Allan Atuhairwe, the Head of Trade & Working Capital at Absa Bank Uganda
The COVID-19 pandemic has adversely hit economies world over. In Uganda, traders both importers and exporters are one of the key players in the economy that have been impacted most following the COVID-19 induced lockdown announced in late March 2020.
However, there is hope that the economy will bounce back considering the fact that Entebbe International Airport resumed operations on October 1 after six months of closure as a result of the COVID-19 pandemic.
It is important to note that imports and exports play a big role in the growth of Uganda’s economy.
According to figures from the Bank of Uganda (BoU), Uganda exported merchandise worth US$4,095bn (Shs15.1 trillion) in 2019 from US$3,642bn (13.48 trillion) in 2018.
In comparison, Uganda imported goods worth US$6,185bn (Shs22.89 trillion) in 2019 compared to US$5,317bn (Shs19.68 trillion) recorded in 2018.
Figures released by BoU on 5th October 2020 further indicate that both imports and exports are beginning to increase following the easing of COVID-19 restrictions in July.
Figures show that Uganda’s exports were low in March (US$(299.46m), April (US$207.10m) and May (US$290.88m). However, in June Uganda exported goods worth US$338.14m. Exports further increased to US$419.47m in July before reducing slightly to US$416.27m in August 2020.
BoU figures also indicate that imports increased in June, July and August to US$522.88m, US$563.93m and US$637.98m respectively.
The Airport has been reopened a few months to the end of 2020. This means traders will have an opportunity to import and export goods ahead of the festive season. As Uganda concentrates on import substitution industries, the reopening of the airport will support this drive through importation of key raw materials.
Gideon Badagawa, the Executive Director at Private Sector Foundation Uganda (PSFU) is upbeat about the reopening of the airport.
“This is a good development. We have been crying out for this,” he says, adding that tourism is one of the biggest value chain sectors that will benefit from the reopening of the airport.
“Tourism can’t be until borders are open. The problem is; we haven’t promoted tourism to give us the resources we want. If we have opened these borders, that is wonderful news to the private sector and the economy. We are excited about the development but we want to call on people to observe the SOPs (Standard Operating Procedures),” Badagawa says.
Financial solutions to traders
Allan Atuhairwe, the Head of Trade & Working Capital at Absa Bank Uganda explains the implication of Entebbe Airport reopening to traders and the economy at large.
“Entebbe Airport directly supports passenger / cargo transportation and provision of services to various airlines. Given that Uganda is heavily reliant on imports with most traders having to travel to various markets for order confirmation and verification, we anticipate an increase in both cargo and passenger movement which Absa Bank will happily support through various international trade advisory and payment solutions,” Atuhairwe says in an exclusive interview with Business Focus.
Asked on what products and services Absa has for traders, Atuhairwe revealed that the bank supports traders with local, import and export trade financing and payment solutions to effectively manage payment and liquidity risks.
“Our pan African understanding of regional and local markets makes us well placed to connect clients to various supplier networks globally,” he says.
He adds: “Given our market understanding, we have to a larger extent moved away from facilitating imports using tangible collateral (which most traders may not have anyway) to availing structured import finance, working capital and payment solutions that will enable traders maintain steady inventory levels to meet their contractual obligations during and after the festive season.”
He notes that the bank has launched an online trade client application platform that enables traders apply for import, export and bidding facilities from the comfort of their homes without necessarily having to drive to an Absa branch, which should improve efficiency in making supplier payments and meeting contractual commitments on time.
On what it requires for a trader to benefit from the bank’s products and services, he said: “Our import trade products and services can be accessed across our entire branch network and our team of relationship and specialist advisors can be reached on AbUgTradeSalesTeam@absa.africa or Toll-free no. 0800222333 / 0312218348 for assistance.”
Simon Sandeep, Country Director-Uganda at Mega Lifesciences Limited is an importer of medical supplies.
He says the re-opening of Airport is very good because physical contact has no substitute even when business communication has changed to digital.
He however says many investors are still hesitant to invest (supply) in terms of stock because of the COVID-19 restrictions that are still in place.
He adds that the ‘new normal’ is set to increase the cost of doing business.
“Although cargo flights are open, very few flights are allowed. For example, a shipment which used to be at $6,000, it is now $14,000…all these costs trickle down to the consumer,” he says.
None the less, with the reopening of the airport and other entry points, traders not only have an opportunity to recover from losses suffered during lockdown, but also play a huge part in the recovery of the economy.