Coronavirus: Why your pockets will be affected

 

KAMPALA - The dreaded phrase "out of stock" will soon be on the lips of some traders in town as the Coronavirus keeps global suppliers of essential goods in China under self-quarantining, local traders have warned.

 

The interruption in supply chains caused by the disease could trigger price hikes across several goods imported from China on the back fast-falling market stocks.

 

Traders who import their merchandise from China told New Vision recently that in the next few weeks if the disease is not contained, the market is likely to witness gradual hikes across a range of goods such as tiles, kitchen sinks and soap dishes. 

 

Most traders last stocked their warehouses with goods in between December 2019 and January this year, they said. 

 

Last month, Bank of Uganda Governor Emmanuel Tumusiime-Mutebile said although the economic impact due to supply chain disruption resulting from Coronavirus will be of short duration, some sectors could be significantly affected and that "the impact could be larger than anticipated and more persistent." 

 

Monthly, statistics from the central bank indicates that Uganda imports goods worth nearly $80m (about sh288b) on average from China. The latest data set, for instance, shows that imports from China grew to $109m in December 2019 from $81.6m in November. 

 

Uganda imports 25% of its goods from China. Nearly, 70% of these are raw materials used to make other products in sectors such as construction and other general goods. This means that the impact of the crisis will stretch on prices of locally manufactured goods. 

 

"Most construction materials used after the construction of houses are got from China such as transparent sheets and raw materials in the local factories. Some of the areas where factories are located in China are not working and all works are on standstill," William Kaggwa, the secretary-general of the Hardware Traders' Association, said. 

 

"You find that most containers that were to transport goods are still stuck. Prices of items are slowly going up because the goods are not in the market and demand is peaking," he added. 

 

As available stocks on the market get used up, there will be too much money chasing the few goods on the market. The pressure on the fewer goods at retail shops will trigger a price hike because traders have not yet got alternatives sources. 

 

Market prices, some experts project, could further be worsened by the invasion of locusts that could constrain agricultural productivity. 

 

Risky to do business 

 

In the eyes of the traders, it is currently risky to conduct any business with the Chinese. Before the crisis, many traders could simply place their orders online and the goods would be delivered to them at the port of Mombasa in Kenya. 

 

"Currently, there is a big risk because you may send money and goods don't arrive. You might even send it to a person who is infected or the goods have to be picked from that area," Kaggwa said. 

 

"I advise traders to be careful making any dealings in China currently. They should not send money until they are sure the factory or the persons, they are sending money to are working," he added. 

 

By last week, the coronavirus crisis had still shown no signs of peaking, with health authorities reporting more than 5,000 new cases. The death toll from the epidemic now sits at 3,051. 

 

Everest Kayondo, the chairman Kampala City Traders Association (KACITA) said traders were supposed to travel to China this month and load merchandise for March and April.

 

"They are likely to run out of stock. And this means, there will be a supply gap and prices will go up. Unless we look at alternatives to source our merchandise, this is likely to happen," he said. 

 

If traders don't import, it could have a major effect on government expected revenues for the last six months of FY2019/20 by the Uganda Revenue Authority.