Impact on Uganda’s economy
Enock Twinoburyo, a senior economist at the Sustainable Development Goals Center for Africa in Kigali told The Independent that the continued conflict could shed-off Uganda’s projected GDP growth in the range of 1-2 percentage points.
Uganda’s economy is projected to grow at 6.3% in the current financial year 2018/19 and also in the next financial year 2019/2020, following a recovery from the slump during financial year 2016/17, according to the International Monetary Fund.
Data from the Bank of Uganda shows that Uganda’s earnings from Rwanda ranges between US$16-18 million per month. Uganda exports mainly food stuffs and construction materials including cement, iron and steel, salt, beverages, spirits, vinegar, soaps, and fuels among others.
On the other hand, Uganda spends on average of US$1-3million per month on importing ceramic products, edible vegetables and raw hides and skins –from its neighbour to the Southwest.
Uganda’s exports into the EAC over the last four years shows a decline in exports to Rwanda from US$253million in 2014/15– the highest ever recorded over the last eight years – to US$198million in 2017/18.
Uganda’s exports to the neighboring countries from 2010-2018 in million US dollars
Source: Bank of Uganda
Uganda’s imports from neighboring countries from 2010-2018 in million US dollars
Source: Bank of Uganda
On the other hand, the value of Uganda’s imports from Rwanda remains minimal. In 2014/15, Uganda’s imports from Rwanda increased from merely US$9.5million to US$20.6million in 2017/18.
Meanwhile, the value of Uganda’s exports to South Sudan and DR Congo increased from US$309million to US$311million and US$160million to US$196million, respectively, during the period under review. However, exports to Tanzania fell from US$56million in 2014/15 to US$46million 2017/18/.
However, the value of Uganda’s imports from Tanzania and DRC also increased from US$55.1million and US$31.5million to US$204million and US$168million, respectively, during the same period under review.
Kenya remains the largest market for Ugandan products with the value of exports increasing from US$348million to US$678million during the same period under review. Interestingly, Uganda’s imports from Kenya fell from US$608million to US$513million during the same period under review.
Twinoburyo said the Uganda-Rwanda trade linkages are far beyond simply the trade balance or least the trade channel.
“There are other several mechanisms in which either economy that is trade, financial flows in form of FDI and remittances – all of which have implications for the financial sector,” he said.
Regional observers say the solution to the current impasse lies in the hands of two leaders – Uganda’s President Museveni and Rwanda’s Paul Kagame.
“They should sit together and understand the situation, the challenges that the business people are going through because these are two countries that have for a long a time worked together” Badagawa told The Independent.
“If countries within the EAC integration don’t work together, there is no way you can sustain the market,” he said.