Last week, Uganda and the Democratic Republic of Congo (DRC) signed a memorandum of understanding to promote trade, harmonise immigration formalities and ease cross-border trade.
Under the MOU, the two countries are to facilitate investment in manufacturing, exchange information and statistics and generally foster cooperation between their private sectors.
Celebration at signing
The MOU signed in Kasese by trade minister Amelia Kyambadde for Uganda and her DRC counterpart, Jean-Lucien Bussa Tongba, aims at resolving most of the trade barriers between the two countries.
The trade barriers that have been hampering trade between the two include different tariff structures, customs delays, non-recognition of origin, poor infrastructure and cumbersome immigration policies.
The two trade ministers are expected to make follow-up meetings with their respective technical teams. The excitement was unmistakable as the local people on the border broke into dance and celebration at the prospects from the steps the two countries have done.
A cross-border trader with empty gallons and cement crossing from Uganda to DRC at Bunagana border
Most of these people are the small petty traders who have been doing business under difficult conditions due to these limiting factors.
The developments are part of the $79m (about sh292b) World Bank-funded Great Lakes Trade Facilitation Project (GLTF). The two countries are also part of the Common Market for Eastern and Southern Africa (COMESA) trade block, which makes the border development that important because it eases access to broader markets.
The two countries will create a one-stop border point at Mpondwe in Kasese. Works on the Mpondwe border post have been launched.
During the Kasese meeting, the ministers agreed that both countries will work on developing infrastructure along the northern trade corridor route that links the DRC town of Kisangani, Kampala in Uganda and the Mombasa sea Port in Kenya.
The Ugandan technocrats also rooted for fast-tracking of licenses for Ugandan private aviation operators to fly people and goods between Uganda and Kisangani. The two countries also promised to harmonise their visa fees. Currently, Uganda charges $50 while DRC charges $100.
According to a cabinet paper prepared by the trade ministry, DRC was the second largest recipient of Uganda’s exports in 2016 and was worth $398m (about sh1.47 trillion).
Traders crossing the border
The exports included cement, palm oils, refined sugar, rice, beer, flat-rolled products, wheat flour, biscuits, beauty and make-up products, tomatoes, and salt among others.
Kyambadde says export volumes can be scaled up to $2b in the next two years with the improved trade relations.
“This (meeting) is a way of preparing the two states for African integration. We are both committed to reducing issues of fraud and infrastructure at both borders to ensure that the volume of trade and investment rises,” Kyambadde said.
During the meeting, the ministers also launched the COMESA simplified trade
regime (STR) and the commencement of works on the Mpondwe – Kasindi one-stop border point to ease cross-border trade between both countries.
Benefits from COMESA STR
Kyambadde said a large part of trade flows between Uganda and the DR went undocumented and is carried out mostly by small traders.
With the signing of the MOU, that is expected to change because under the programme, goods on an approved list with the Simplified Certificate of Origin under COMESA, can enter either country free of customs duty.
The list includes livestock, grains, vegetables and simple manufactured goods that are up to $2,000 (sh7.4m). Most of these have been goods traded by small traders, especially women.
The certificates required to import or export under the programme is filled in at the border post by the trader and are stamped and certified by a customs official there.
Kyambadde said, the informal trade will be reflected in formal figures, which will aid the growth of trade between Uganda and the DRC.
The move by Uganda and DRC has been welcomed by the Private Sector Foundation of Uganda (PSFU).
“DR Congo has several small importers of Ugandan products. We want to organise them by sectors, for example, if they want to deal in Ugandan steel products, they can purchase the steel products at a discount in bulk as opposed to purchasing small quantities,” Moses Ogwal Goli, The director policy advocacy, Private Sector Foundation Uganda (PSFU), said.
Congolese traders celebrate the signing of the agreement
He added that Congolese importers can be assisted to have dialogue with Ugandan manufacturers to dissolve lingering information gaps that have been constraining trade.
Currently, he said, Ugandan manufacturers think it is risky to do business with Congolese traders. Goli is also optimistic that the co-operation will deal with the problem of fake minerals coming into Uganda.
He said there have been a lot of scams by fake dealers. He said both countries will work closely on the importation of Congolese minerals following high-value scams in Uganda by fake dealers. These scams are not limited to minerals, but also other trade items.
Challenges to overcome
While the two countries have expressed willingness to work closely, several hurdles are yet to be navigated. One of them, according to the Congolese, are Uganda’s ‘numerous weighbridges,’ which they said slow the movement of goods and increase the cost of doing business.
They complained that some of the weighbridges are faulty. The traders also said several Congolese trucks, as well as those belonging to Ugandan traders, have on several occasions been impounded by the Uganda National Roads Authority (UNRA).
The trucks, are set to be auctioned, said Byron Kinene, the chairman of the regional lorry drivers and transporters association.
“Even when you comply and not overload, the faulty machines will still show that you have either three or ten tonnes over the limit and unfortunately UNRA officials do not want to listen to our queries. They are penalising us erroneously,” Kinene said.
“It does not make sense to fine someone sh530m when the value of the truck itself is just sh150m,” he added. Kinene also said the $90 fine per tonne of excess load is simply too high, especially without proper weighbridges in place.
Likewise, Ugandan trucks are reportedly impounded in DR Congo. However, Tongba pledged to look into the matter and possibly have the trucks released.
Other complaints included the existence of multiple inspection points in Uganda from the Busia border post to the DRC border, according to Polycarp Ndivito, a transporter.
“In business, if you delay the goods, the customer can look for alternatives to your products and you lose the market. We are happy that these problems are going to be solved,” he said.
“We need to see better trade and investment between DR Congo and Uganda; we also need good infrastructure to facilitate this. We need a common vision of development for both countries,” he added.
The two ministers agreed to form joint committees at the border posts to fight fraud, smuggling, splitting of cargo and trans-shipment.
WHAT EXPERTS SAY
Davis Muhwezi, team leader transport economics at the Uganda National Roads Authority (UNRA)
We had challenges with software, hardware and equipment, but we have sorted them out. We have restructured and have new staff members and a directorate in charge of infrastructure protection.
In the past, there was a lot of human involvement at the weighbridges, which created challenges, especially in enforcement. We are reducing human involvement by installing weigh-in-motion weighbridges.
The new technology will not require every truck to stop, the weighbridge will be within the pavement before it stops, if it is within the acceptable load, it moves on. The measurements will be transmitted to the UNRA head office, so the entire process will involve more than one individual.
The first station we want to transform to the new technology is at Magamaga in Mayuge district.
Jason Stuart Mwesigwa, business development manager Roofings Uganda
In a business transaction, one needs to develop dialogue and a relationship with the customer. It is encouraging that Uganda and DR Congo have realised that there is a gap in the way business is being carried out and are working to iron out the technical issues.
This will improve trade between the two countries. We have discussed issues to do with immigration and non-tariff barriers, security and documentation of how goods and services are being traded between the two countries.
Government technocrats are good at discussing issues and they remain on paper, however, as a businessman, I hope that what we have agreed on will be implemented as soon as possible so that we can start reaping the results.