By Damali Ssali
Uganda is predominately an informal exporter mainly trading with its neighbours. According to 2014 Bank of Uganda (BoU) data, the country registered an informal trade surplus.
The 2014 BoU data indicates that informal trade accounted for more than 30 per cent of all Ugandan exports, earning about Shs1.5 trillion. DR Congo, which fetched $139m, was Uganda’s largest informal exports destination followed by South Sudan and Kenya, which fetched $119m and $92m, respectively.
Additionally, data from BoU further indicates that informal cross-border exports earned a combined $595m in the 2017/18 financial year with DR Congo continuing to dominate as Uganda’s export destination fetching up to $291m in the period. It was followed by Kenya at $149m, Rwanda and South
Sudan at $54m each while Tanzania fetched some $45m.
Agricultural produce, mainly beans, maize, sugar, other grains, bananas and fish as well as locally manufactured goods were the most informally exported items during the period.
Therefore, it is quite important and urgent, that while priority continues to be given to formal traders, some focus and steadfastness ought to be directed towards informal cross border traders too.
A 2015 study conducted by United Nations Economic Commission for Africa indicated that informal trade in Uganda provided more than 59 per cent of non-farm private sector jobs, underscoring its significance in addressing the employment challenge that Uganda finds herself in.
Different studies indicate that more than70 per cent of women-owned businesses are in informal trade, accounting for a significant majority of employment in this sector.
Women spend much of their income on uplifting family livelihoods, among which include buying food, paying school fees and re-investing in their enterprises. Therefore, informal trade, which is mainly dominated by women, must be supported to enable women improve their disposable income to contribute towards social and economic development.
It is important to highlight that women informal cross border traders face a number of unique challenges that limit their growth opportunities. Key among the challenges is low knowledge of export requirements, lack of understanding of quality inspection procedures, lack of information on markets, lack of access to certification procedures and general gender based harassment as well as the general lack of appreciation for the certification processes.
The challenges are compounded by the limited time that women have to invest in their enterprises therefore they have to rely on middlemen to help them uplift and get value for their businesses.
However, amid all this, informal cross border traders have been organizing themselves into associations, cooperatives, and Saccos, which will help them to reason and speak with a single voice to advance their cause.
Additionally, government through the Ministry of Trade and the Ministry of East African Community Affairs is addressing some of these challenges by developing several policy frameworks such as Cross-Border Trade Strategy, which seeks to increase the value of Uganda’s exports of the specified products and services to the targeted markets over the next five years. Other polices are Micro, Small and Medium Sized Enterprise Strategy and the Cross-Border Trade Charter.
Government has also appointed district commercial officers in every district and established regional integration centres at some busy border points and Uganda Revenue Authority is implementing the Women Trader’s Trade Facilitation Framework.
Finally, there are also some other agencies that are supporting cross border trade such as the Stanbic Business Incubator, which is providing business skills development to MSMEs, AbiTrust which is providing support to enhance the export capacity of agri-businesses and Financial Sector Deepening which is looking at provision of inclusive finance.
However, even with this kind of arrangement, there is need to ensure that the full spectrum of informal cross border traders is identified and supported to respond to existing constraints such as non-tariff barriers, limited export capability, lack of information, financing and exclusion of women.
This must be mitigated by putting in place comprehensive interventions and policy regulatory frameworks that support informal cross border traders given that an all-inclusive approach will ensure that Uganda leverages on its geographical location to access the markets around it.
We also need to enhance capacity of small and medium enterprises to provide products and services that meet export standards to ensure easy penetration to intra-regional markets. This will not only enhance cross-border trade but will also promote social and economic development of Uganda.
Informal cross border trade provides a significant source of employment, which, if enhanced, can be the bedrock of the social economic transformation of Uganda.
It is also an economic buffer that can contribute to sustainable, inclusive and youth employment.
About author:
Damali Ssali is a Trade Development Expert.
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