verge of losing deals worth Shs2 billion from clients who had entrusted me to deliver furniture at the beginning of this year," He shares his agony.

Kikabi's mainly supplies government, ministries, and departments plus a range of corporate companies and individuals.

Fatuma Nasuuna owns shops in downtown under the brand name Fatuma's Shoe World. Since 2011, Nasuuna has been importing shoes from China and travels almost every month to get new designs for her customers.

By the time the novel Coronavirus broke out, Nasuuna was preparing to travel to Guangzhou-China to stock her two outlets.

Folding her hands against her chest, Prosper Magazine found Nasuuna in deep thoughts.

"I don't know when we shall be able to travel because all flights were cancelled. I am currently having old stock and customers shun it." Nasuuna says.

Her biggest worry now is that the capital meant to bring in new stock is diminishing slowly into the rent to keep her shops running.

Not certain about the future of her business in case coronavirus spirals, Nasuuna is not willing to look for other alternative markets like Thailand or Malaysia.

"Products from Thailand are completely different from Chinese products. I cannot risk going to Thailand because my customers will not buy the shoes," she shares.

Joseph Birungi of Jose Collections dealing in women's bags at Angel Plaza along Nabugabo road is also stranded.

"I was supposed to return to China at the end of January, my flight was cancelled after the outbreak of Coronavirus," Birungi shares.

Birungi, who used to travel every month to restock his shop has spent two months without traveling and is not certain when the situation will normalise.

"The number of customers who used to buy my products is slowly reducing because I don't have new stock," he shares his ordeal.

Worse still, Birungi says the prices of the bags have gone up and this reduces the number of pieces (bags) customers buy from him.

"The price of bags on wholesale has gone up by Shs10,000. A small bag that used to cost Shs50,000 is currently sold at Shs60,000. This price is likely to escalate," Birungi narrates.

Exporter

With coffee stocks piled in the warehouse worth $110,000 (Shs407m), afraid of its shelf-life, Mr Timothy Mukisa, a director of Nile Café, a Ugandan coffee company which exports coffee and processes coffee for the Chinese market, is equally confused about the next step.

With the support of the government through the Uganda Coffee Development Authority, they have moved into 40 cities in China at different exhibitions throughout the whole of last year and this year.

They have close to 50 exhibitions in 61 cities across China where they were supposed to promote Uganda's value-added coffee.

"We are not certain whether we shall be able to make it to some of the exhibitions which provide us the platform to market Ugandan coffee," Mukisa shares.

Relatedly, Uganda was nominated to exhibit and showcase her potential in coffee production and supply at China Specialty Coffee Expo 2020 scheduled for March. But this won't be the case as the expo was postponed to an unknown date.

China is one of Uganda's coffee export markets with a coffee-drinking culture growing at 20 per cent per annum.

If the Coronavirus is not contained, Uganda's dream to boost exports to this market hangs in balance.

Logistics

The situation is worse for those involved in logistics like Ms Maria Nakaweesi a Ugandan businesswoman managing Maria's Cargo in Guangzhou, China with offices in Kampala.

"I am stranded on what step to take next. My business has come to a stand-still. I employ 50 people in Uganda and 25 in China. As I speak, I have remained with only two employees and others have returned to Uganda. I am slowly losing hope on what to do next," She narrates.

According to Nakaweesi all the containers of goods they shipped to Uganda before the Chinese New Year (January 25th), arrived in the country a week ago and from then no goods are being shipped.

With no flights heading to Guangzhou and Shanghai - the leading sources of Uganda's imports from China - because they have all been canceled, orders have been pushed months for months. But stocks are also tumbling.

China is the number one source of Uganda's imports and machinery for manufacturers. Over 80 per cent of the importing businessmen in Uganda source their goods from the Asian tiger.

Statistics

Latest statistics from Bank of Uganda show that in 2019, a total of Shs10 trillion of the import bill was spent in Asia. Of this, China took the biggest share of Shs3.7 trillion; thus, making it a single leading source of Uganda's imports.

Trade experts and economists admit that Coronavirus is no longer a China issue but a global challenge that is bound to affect businesses.

Mr Everest Kayondo, chairman Kampala City Traders Association (Kacita) said: "Currently, flights are no longer heading to the common routes where we go for trading."

Kacita has over 150,000 members' majority of whom are importers and their source has always been China.

Kayondo said coronavirus is not something they can say is normal because of a big number of importers who are stranded wondering what to do next," Kayondo lamented.

More to this, the Chinese embassy in Uganda, unlike before the coronavirus outbreak, has been giving visa appointments for two months prior but this has been pushed to five months.

Since international trade is a big contributor to the country's revenue collection with over Shs3.5 trillion in taxes, a halt in traders business is likely to impact the collections and subsequently the tax authority's targets.

In an interview with this Prosper magazine, URA's manager corporate affairs Ian Rumanyika said: "For now, we don't see any change in volumes of trade. This is because goods had already been loaded from China to Uganda."

Rumanyika, however, said the tax authority anticipates a drop in the flow of goods in the next one month because there are no goods being shipped from China.

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