logo logo

Sudan: Uganda losing out to FTA countries

The East African, Uganda

Sudan: Uganda losing out to FTA countries

By Esther Nakkazi, Special Correspondent

6-12 February 2006

Uganda is losing business in the Sudanese market because of its failure to ratify the Free Trade Area of the Common Market for East and Southern Africa (Comesa).

Nine Comesa member states have so far removed Customs tariffs, quotas and other restrictions to trade.

Kenya, for example, gets duty-free access to the Sudan market for its goods, which qualify under Comesa rules of origin, while Uganda does not.

"There is a rush to Sudan now, particularly Southern Sudan, said Paul Mukumbya, head of economic affairs at the Uganda embassy in Khartoum. For now, most institutions are not fully established and most of the trade is informal, but when they are, Uganda will lose out to countries like Kenya whose exports to Sudan are zero-rated."

Uganda’s exports to Sudan include coffee, tea, fish and human resources, while Kenya’s main export to the country is tea.

Mr Mukumbya said by joining FTA, Uganda would increase its exports to Sudan by 100 per cent because they will be zero-rated.

Kenya and Uganda have opened consulates in Southern Sudan’s capital city of Juba to promote trade with Sudan.

Uganda and Sudan revived trade relations last year and signed a joint trade agreement.

All 20 Comesa member states were to have ratified the FTA by 2005, but Uganda has delayed its decision, raising concerns among manufacturers and traders.

The business community is complaining that failure to sign the treaty is making trade with Uganda’s neighbours unviable, as its exports to Comesa are charged an 80 per cent tariff.

However, Abid Alam, chairman of the Uganda Manufacturers Association, says they are reviewing the agreement to avoid loopholes before endorsing it.

Sudan’s economy is booming, with its gross domestic product having grown by 23 per cent in 2004.

The approved investment projects for the first quarter of 2005 are worth more than $2 billion.

There are 434 national projects worth $1 billion. Of these, foreign investors own 27 projects while 24 are jointly owned by foreign and local investors.

Sudan’s relations with the international financial institutions have normalised since the country regained its full membership of the International Monetary Fund in 2000.

Financial institutions from the Arab world have offered over $650 million in loans to fund the Merawe Dam project. Foreign loans and grants to the country rose from $428 million in 2000 to $853 million in 2004.

Export values rose from $1.9 billion in 2002 to $2.5 billion in 2003 and $2.7 billion by September 2004.

The Sudanese government has established two free trade zones - Suakin on the coast of the Red Sea, and Al-Gaily, near Khartoum.