Uganda and the Democratic Republic of Congo (DRC) on Wednesday launched a 223km road project linking the two countries, with the project envisioned to boost cross border trade, improve security and connectivity between the two countries.
At the ground breaking ceremony held at Mpondwe (Uganda) and Kasindi (DRC), President Museveni and his DRC counterpart Felix Tshisekedi said the infrastructure will transform the socio economic welfare of the citizens in both countries.
While many Ugandans have in the past dismissed the project as an unnecessary expenses for Uganda, experts say it is a viable project for Uganda.
Dr Fred Muhumuza, an economist, said there is potential business in terms of commodities such as food products, gold, and manufactured goods such as textiles and plastics that Congolese traders buy from Uganda.
According to Dr Muhumuza, road transport is the most viable because of the bulk and nature of merchandise and the local traders engaged in trade between the two countries.
“It is important to have them [roads]. There are many benefits. Uganda has very many good roads up to the border, yet Congo was not interested in doing their part. The need to continue because once you cross to the other side, the roads disappear,” he said.
A look at statistics shows that the Democratic Republic of Congo (DRC) was Uganda’s number one source of trade surplus in 2020 according to Bank of Uganda.
Uganda earned $241 million in trade surplus from DRC in 2020, and $177 million estimated informal trade exports that push the figure to $418 million trade earnings. This makes DRC Uganda’s number one source of trade surplus.
Trade surplus refers to the amount by which the value of a country’s exports exceeds the value of imports.
Second to DRC is South Sudan. Uganda earned $276 million (trade surplus) from goods exported to the country, slightly above DRC formal trade earnings. The $80 million estimate of informal trade exports to South Sudan is almost half of DRC’s estimate.
For countries such as Kenya and Tanzania, Uganda’s other main trading partners in the region, Uganda’s export earnings are subdued by a large import bill, tilting the balance to trade deficit. For instance, Uganda exported goods worth $465 million in 2020 to Kenya but imported goods worth $809 million. This means Uganda’s trade deficit with Kenya was more than $300 million in 2020.
Uganda exported goods worth $95 million to Tanzania in 2020 and imported goods worth $772 million, translating into trade deficit of almost $700 million. The Rwanda market was decimated by border closure in 2019. In 2019, Uganda exported goods worth $194 million to Rwanda and the value of exports diminished to $5 million in 2020, a year after the border was closed according to statistics from Bank of Uganda.
Such trade statistics make Uganda’s investment infrastructure in eastern DRC ‘tick’. Finance Minister Matia Kasaija last month, speaking at media center during launch of the budget month activities, described DRC a “huge sleeping market.” Uganda investment in the country is strategic, he said.
Kasaija revealed that a legislator had described him as “a stupid man” for going to construct roads in DRC yet he had told the legislator that there is no money to build a road in his constituency.
Africa Kiiza, a trade negotiations and policy analyst at Southern and Eastern Africa Trade Information and Negotiations Institute (SEATINI) says DRC market has become vital for Uganda given Rwanda’s failure to reopen the border and Kenya’s recent schemes to block Uganda products from entering its market.
“We classify some markets as troubled,” Kiiza said in a recent interview. “Rwanda and South Sudan are classified as troubled. Kenya is also starting to show signs of becoming a troubled market. Amidst these shifting geopolitical aspects, DRC market becomes important.”
But Kiiza warns; “It is not automatic that when you construct a road in Congo which is now our biggest trading neighbor, that the benefit that accrues will be felt by all. We can continue having increased trade without benefits.”
Kiiza says government should put in place mechanisms for maximum utilization of DRC market. “Should we not utilize this market, it’s the tax payers to lose,” he said.