Uganda Business Community Grabbing Opportunities in ‘Dangerous’ South Sudan as Traditional EAC Partners Stick to Trade Barriers

Nine years after fleeing the war pitting soldiers loyal to President Salva Kiir versus those loyal to Vice President Riek Machar, Uganda’s business community has leapt at the opportunity to return to Juba for a dialogue with the South Sudanese government.

The private sector foundation reported receiving 200 applications from businesses interested in travelling to Juba for the Uganda-South Sudan business forum three days before the deadline for the short registration window.

The private sector in Uganda also sponsored most of the business forum’s activities even if it was taking place in Juba, when traditionally at least within the East African Community hosts usually finance conferences and exhibitions like the one held in Juba from July 18^th to 20^th.

General Ronnie Balya, Uganda’s Ambassador to South Sudan says the general excitement has to do with the government in Kampala wanting to increase export volumes back to the pre-2013 levels.

He says that Uganda’s formal and informal exports to South Sudan have since the 2013 war, ranged between $400 million and $500 million every year.

“Before 2013, however, Uganda’s exports to South Sudan were approaching the one-billion-dollar mark and now that peace has returned, I encourage our people to come back so that we can trade at the levels where we were before the war,” he says.

For some in Uganda’s business community, however, things are not so simple.

MacWilliams Edward Mponye a businessperson providing Information and Communication technology services says rule of law and an assurance from the South Sudanese to play by the rules must be provided.

The business forum is the first time Mr. Mponye is returning to Juba, nine years after he was reportedly almost killed, not by the different factions of the ruling Sudanese People’s Liberation Movement (SPLM), but by people he thought were his partners.

“I imported equipment from China, sent boys over, who spent time and resources on the installation of security systems. I also invested in training users, but when I came over to sign the necessary documentation and conclude the business deal, I was almost killed by the people that had invited me to work,” he says.

As he tells it, he escaped death after his connections within the United Nations system told him to stop using the double cabin he had been using to travel around Juba. On the day he was to be killed, he hired a different car that later took him to the airport, leaving behind the double cabin with a South Sudanese who was shot to death, as the executioners thought the team from Softect Integrated Africa and the EPS technical solutions were still around.

“That business almost crippled me,” says Mponye who has since expanded into farming cereals such as maize and sorghum as well as oilseed crops that include sesame, soya, groundnuts, and sunflower.

Another person that needs assurances that the government in South Sudan will make sure the rule of law is respected for the business community to thrive is Julian Omalla Adyeeri, the Chief Executive Officer of Delight Uganda Limited.

Her issue is to do with soldiers in South Sudan sometimes grabbing the properties of foreigners.

“I used to bring water, bread and cheers juice to Juba and by 2013, I had 150 workers,” she says.

According to Alijaabu Mohammed the Juba City Council Mayor, businesspeople like Ms. Omalla are what South Sudan needs.

Mr. Mohammed says Ugandans are important partners to South Sudan because the two countries have a long history of supporting each other’s liberation movements.

He adds that South Sudan would want a strong and beneficial relationship with their southern neighbours, but this is sometimes difficult because there are Ugandans who sell “dirty” items like sachet alcohol that is wasting the productive lives of young people in Juba.

Other Ugandans, according to the mayor are in petty trade, yet this should be left to the South Sudanese, while foreigners should venture into businesses that can expand to provide jobs to Juba’s growing population.

“We want businesses that are clean and can employ our people,” says the mayor.

Ms. Omalla says she was one of those businesses fulfilling the mayor’s wishes as her business was not the kind that would poison South Sudanese. She also had a decent number of employees.   

As 50 per cent of her employees were South Sudanese, while the rest were foreigners in a land with limited housing, Ms. Omalla decided to build a house for her company to use. However, in 2013, a soldier snatched the house.

“I have all the documentation to prove that this is my house but until today the house is still occupied by the soldier,” she says.

In reaction to these complaints, however, Ocum Genes Karlo the First Undersecretary for the Ministry of Trade and Industry says some of the problems with traders registered under the SPLM regime of 2013 could only be addressed in a separate forum, that is not the Uganda-South Sudan Forum.

Even without addressing these problems, however, some Ugandans say they have no choice but to venture into South Sudan, as it is better than seeing your goods rot for lack of a market.

Twesiga Sosimu, the Chief Executive Officer of Farm Uganda is one of the estimated one million Ugandans that have taken the risk to do business in South Sudan despite the risk as he does not have many alternatives.  

In 2016, he imported a machine worth $540,000 from China to make high-quality cassava flour. The plan was to sell cassava for making beer to Uganda Breweries Limited. The Uganda government found this plan exciting, as the ministry of agriculture, animal industry and fisheries provided half of the funding needed to purchase the machine.

However, a year, after he had supplied 3000 metric tons of cassava flour to Uganda Breweries Limited, the Ministry of Finance, Planning and Economic Development introduced a tax on beer companies and altered his business plan.

“The government increased taxes on beer and companies cut their production of beers dependent on cassava as a raw material to zero. What was I supposed to do? So, I came here to find an alternative market,” he says.

Mr. Sosimu says that he currently brings his flour to Juba where he identifies a shop or store owner to whom he sells, in a system that is similar to what is applied by middlemen of agricultural produce in Kalerwe or Owino market.

He says the risks of not getting paid under this arrangement are high, as it is difficult to trust a storeowner that might close the next day or even claim you never gave him or her your goods.

He adds that he hopes the governments in Uganda, South Sudan and the donors work out a system to formalize such transactions, but for now, this is how his business is surviving, as he doesn’t have many choices.

Damali Ssali the Chief of Programmes and Projects Officer at the Private Sector Foundation says in recent months, Uganda has been drumming up demand from markets like the Democratic Republic of Congo and now South Sudan, to overcome the difficulties in accessing other East African partner states. 

In addition to having a small market back home, Ugandan businesses face the challenge of a hostile trading environment from the older members of the EAC. The challenges according to Ms. Ssali are several including Uganda’s failure to reiterate whenever EAC partner states introduce tariff and non-tariff barriers contravening the customs and common market protocols.

For example, Ugandans are still not allowed to export their goods to Rwanda, yet Kigali and Kampala are supposed to have in January 2022, buried the hatched that had kept the borders of these two countries closed.   

Ms. Ssali adds that Uganda’s business with its biggest trade partner soured in the 2017/18 financial year when Kenya lost its positive trade balance. Since then, Ms. Ssali says Kenya has introduced non-tariff barriers that ensured fewer goods were exported to Uganda’s eastern neighbour.

Just like Kenya, Tanzania has always had tariff and non-tariff barriers targeting Ugandan businesses. She cites Tanzania’s previous bans of items like sugar and cooking oil, as well as the over $500 that Ugandan trucks had to pay to bring goods from the port of Mombasa.

“While President Samia Suluhu resolved many of these issues that we had been raising for about ten years, Tanzania no longer feels like a natural partner to Uganda so the business community hasn’t embraced this opportunity,” says Ssali.

In the face of these different barriers to reaching the older members of the East African Community, Ms. Ssali says that Uganda’s business community is now looking to newer members. This she says explains why the business community jumped at the opportunities for the business forums held in the Democratic Republic of Congo (DRC) at the end of May and the beginning of June and now the one in South Sudan that just ended.