ROBERT MWESIGWA RUKAARI: The Need To Improve Africa’s Balance of Trade

Dr. Robert Mwesigwa Rukaari, President Uganda National Chamber of Trade and Investment
By :
Robert Mwesigwa Rukaari

Presentation at the World Chamber Federation special virtual meeting for the Sub-Saharan Africa on 14 May, 2020

Dear all,

I greet you and hope you are keeping safe in these very undefined times.

For decades, now Africa has stood at a disadvantaged position in its Balance of Trade with the entire world. Several African countries import a lot more than they export to the world.

To best demonstrate this, I shall use the example of Uganda, which is home for me, against China, currently the biggest market of Uganda products, as well as the biggest exporter to Uganda.

Ahead of the UAE and Kenya, in second and third place respectively, China accounts for majority of Ugandan imports, with 15% of all imported products in Uganda coming from China.

In January, when the Novel Corona Virus hit China the hardest, Uganda’s imports from China took a Shs6 billion dip, lowering a decades-long import bill. Statistics from Uganda’s Central Bank indicate that Uganda’s imports stood at Shs400 billion in January, down from Shs406 billion in December 2019. This drop, was expected to go lower as the China grappled with the pandemic.

It is worth noting from the above statistic, that even in a difficult time, Uganda, representing Africa for the sake of this presentation, still sits in a position that urgently needs addressing.

Talks between Uganda and China have had the government of Uganda call on their counterparts to allow in more imports from Uganda’s growing economy. Uganda has argued that China should import more agricultural produce from Africa, especially since the continent imports a lot from China, even things that could be produced locally.

Spearheaded by the Ministry of Trade and Industry, the government has taken steps towards institutionalizing this call for import substitution by launching the Buy Uganda, Build Uganda (BUBU) policy, where the government encourages local entrepreneurs to produce locally and to use as many local inputs in production as possible.

Does that then mean that Africa should cut its imports? Absolutely not. The continent’s drive at increasing its export value is heavily dependent on industrialisation, in order to realise this industrialisation, there is still need to import machinery and raw materials.

Secondly, the continent cannot make a leap to cutting off imports because most of the products that countries in Africa can make right now are already being made elsewhere cheaply. Products like foot wear, small electronics, garments and packaging material are already made efficiently elsewhere.

What then can African countries do? We need to widen our export basket. We shall have to think of producing more than just the agricultural products, the furniture, footwear and garments. This calls for growing our production capacity as Africa and because of our limited resource envelope to achieve this, we shall need Foreign Direct Investment in the industrial sector.

More so, Africa is largely well positioned to become the world’s food basket. Many countries on the continent are largely dependent on the sector and with proper planning and investment, they can turn into leading producers and suppliers of food around the world. This desperately needs to be harnessed.

One of the steps being taken and which requires support from the private sector players in Africa is to reinforce Africa as the food basket. In Uganda, the government is working with private sector players to build silos and food stores, with the objective, first to ensure availability of food for Ugandans after the COVID-19 pandemic, but also to have enough food kept away for export.

Silos and food stores are going to be a boost in post-harvest handling in a sense that while farmers in Africa have worked tirelessly thorough the crisis to ensure food production, there is poor handling of food post-harvest, which has led to wastage.

The WCF needs to rally governments and the private sector to work together to design long term strategies for food security.

Lastly we need to join voices as the WCF to the world to open its markets for products made in Africa. It is in vain if we increase production and widen our production basked in Africa when the goods will not be bought. Products such as beef, cotton, coffee and milk products to mention but a few are on demand across the world and Africa produces them in plenty. Let us call on the world to absorb these.

Dr. Rukaari, is the President Uganda National Chamber of Trade and Investment

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