On 15th May, the Uganda Manufacturers Association (UMA) together with other partners and key sector players met with Mr. Wamkele Mene, Secretary General of the Africa Free Continental Trade Area (AfCFTA) during the private sector dialogue on harnessing opportunities presented by the AfCFTA at Serena Hotel, Kampala.
Themed: Accelerating Uganda’s Participation in the Africa Free Continental Trade Area, the dialogue aimed at discussing Uganda’s readiness to participate in the AfCFTA market, Guided trade initiative, market access and other initiatives by the AfCFTA secretariat and to enable Uganda effectively participate in the Continental market.
Speaking at the conference, Mr. Richard Mubiru, UMA Chairman Policy and Economics sub-committee noted that connectivity to various parts of Africa remains a daunting nightmare; such is a status for roads, railway, air and water transport.
He added that it is consequently cheaper to import a container from China to Uganda than exporting from Uganda to Nigeria since the cost parameters for exports into Nigeria can at the minimum be double the cost to China.
According to the Secretary General of the Africa Continental Free Trade Area (AfCFTA) Secretariat, Uganda based manufacturers have an immense potential to flourish in the AfCFTA market, however, this is only possible once the challenges they face during exportation are tackled by government and responsible MDAs.
The meeting highlighted opportunities available to Ugandan businesses and the challenges they face when exporting to the African market. Additionally, practical solutions to overcome these obstacles and maximize Uganda’s exports within the AfCFTA framework were laid down in a bid to foster economic prosperity.
Africa’s Potential within the AfCFTA Market:
Africa possesses unique characteristics that make the AfCFTA a transformative integration agenda. Encompassing 54 countries and a population of 1.373 billion, Africa holds vast untapped potential with abundant arable land and substantial reserves of strategic minerals.
Despite a relatively low contribution to global GDP, Africa presents a significant opportunity for economic growth and development. It also offers a potential workforce for driving sustainable economic progress given that Africa has the youngest population worldwide.
Uganda has significant potential for growth and expansion by capitalizing on the opportunities presented by the AfCFTA. Currently, intra-African trade only accounts for 12% of total trade, highlighting ample room for improvement. To maximize export value and increase market reach, Uganda can focus on value addition in its key sectors.
In terms of exports, Uganda’s top destinations include the United Arab Emirates, Kenya, South Sudan, and the Democratic Republic of Congo. By optimizing its export strategy, Uganda can tap into the AfCFTA market and prioritize areas where it has a comparative and competitive advantage. This includes sectors like oil and gas refinement and regionalized production of agricultural products. Adding value to these sectors, can enhance Uganda’s export potential and contribute to the growth of intra-African trade.
Furthermore, the services sector in Uganda, particularly professional, scientific, technical activities, and transportation, offers untapped export potential. Exploring and expanding these sectors creates potential for Uganda to increase its export revenue and take advantage of the growing demand within the AfCFTA market.
Uganda’s substantial milk production capacity provides an opportunity to meet Africa’s high demand for dairy products. By leveraging this advantage, Uganda can boost its exports and tap into the lucrative African market for dairy products. This will require investments in modernizing and commercializing the agricultural sector, including the production of fertilizers and forming strategic partnerships for agricultural development.
Promoting Intra-African trade in pharmaceutical products and medical supplies can enhance Africa’s self-sufficiency in meeting its healthcare needs. Reducing dependence on imports and fostering local productions capabilities can go a long way in contributing to the strengthening of the healthcare sector within Africa and create export opportunities for pharmaceutical products.
Addressing Strategic Challenges:
1.Limited access to reliable market information inhibits exporters from sustaining and expanding their trade.
2.Inadequate connectivity through roads, railways, air, and water transport poses challenges for trade within Africa, resulting in higher export costs.
3.The lack of affordable finance hampers local exporters’ growth, as commercial banks offer credit with less favorable terms compared to development finance institutions. Access to affordable credit can be improved through partnerships with these institutions.
4.Meeting standards and certification requirements for export markets can be costly, particularly for small and medium-sized enterprises (SMEs).
- Governance challenges across Africa create uncertainties that affect business and investment. Addressing these political volatilities is essential to provide a conducive business environment.
- Establish a comprehensive trade information portal utilizing ICT to provide reliable market information accessible continent-wide.
- Promote trans-continental infrastructure projects through multilateral engagement and public-private partnerships to improve connectivity and reduce export costs.
- Improve access to affordable credit for SMEs through partnerships with development finance institutions and local commercial banks.
- Expedite the operationalization of the Pan-African Payment and Settlement System (PAPSS) to facilitate efficient and secure financial transactions.
- Provide SME export readiness training and capacity development programs coordinated at the national level.
- Establish Export Development Funds to provide financial support to exporters and help them meet compliance requirements.
- Encourage regional and continental collaboration in harmonizing standards and certification processes to reduce the burden on exporters.
- Enhance regional integration through coordinated policies and frameworks, promoting the free movement of goods, services, and people.
Uganda’s private sector recognizes the enormous potential the AfCFTA presents for economic growth and regional integration. By strategically addressing the identified challenges and implementing the proposed solutions, Ugandan manufacturers can expand their exports to the AfCFTA market and contribute to the economic transformation of the continent.
With concerted efforts from the AfCFTA Secretariat, governments, and the private sector, Uganda is poised to seize the opportunities and drive its businesses towards success within the AfCFTA framework.
Relatedly, the AfCFTA represents an unprecedented opportunity for Africa’s integration and economic growth. Uganda’s private sector is committed to harnessing the benefits of the AfCFTA, and addressing the identified challenges requires strategic collaboration between the AfCFTA Secretariat, governments, and the private sector. By leveraging these opportunities and implementing the proposed interventions, Uganda can significantly enhance its exports to the AfCFTA market and contribute to the economic transformation of the continent as a whole.