The move by Rwanda to block Ugandan cargo trucks and buses from crossing to the neighbouring via Katuna and Chanika border points has left traders counting losses.
Rwanda blocked cargo trucks and buses since
Wednesday last week, to reportedly pave way for upgrading the One Stop Border
Post at Gatuna border.
But on Friday, the Rwandan Minister of Foreign Affairs and International Cooperation, Richard Sezibera tweeted that Rwandans are strongly advised not to travel to Uganda due to ongoing arrests, harassment, and torture, a statement which depicts hostility between the two neighbouring countries.
However, the standoff has paralyzed business at Katuna and Chanika borders. Businessmen; among them wholesale and retail shop owners, money changers, hoteliers, drivers, say that they are incurring losses as a result of blocked traffic at the border.
But who is the ultimate loser in this impasse?
Rwanda and Uganda are historically good trading partners. Uganda earns millions of dollars from exporting items to Rwanda and spends less on imports from the negibouring country. This means that Rwanda also earns some good money in tax revenue from goods imported from Uganda. Additionally, Uganda is Rwanda’s key trading partner going by latest statistics from the Bank of Uganda (BoU).
After Kenya and South Sudan, Rwanda is Uganda’s 3rd export destination in the Common Market for Eastern and Southern Africa (COMESA) region.
According to BoU figures, Uganda exported goods worth US$212.14m (Shs785.9bn) to Rwanda in 2018, up from US$180.8m (Shs669.8bn) in 2017.
In 2016, Uganda exported goods worth US$237.61m (Shs880.4bn) to Rwanda, up from US$193.98m (Shs718.7bn) in 2015.
In 2014, Uganda earned a whopping US$245.37m (Shs909bn) from exports to Rwanda.
This means that in the last five years, Uganda has earned Shs3.96 trillion from her exports to Rwanda.
On the other hand, BoU figures indicate that Rwanda earned US$17.94m (Shs66.4bn) from her exports to Uganda in 2018, up from US$13.10m (Shs48.5bn) in 2017.
In 2016, Uganda imported goods worth US$13.04m (Shs48.2bn) from Rwanda, up from US$11.06m (Shs40.9bn) recorded in 2015.
In 2014, Rwanda exported goods worth US$11.84m (Shs43.8bn) to Uganda.
This implies that while Uganda has earned Shs3.96 trillion from her exports to Rwanda in the last five years, the neighbouring country (Rwanda) has only managed to earn Shs247.8bn from her exports to Uganda.
To put it simply, the money Uganda earns in exports to Rwanda in a year is four times higher than what Rwanda has earned in exports to Uganda in the last five years.
The items Uganda exports to Rwanda are mainly food stuffs and household items.
Going by the above figures, it is easy to conclude that both countries strongly need each other.
By Rwanda blocking Ugandan goods, its hospitality industry may get badly affected due to food shortage.
Additionally, Rwanda also loses on tax revenue earned from goods imported from Uganda.
Uganda also losses the much needed revenue earned from goods exported to Rwanda.
If this border impasse persists, Uganda Revenue Authority (URA) may not achieve its target of collecting tax revenue amounting to Shs16.3 trillion in the 2018/19 Financial Year.
Ugandan President Yoweri Kaguta Museveni and his Rwandan counterpart, Paul Kagame must quickly come to a negotiating table and save the situation.
Estimates indicate that the business community has so far incurred combined losses of over US$15bn in the past several days of this impasse.