From Goma to Kinshasa, Uganda plans to capture a bigger share of the DRC’s trade market

By Musinguzi Blanshe
Posted on Thursday, 21 July 2022 16:42

A trader transports merchandise on a tricycle during market day close to the border with Uganda in Bunagana town 14 May 2013. REUTERS/James Akena

The Democratic Republic of Congo (DRC) officially became a member of the East African Community (EAC) on 11 July after submitting instruments of ratification to the bloc secretariat.

From petroleum products to biscuits, DRC offers a market of about 90 million people that other EAC members hope to tap into, a study by East African Community Business Council (EABC) has revealed.

Another report by the Economic Policy Research Centre (a think tank in Kampala) also showed that EAC’s trade could increase by 28% due to the DRC’s formal integration into the bloc based on figures from 2018 when exports were worth $880m.

In Uganda, the task of ensuring that the country gets a bigger slice of the market has been handed to Odrek Rwabwogo, an in-law of Ugandan President Yoweri Museveni. Rwabwogo acts as the presidential advisor on special duties and sits on the Presidential Advisory Committee on Exports and Industrial Development (PACEID).

Rwabwogo however tells The Africa Report that he shouldn’t be viewed as the president’s in-law who has been handed a job he won’t perform effectively. He says he prefers to be identified as a professional with vast experience in production, processing and business management that he has accumulated over the past two decades, in part via his own company, Vital Tomasi Dairy Limited, which exports dairy products to Kenya and South Sudan.

Growing competition

Uganda is aware of the competition it will face in the DRC from its neighbours, such as Kenya and Rwanda, as well as other leading exporters to the country like China, South Africa, Belgium and France.

Since independence, Congo’s market suppliers have largely been Europeans, Rwabwogo says. However, Congo’s current main source of imports is China, as is the case with many sub-Saharan African countries.

In an attempt to gain ground, Rwabwogo’s PACEID office organised a weeklong business summit to Kinshasa and Goma at the end of May that attracted more than 200 participants from Uganda and DRC dealing in import-export business.

To promote regional trade that benefits EAC member states, Rwabwogo says, countries must communicate directly, something he applauds Felix Tshisekedi, president of the DRC, for promoting.

“We have to speak to each other genuinely, because this thing that I have to speak to Congo, but I have to go through Belgium, has caused us a lot of issues,” he says.

Vast opportunities, vast challenges

From the trade summit, Uganda identified vast trade opportunities: From export of foodstuffs to export of services, such as banking and low-level assembled products.

“If you take low-level manufacturing, processing of food, manufacturing of things like mattresses, assembly of bicycles and motorcycles, these are things that are still 10-15 years back especially in eastern Congo,” he says. Uganda has assembly or manufacturing plants for many of these products.

We are trying to find a way to create a fund that can de-risk entry into that market

Rwabwogo thinks that in the coming years young Ugandans will have opportunities to go to eastern Congo to run pharmacies, schools, hospitals, offer management services, among others.

To tap these opportunities, Uganda – and other countries in the region – must be organised because they are competing with Europe and Asia. “When we were in Congo in May, a ship carrying offal from Turkey, just selling at less than a dollar a kilo, landed at port Matadi – 150% less than the price of meat we produce in Uganda,” Rwabwogo says, underscoring the importance of being organised to see off competition from countries thousands of miles away which can offer cheap products.

Rather than focus on eastern DRC provinces, Rwabwogo is advising Ugandan traders to go for the jugular — Kinshasa, a city of about 17 million people.

However, this will be a challenge because Kinshasa is 1600 miles away from Goma, the main city in eastern DRC. With no road connection, it becomes difficult for small and medium scale exporters to get their goods to Kinshasa.

He says medium size exporters who can’t fly their products to Kinshasa are being advised to set up warehouses in Goma where they can coordinate and fly their goods at once. Alternatively, smaller companies can supply intermediate companies with enough capital to take the goods to Kinshasa.

Exporters also face a language challenge, Rwabwogo says. Congo is a French speaking country. Other languages spoken include Swahili and Lingala yet Ugandans speak mainly English. Swahili was approved as a national language this month, but it will take years for it to be taught in schools and spoken fluently by many Ugandans.

It’s a challenge in trade, Rwabwogo argues, because exporters will need to label their products in French and other languages spoken by Congolese. “That’s a cost to me in terms of packing and packaging,” he says.

Rwabwogo also mentions lack of export credit facilities as a hindrance to trade, but says it’s something that his committee is trying to solve. “We are trying to find a way to create a fund that can de-risk entry into that market so that both the Congolese and Ugandan firms can utilise it to supply that market very well.”

Regional dynamics

In the DRC, Kenya is already miles ahead of its peers. Equity Bank, which has been operating in DRC since 2015, is now the second largest bank in the country. With the bank’s backing, 26 Kenyan companies have committed to invest $1.6bn in the DRC.

Uganda, for its part, has started by investing in security. Its soldiers were deployed in eastern Congo in November last year to fight the Islamic state-linked Allied Democratic Forces (ADF), a terrorist group with that originated from Uganda in the 1990s. The true cost of the operation, which is bankrolled by Uganda isn’t clear yet, but parliament recently approved about $16m (USh60bn) for its activities.

Uganda is also teaming up with DRC in building roads in eastern Congo that will ease movement of goods between the countries. A peaceful eastern DRC is vital for Uganda as a market, government officials argue. The argument is buttressed by statistics from Bank of Uganda showing that Uganda’s exports to the DRC reached $665m at the end of 2021, but almost a half of it is informal trade estimates. Uganda’s imports from the DRC were worth a meagre 3% of export value.

Source: Bank of Uganda (The Africa Report)

Apart from the DRC, Uganda has a high trade surplus with South Sudan. It lost the Rwanda market following a diplomatic spat between Kigali and Kampala and although the relationship has thawed, Rwanda is yet to reopen its borders to Uganda products.

At the same time, Uganda has a trade deficit with both Tanzania and Kenya, the region’s big economies, making DRC a vital alternative.

Rwanda, too, has been positioning itself to capture a big share of the DRC’s market in recent years. However, last month, the DRC cancelled all trade agreements it had signed with Rwanda over the ongoing diplomatic spat due to M23, a rebel group that the DRC claims is supported by Rwanda.

Smuggling of DRC natural resources

Since the 1990s when Uganda and Rwanda entered the DRC in support of Laurent Kabila, who ousted Sese Seko Mobutu in 1997, the two countries have been accused of engaging in looting of Congolese minerals or being a conduit for smuggled minerals.

In February this year, the International Court of Justice (ICJ) ordered Uganda to pay DRC $325m – part of the payment is for plundering of its minerals during the late 1990s invasion. Individuals highly connected with the state have also been featured in reports on smuggling of minerals from the DRC.

In March this year, the US Treasury Department sanctioned African Gold Refinery based in Kampala, alongside Belgian gold businessman Alain Goetz –the company proprietor – for engaging in processing of gold smuggled from the DRC. The Treasury Department noted that “more than 90% of DRC gold is smuggled to regional states, including Uganda and Rwanda”.

How Uganda can help Congo deal with smuggling of its minerals is a question that Rwabwogo dodged answering. He offered praise for the new breed of Congolese politicians who are now demanding that all their minerals be processed inside the country. “Africans and especially Congolese are waking up. We should not take them for granted,” he says.

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