Kampala, Uganda | THE INDEPENDENT | Uganda needs an export guarantee scheme for trade with Democratic Republic of Congo and South Sudan, according to the Uganda Manufacturers Association Executive Director, Daniel Birungi.
Birungi made the remarks at the recently held post-budget virtual conference in Kampala sponsored by Absa Bank Uganda.
Birungi’s call has been previously advanced by many trade experts given that the two countries have experienced political instability that has cost many Ugandan traders billions of shillings.
He said: “We have opened up South Sudan and DRC, which is very good work. But the aspect of volatility in these markets requires that we have an export guarantee scheme… so that, when a manufacturer transports their goods to these countries and loses them, they are able to have recourse.”
An export credit guarantee provides safeguards and insurance for exports by a government or semi-government agency to ensure that an exporter receives payment for goods shipped overseas in the event the customer defaults.
“At present, it’s really a wild west out there,” Birungi said, “You go at your own risk and whatever happens, is your business or you come back to the government and request a bailout, which is not the right way.”
During the reading of the FY2021/22 National Budget, Amos Lugoloobi, the state minister for Finance announced that Shs5.1trillion has been allocated in the budget for the development of the integrated transport infrastructure and related services, which includes a 1,182 km road connecting Uganda and the DRC.
Additionally, the budget also makes provisions to rehabilitate the Tororo-Gulu Meter Gauge Railway (MGR) and complete the Gulu Logistic Hub, both to expand trade with South Sudan.
In 2018, Uganda exported goods to DR Congo worth $532million, including an estimated $312million in informal exports, while the country’s exports to South Sudan amounted to $357.34million during 2020.
Mumba Kalifungwa, the Absa Bank Uganda’s Managing Director lauded the efforts to develop infrastructure that will stimulate growth in new markets or enhance the already existing ones.